Purchasing a tax sale tear down in Baltimore City

Baltimore, Maryland
Rehabbing & House Flipping
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Purchasing a tax sale tear down in Baltimore City

Jessica Howard
Investor · Washington DC · Member since 2016 · 26 posts · 13 votes

Hello everyone,

I came across some properties on the Baltimore City tax sale list that I considered purchasing but wanted some feedback regarding. There are 3 properties, all on good blocks.  My spouse, who has 4 rentals in Baltimore City drove the blocks and saw the properties.   The city back taxes and other liens (I purchased lien certs on each property to find out the details) are far below the ARVs for each property. Two properties had been recommended for "razing"; which I construe as being demolition. My exit strategy is to pay the taxes and then flip 'as is' to a rehabber. Has anyone had experience using this strategy in Baltimore City? Are there any investors in Baltimore looking for these kinds of deals?

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Mark Cruse
Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
4y

There are millions of investors all around Baltimore who are looking for good investments. The key is getting an investment that they will want. If the numbers work and its a decent deal you will have zero problems unloading it. However, there could be ten thousand reasons as to why investors bypass it. Suppose those units that are tears downs have an ARV that is lower than what it would take to demo and rebuild? Supposed the others are in such bad condition that the acquisition, renovation and carrying costs all exceed the ARV by hundreds of thousands of dollars? There are multiple scenarios that could make an offer undoable to most investors and that is what you must figure out! On the other hand, it may be a home run. Good Luck!

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  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    4y

    There are millions of investors all around Baltimore who are looking for good investments. The key is getting an investment that they will want. If the numbers work and its a decent deal you will have zero problems unloading it. However, there could be ten thousand reasons as to why investors bypass it. Suppose those units that are tears downs have an ARV that is lower than what it would take to demo and rebuild? Supposed the others are in such bad condition that the acquisition, renovation and carrying costs all exceed the ARV by hundreds of thousands of dollars? There are multiple scenarios that could make an offer undoable to most investors and that is what you must figure out! On the other hand, it may be a home run. Good Luck!

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  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    4y

    @Jessica Howard Most tax liens are sold at a premium… for far more than the taxes due. So factor in the high bid premium if applicable. Plus you have to foreclose the right of redemption in order to obtain title, which costs $3k+ In attorneys fees and costs on average and can take upwards of 2 years from the date of the auction, depending on the property. Perhaps @Ned Carey will chime in here.

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  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    4y

    @Jessica Howard As pointed out this is not as easy as it sounds. I wonder what “tax sale list” you are looking at. 

    The tax sale list of leftovers from the last Baltimore tax sale would have had nothing left of value. In addition to the tax lien you will have legal fees and two years worth of taxes and water bills to pay in order to take title. Then hundreds or thousands getting the property ready for sale; changing locks and clean out etc.

    As @Tom Gimer Said, (thanks for the shout out Tom) if is an upcoming sale the properties will sell for 60-80% of assessed value. This may be way to much to work for a fixer upper.

    People like me do this all the time, but it is not easy and can be quite risky. If you know what you are doing and know your numbers well it can also be quite profitable 

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  • Jessica Howard
    OP
    Investor · Washington DC · Member since 2016 · 26 posts · 13 votes
    4y

    Thanks all for chiming in.  I have a few calls out to GCs in Baltimore to get a feel for the cost to rehab and rebuild these types of properties to get an idea of my numbers. The properties I'm looking at now are from the 2021 OTC list. Two of the properties have water bills and other city liens on them.  All need major work, but the reason I am interested in them is because they are on good blocks with decent ARVs. I participated in the 2022 tax sale to learn how bid premium works as well as the process for analyzing tax sale properties in Baltimore City.  I've purchased a lien in Prince George's County MD this year and bid in the St. Mary's County  MD sale - albeit unsuccessfully, but I learned a lot.

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  • Felipe Stefanoni
    Investor · MD FL WV · Member since 2020 · 38 posts · 21 votes
    4y

    I would really take care with the location. I don't think tax liens/deeds are a bad investment, I really like them, but make sure you are on a location and at a price that supports your strategy. 

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