Tax Sale Questions in Georgia - Safe or Risky?

Question

I have attended foreclosure actions in my city before, but very recently I heard of tax sales. From the looks of it, making reasonable bid at auction can score a good deal on a home, and if the deal is "too good to be true" then lien/mortgage holders can buy the right to the deed from you within 1 year for a 20% premium. I am mainly looking for buy and hold.

So far, that looks good. I'd like to get some advice regarding my understanding of tax sales in Georgia so that I know I'm not missing any key information.

From doing my research I have painted the following picture about how they work:
Some owner with a mortgage did not pay their property taxes. So the county takes the right to auction his property at a tax sale in order to recover taxes owed.
Anyone, including the owner and lien holders (including a bank holding the mortgage) can bid at the auction. 
If a third party, like myself, win at an auction price, within 1 year, the original owner OR lien/mortgage holders can legally buy the property back from me, for a 20% premium on the price paid at auction.
If no lien/mortgage holder comes to claim the deed within 1 year, the deed is transferred to the 3rd party buyer, myself, via foreclosure. I can then get title insurance and the case is closed (no one can claim ownership of the home but myself).
During the 1 year, I would be able to collect rents from the property. However, any improvements that I make in the property are non-refundable if the lien holder comes back to take the house.

What fees should I be aware of? What about after 1 year during the "foreclosure" process?

Thanks all!

Source: http://gwinnetttaxcommissioner.manatron.com/Tabs/Property/DelinquentTaxInformation/TaxLienTaxSaleGeneralInformation.aspx

Morris Lucas · Answer

Your right, got the date wrong, but it's every first Tuesday of the month.

To answer your question, after 12 months, assuming you won the auction for the LIEN, yes, you can foreclose if you want. After the 12 months, there is no other auction, (that i am aware of)you just get with an attorney and begin the foreclosure process and either rent to the homeowner or evict them.

Not sure about the prices the auctions end at, i would imagine some of that information woud be available at the courthouse in the deed/lien history documents.

I have a different strategy i am trying to implement regarding the liens, but the couple auctions i went to in Dekalb county, you really have to do your research, as there are just a bunch of attorneys standing around auctioning stuff off, there is no rhyme or reason or organization to it all, so you definitely would benefit by going to a couple before you decide to bid, to get a feel for how it all works.

Ben Bakhshi · Answer

I did some phone calls to the Gwinnett County tax office, plus spoke to an attorney.
Rents cannot be collected, like you said. In fact, you arent supposed to step on the property.
The previous owner could pay you back for the taxes, whether its 1 day or 364 days after the original auction, they pay you for the full auction price + 20%.

After 12 months, you can foreclose on the house.
Does that mean you put the house at a foreclosure auction? 
To whom do the proceeds go? 
What if I decide to outbid all buyers, do I just keep the home?

Finally, I'd love to get an idea about how close to the starting prices do the auctions end.

The auction is on the 4th not the 8th! It's on a Tuesday.

Morris Lucas · Answer

Hi Ben;

I'm no expert,  but live in Gwinnett County and have been researching this for the last 6 months or so. 
I think you basically have the process right from what i have understood it, however a couple things...

I do not think their necessarily has to be a mortgage on the property; the house could be free and clear, although this is probably rare, but attorneys i talked to said it does happen occasionally.

After a year, they put a "notice of redemption" ad in the paper to notify homeowner, lien holders etc that they have until specified date(normally a few weeks later) to redeem or the rights will forever go away.

Also, I do not think you are allowed to collect rents during the redemption period, it is not your property yet, you only have a lien, not a DEED at that point.

Again, this is my understanding, i am sure more advance investors will chime in.

PM me if you would like any assistance, I am planning on going to the sale on the 8th at the courthouse.