Investor · Macomb, MI · Member since 2013 · 654 posts · 115 votes
Hi all you fellow SE Michigan REI's. Well I got some very juicy inside news this morning. Thought it was going to put me into a sweet position of wholesaling and flipping some properties in Macomb County.
After getting my tip of who bought them, I contacted him directly. Was passed around to 2 other people just to find out that the company that was formed for the purchase will be rehabbing to some extent at least, ALL of the properties before reselling them. Some will be full rehabs others will be small renovations. None are planned to be sold at this point without some kind of work being done to them.
Properties will start to come on the market through Real Estate Agents Only in about 6 months!! I have been added to what is most likely an already mile long list of investors trying to buy the properties "as is".
How can little guys like me compete with this kind of competitor!!??
Something like $2.3 million dollars this time and ove 340 houses and lots were sold....
Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
12y
I know there are differences between states/county, but what about buying from the owner, right before auction and paying off the back taxes? That would be an option for the single investor
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
13y
You must have no/short redemption periods, and I don't know what quiet title type process you have to go through there, but when one bidders buys them all, they are definitely paying too much.
Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 1k+ posts · 951 votes
13y
Originally posted by Aaron Yates:
How can little guys like me compete with this kind of competitor!!??
If you have cash then you could buy one of them at the auction. It's not like they were being sold as a lot where you need $2.3M to be in the game, with 340 auctions the average sale price was under $7k. If they're paying too much then there's no room for you to flip the property anyway.
As Wayne said the quiet title process could be a big hurdle, at least it would be here in FL for that many properties. The last one I did cost me $2,250.....$1,200 flat attorney fee and $1050 in attorney costs (process server, publication, filing fees, etc). If you had to pay $2k x 340 to quiet the titles and get marketable title it'd make it even harder to make any money on that deal. No idea what the title process is on tax sale properties in MI though.
Investor · Macomb, MI · Member since 2013 · 654 posts · 115 votes
13y
Patrick L., if one buyer bids 2.3 million for all properties, it stops everyone else in their tracks... so no one will be able to only buy 1 property.
as for title process, it's apparently not too hard because this happened last year as well. Then I purchased two of the properties later in the year when he was ready to start selling.
Wayne Brooks, I don't remember off the top of my head what the redemption period is here in Michigan but properties that go to auction are already 3 years in back taxes and have a current tax year billed. So in retrospect, 4 years of taxes must be paid when buying at the auction. Then they can pro-rate current paid taxes when they sell the property.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
13y
Aaron, not doubting you but it makes no sense the county would take a lump sum bid for all properties, verses individual bidding on each one. Sounds like some due process issues for the previous owners. Are you saying once the "take them all" bid is entered, there is no more individual parcel bidding?
Investor · Macomb, MI · Member since 2013 · 654 posts · 115 votes
13y
Wayne Brooks, yes, exactly that. Once a buyer bids on all and has proof of the funds the County of Macomb blocks out all other bids and sells everthing to that investor.
Last year when it happened it created some serious anger amongst smaller investors. It was all over the news. Then the talk started that it would happen again this year, and it did. But with a different guy.
It makes perfect sense as well. The county now only deals with one buyer instead of anywhere from say 50 to 300 based on the 343 houses and lots they had up for auction.
Oxford, MI · Member since 2013 · 5 posts · 0 votes
13y
Aaron Yates, Have you heard anything about that same thing happening in Oakland County or is Macomb the main target because the properties (on average) are cheaper than Oakland County?
Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
13y
Who was the purchaser this year? Last year, it was the guy that owns the huge marina on the lake. The year before, it was that guru, *************.
The reason the county sells them in bulk to one guy is so they can sell them all. I was at the auction 3 or 4 years ago and half the houses didn't receive a bid. It was mass chaos. The auctioneer talked like he had a mouth full of marbles. My buddy wanted to purchase a house and couldn't understand the guy. The house received no bids after less than a second and he was on to the next house. My buddy had to stand up and scream that be wanted the last one and the guy went back to it.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
13y
Aaron, this just baffles me. If I understand you correctly, the county receives One bid on each property this way, and then bidding is closed? I assume the single bidder is bidding the minimum opening bid for each property? There are other lien holders, in addition to the property owners, that would be due any overage bid above the taxes owed. These owners and lien holders are being denied the benefit of an "open bidding" process, for the benefit of the county receiving what's owed on other properties. I understand the whole tax auction concept, and the specific rules and procedures here in Florida, but I must be missing something. I just can't see how this passes legal muster.
Investor · West Bloomfield, MI · Member since 2009 · 358 posts · 306 votes
13y
At the beginning of the auction there is an opportunity for a bulk bid. If no one buys them all then each is auctioned off individually. There are always properties that have little or no value, like landlocked swampy land and such, that don't sell. In a bulk sale the county gets the taxes paid off for everything. It is disappointing for the small investor however.
I'm not sure if Oakland County offers a bulk purchase or not, but I do know that there hasn't been a bulk purchase of all properties. Oakland county is an interesting place. You can call up the treasurer, Andy Meisner, and discuss buying properties directly. He'll sometimes even meet you at the house to discuss.
Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 1k+ posts · 951 votes
13y
Very strange, I've never heard of a bulk sale like that. Here by law they need to auction each property individually because the lien holders and then the previous owner would have a claim to any surplus funds.
Investor · Macomb, MI · Member since 2013 · 654 posts · 115 votes
13y
Ned Carey, I don't attend the auctions. I was just making a general statement in regards to smaller newer investors like me. If I was to attend and that was my only strategy I would be screwed.
Or also in the sense of all the big companies that came in and swooped up 100's of properties in South Oakland County and Macomb County and are just sitting on them and waiting for the market to keep rising. Some they rehabbed and rented but many are just sitting... waiting...
Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
13y
Why did the guru's name get blocked out from my post? He was on TV two years ago on the local news taking about all the houses he bought at the auction. It was in the newspaper too. I'm not making it up. He is literally a guru and he bought all of the houses at the auction.
These owners and lien holders are being denied the benefit of an "open bidding" process, for the benefit of the county receiving what's owed on other properties.
Excellent point. Rationales aside, it would seem to me the County has a legal obligation to get the highest bid for each individual property. Now, focusing back on the rationalization of it being better for the County to sell all the properties to one bidder, I do not buy it. Sure they save a few thousand dollars by not conducting the sale, but no one can convince me that the individual bidder that bought all the properties is not getting them at $100,000+ less than what the County could sell them at on an individual basis. But I have seen equally irrational behavior among some Colorado counties that refuse to have open bidding, and sell the large majority of properties without competitive bidding via a lottery style approach, effectively cheating the County of $50,000+ in over bids a year.
Specialist · Phoenix, AZ · Member since 2011 · 698 posts · 629 votes
13y
We may see more counties that have deed auctions go with the offering of single bid for all properties first, before auctioning off individual properties.
The main goal for the county is to get the parcels - all parcels - back on the paying tax rolls. The county doesn't care if they sell at market values. They don't profit from overbids. All they can legally get is the taxes. They need as many parcels paying taxes as possible.
A "super bidder" is on the hook for paying the taxes going forward on all properties - even the junk land.
What will be interesting to see in MI is if the super bidder last year decides to NOT pay taxes on the junk properties he had to buy in the bulk purchase. But unless you look at specific properties that you know he bought that are junk (small 2 foot wide parcels, odd shaped landlocked parcels, etc.) to see if he paid the taxes this year, then you won't know for a few years until you see if they pop up at future deed auction.
If the counties find that the "super bidders" do not pay taxes on the junk parcels, then they may reconsider the bulk purchase option.
Wholesaler · Utica, MI · Member since 2013 · 133 posts · 36 votes
12y
I did email the contact that was posted on the treasurers website to ask about a couple properties. He just said they've already been sold or offers pending... I wonder if he's talking about after the 6 months you referred to Aaron Yates or just they weren't for sale bc they're not going on the market until rehabbed? Guess ill just have to keep an eye on them. Would t mind them making them turn key if they sell belie market bc they can still make a nice profit after buying them for minimum bid.
Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
12y
I know there are differences between states/county, but what about buying from the owner, right before auction and paying off the back taxes? That would be an option for the single investor