Tax Liens, anyone successful investments?

Question

I'm interested and Tax Liens. I've heard it's one of the best ways to save money and make interest. Has anyone successfully invested and made a profit?

Thanks

John

John Underwood · Answer

Yes I have been successsful with Tax liens.

I have 15 rentals that I bought over the last 10 years at Tax sales. They mostly all still have the tax deed as I saw now reason to do a Quiet Title.

John Underwood · Answer

Jay,

What this means is that in 10 years the cloud from the title will expire and you will own the property essentially as a general warranty deed. I can also usually get a QC deed from previous owner and a line release from bank if there was a mortgage. I have done this with Bank of America, JP Morgan and I am working on one with Fannie Mae. Then I can get a title insurance policy.

SC also mails me the deed to the property after the 12 month redemption period expires. I don't have to foreclose or do anything other to wait for deed to show up in my mailbox.

John Thedford · Answer

@William Jones

Yes Florida tax lien certs start bidding at 18% and go down. If you are buying tax lien certs at 18% I would question how? Usually there is a lot of competition. I do know that on certain properties there is no interest due to the property characteristics. Almost everything we see in our county gets bid down to .25% but there are a few with no takers. I believe the counties sell these over the counter. How long have you been buying them, how many have paid off, and have you forced a sale on any of them? Thanks.

Jay Hinrichs · Answer

@John Underwood  John did you see the Answer William gave.. it appears your SC tax liens will sunset in 10 years and you will not longer own the homes... I guess that's Ok in some repsect as you probably made a killing on rent.. but do you think you will go ahead and perfect title? or do you think the old owners and tenants will never know the difference and you will just keep on collecting rent.

William Jones · Answer

I do Lien investing in Florida (18% return is why) and tax liens in Florida expire after 7 years.  It means that after 7 years, the lien simply expires, goes away.  To prevent this, one must call the lien, that is, force a tax sale of the property.  The tax is sold at auction and the investor is repaid.  This is different state to state.

I looked up South Carolina and here is the statement in the state revenue laws:

"South Carolina has issued a revenue ruling stating that a tax lien filed by the South Carolina Department of Revenue expires 10 years after it is filed with a clerk of court or register of deeds. Upon expiration, the tax lien is no longer enforceable in any manner and is no longer an encumbrance on any property of the affected taxpayer.(Revenue Ruling 15-6, South Carolina Department of Revenue, June 25, 2015)"

So it appears to be 10 years in SC.

Jay Hinrichs · Answer

@William Jones  can you expound on your statement that tax liens in SC expire in 7 years.

Does this imply that if you do not quiet the title within 7 years of buying the tax lien the lien goes away and you no longer have any interest in the subject property?

I have a couple of quiet titles going in Charleston right now.. and want to make sure of time lines.

Ned Carey · Answer

@John Benn yes, I basically make my living on tax liens. There are a number of investors who are tax lien experts here on BP. So you can get a lot of good advice and some specific details of how to invest in many states here.

They can be very good investments but they are not as easy and risk free as many that promote them would imply. What Warren Buffett described would not apply in the vast majority of states. And they are sold at auctions which can be very competitive.

John Benn · Answer

Thank you for the information. Please let me know how I can return the favor and contribute to your knowledge.

Thank you!

John

William Jones · Answer

Just don't forget, most expire in seven years.  Its a little known fact.  Return is great though.  Just know what you are buying.  Same due diligence as with most investments.

Tax Liens, anyone successful investments?

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