Indiana tax sale strategy

7 Replies

Well, It is tax sale season here in Indiana and I am interested in dipping my toes in the water of this jungle. I have looked at many houses on the list and was wondering what kind of strategy works best if you are interested in acquiring the property and not just getting the interest money. I just want to get properties for a good price, rehab, and then collect rental income for myself. I'm sure most the of the properties have been sent a letter from someone wanting to purchase already. Is a vacant property better odds than an occupied property? Run down property less likely to redeem? Are Information searches of the owner helpful? Are C class properties the most likely to redeem?

I have limited funds so will have to select 5-10 properties out of several thousand. How much over the face value do people typically pay?



@Brian Horwitz I do lots of tax sale buying but I don't know Indiana law specifically.  Generally vacant houses, houses with no mortgage, houses owned a long time are going to be the best candidates to acquire. The most likely to redeem are homeowner properties or valuable properties especially that have a mortgage. 

You will find however that it is somewhat random. I bought a lien on a property with the windows blocked up with cinder blocks. I thought for sure I would get it. I tried twice and it redeemed. Then one year I saw the door open and it was starting to be renovated. Just drove by a week ago. 10 years later it still sits there with the windows still filled in with cinder blocks.  On the other hand i have gotten a newly renovated property for an $800 lien. 

I don't know how competitive it is there. Here in Baltimore they bid the interest rate down to 4-6%. They bid up the prices to where if the owner does not redeem they will lose money on the sale.

Hi Ned, Thanks for your info! 

In your experience out there, does a lower lien amount mean the property is more likely to redeem or is it just random?

Is there a good place I can go to check on liens that might make it likely to redeem. If a property has a mortgage, wouldn't it never end up at tax sale? I have mortgages and the bank pays the property taxes.



@Brian Horwitz in theory a smaller lien is more likely to redeem. larger liens are simply harder to pay. However in the example I gave about it was an $800 lien and when I got the note from my attorney I googled the address. There was an active listing for $119K.

I believe larger lien mean you are more likely to get the property but it is pretty random. Also by buying smaller liens you can buy more so that increases your odds of getting a property. 

I don't check to see if there are mortgages. If you have an easy way to do it I think it would help. See if your land records are online in your area. 

Why some mortgages don't escrow for taxes I really don't know, but it happens. What is more common however is that the owner stops making mortgage payments. Since no payments are coming in the bank has no money to pay out for taxes. Sometimes these are properties the bank just has written off as not worth the trouble to foreclose.

@Ned Carey - Hello from Bloomington IN. I was wondering (since this is an area that interests me)... are there any specific books or other media that you would recommend for learning about tax lien sales? I'm just getting started in real estate investing and I'm trying to learn as much as I can. I understand the basic concept, and I know there are books out there... but I guess I'm always interested in what successful investors have found to be helpful recourses for them. Thanks for the time.

@Matthew Davis I have been tempted to write a book myself. I am just too busy to get it done. I haven't read any books on tax liens. I have heard many recommend the 16% solution.  This has been recommended since when I started 15 years ago. That tells me it is solid information and was put out before everyone and his brother decided to push bunk to be a real estate training Guru.

I had learned some basics like you. I took a tax lien attorney out to breakfast and he patiently answered my biggest question about risks. We are still friends and do business together today. 

Most of the rest I learned by studying the state laws and from experience.

@Brian Horwitz  which county?  I have a different strategy in each that I invest in. Marion County is way more different than the others. 

@Matthew Davis  you don’t t have time to read books. The sales have started!  Read about the rules on the county web site. Get the list and start your research. 

@Dennis Weber this is for st Joe's county up here in the South Bend area. I know the county very well. Granger area property is too valuable. I have focused on mishawaka and specific neighborhoods that rent well in SB. I have looked at many liens/properties on the list in the $1000-3000 range and I dont know if I should go for the vacant beaters, occupied likely rentals, or the properties with over 100k.