This might be the worst idea ever! what are your thoughts?

9 Replies

I have a few rentals that I would like to sell but I am not thrilled with the expenses associated with selling a property and the fact that my tenant retention is effected by having properties on the market.

Last fall I went to the Allen County Tax Sale and I was floored by the prices properties were going for. If I understand Indiana tax law correctly the overages go to the owner.

What would be the ramifications for letting my properties go to tax sale? i know I would need to pay the fees and interest if I did not like the price and decided to redeem them but if I could get close to market value plus retain the property and rents for one year after the sale wouldnt this be a good exit stratagy?

Does anyone know the tax ramification, credit ramification and other issues associated with this stratagy?

That sounds messy...

Have you tried to sell them off-market? This would prevent the tenants from know they are for sale.

Are they SFH? Is so, you could offer them for sale to the current tenants as a lease option to buy program and get full market price.

You could also offer them as a package to an investor with seller financing. This would cut down on closing costs and still provide cash flow.

Sounds liek alot of hassle and unnecessary work for an outcome that may not even be promising.

Why not just sell via for sale by owner?

Chris

What you are seeing is the power of the auction environment. There are faster, easier and less messy ways than using a tax sale. Check out bid 4 assets and other online auction sites.

@Nick Miller You may consider simply selling it through a regular public auction yourself. You can set a reserve an do it with little risk up front other than advertising costs.

I am not suggesting this is your best alternative but I would not hesitate to let one of my properties go into tax sale to see what someone bids. If someone bids too high, either they pay me more than my property is worth or they never foreclose and have simply paid my taxes for me.

Keep in mind tax sale rules vary greatly from state to state. I know my states rules inside and out and can do this with little risk. Make sure you know the local laws before you try this yourself.

Based on last years tax sale numbers most of the residential properties went over market value. I know in Indiana that the owner has 1 year to redeem with a 12% prorated interest rate on the overage and during that time I could be collecting rent, marketing the property for sale or sending it to auction with a reserve greater than the overage.... I noticed some prominent names on the tax sale list and it made me wonder if the tax sale is all part of an elaborate exit strategy of these prominent investors... However, if the tax sale would blemish my credit or create an extra tax liability I wouldn't consider it.

Does anyone know if there is a credit penalty or additional tax on income from tax sale income in Indiana?

If it a risk to credit it probably is a bad idea. thanks everyone.

Sell them on Auction.com!

TONS of RE being sold there. Of course, there is a cost to it, but might be preferable to RE commissions.

You know, when people sell to me "off market", I expect to get a significant discount. In many cases, the public market (MLS) is the most efficient method for selling real estate, even considering commissions & closing costs.

Originally posted by @Dev Horn :
Sell them on Auction.com!

TONS of RE being sold there. Of course, there is a cost to it, but might be preferable to RE commissions.

You know, when people sell to me "off market", I expect to get a significant discount. In many cases, the public market (MLS) is the most efficient method for selling real estate, even considering commissions & closing costs.

I've seen a lot of people get hung up on a 6% commission. Sometimes offering the property on the MLS would get them way more than the 6% back. With few exceptions the MLS will sell everything I offer for more than I can get going FSBO or to my buyer's list.

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