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Tax Liens & Mortgage Notes

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Joseph Hernandez
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Tax Lien Investing

Joseph Hernandez
  • CA
Posted Feb 4 2023, 00:54

Hi everyone!

i've come across some vacant/boarded up properties that i've been attempting to flip. During my research some of them are defaulted taxes facing auction or haven't been paid yet. I'm assuming i could pay the taxes online even against the owners wishes and either take over the house that way over time or at least earn a return on my money if they redeem. What factors are at play here? Any insight or experience is appreciated.

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Bruce Lynn#2 Real Estate Agent Contributor
  • Real Estate Broker
  • Coppell, TX
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Bruce Lynn#2 Real Estate Agent Contributor
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  • Coppell, TX
Replied Feb 4 2023, 02:49

In general not true......some places in fact don't allow others to pay taxes, not even family members.  

If you want to buy tax liens, go buy them at the auction.

Adverse possession is mostly a myth and probably more often than not a good way to get you in trouble and cost you a lot of money.  One guy pitching it around me a few years ago went to jail for several years as the police considered it breaking and entering and burglary because he changed the locks.

Just because you pay the taxes if you can, doesn't mean you own the house?   Have to get a deed for that.

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Jennifer J. Schilling
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Jennifer J. Schilling
  • Rental Property Investor
  • Spokane, WA
Replied Feb 4 2023, 04:02

1) look and see when the tax lein sale is in your county. 2) look into how long the owner has to pay the taxes back before you can begin the process of trying to claim the deed. 3) Find out how long and hard that process is. Some states it's fairly straightforward and quick, some is very complicated, expensive and can take years to pull off. Since your in CA I'm guessing it will be the later.

Have you contacted the owners directly to see if they want to sell to you (and you pay the back taxes)?

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Ned Carey
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  • Baltimore, MD
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Ned Carey
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ModeratorReplied Feb 4 2023, 11:21

@Joseph Hernandez
      I'm assuming i could pay the taxes online even against the owners wishes   .   .   .

As @Bruce Lynn not even close to true. The only way to do this is by buying the lien at the auction. You should be aware that tax lien auctions are very competitive. For a variety of reasons sometimes the bidding is such that it doesn't make economic sense and can lead to losing money. 

If you want the property the best option is to try to locate the owner and work out a deal. Keep in mind just because someone should be motivated to sell, like for a pending tax sale, that doesn't mean they are motivated. 

If you want to buy the tax lien, that can be a good strategy. I make a fair amount of money doing tax lien investing. Keep in mind here that it is not as easy or risk free as promotors would like you to think. 

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Ned Carey
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Ned Carey
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ModeratorReplied Feb 4 2023, 11:25

PS I just noticed you are in CA. If that is where the properties are, then they do not sell tax liens. They sell tax deeds.  CA tax deed sales are very competitive and few properties actually sell as tax deeds. The properties are valuable enough that most properties go through private sale before the tax sale can happen. 

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Rick H.#4 Marketing Your Property Contributor
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  • Greater LA/Orange County area, CA
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Rick H.#4 Marketing Your Property Contributor
  • Lender
  • Greater LA/Orange County area, CA
Replied Feb 8 2023, 07:36

Not so fast…
As is often the case in BP, a poster with a state-specific matter gets uniformed responses from those in other states who are applying their limited knowledge. 

California is a tax deed state and does not sell the county tax assessment liens. Each of the (58) counties holds one or more auction each year for back taxes defaulted for five (5) plus years. This is no secret.

The tax sale list(s) can and are used as a hit list for some investors and “finders” who understand that acquiring property PRIOR to auction can be a great way to find super-bargains. However, there’s much to learn in order to perfect your title ownership if you don’t purchase at auction (I never do) and the record owner is unavailable, or deceased. 

Don’t think for one moment these “abandoned” properties are easy to acquire, either. You’d best start by getting a deep education on studying California real estate title research so that you know how to abstract the record ownership, deeds, liens and history since their acquisition (by purchase) or the prior owner(s), if current owner inherited or spousal distributions. 

Some of these properties, you will discover, are actually vested (held) in a trust. Occasionally, all parties are deceased or trustee fails to act.
You’ll see in my older posts (when I was more active on BP) how I organize these opportunities using the PETITO method:

Property, Equity, Title, Interests, Threats & Obstacles, and the Opportunity (is the juice worth the squeeze?).

This is my 45th year as a real estate investor and I have specialized in working inherited property with title and other issues for well over (30) of those years. I’m fortunate because well-over 99% of my transactions are from attorney referrals as I don’t have the patience anymore to deal with people unwilling to “go deep” and invest in their RE education. 99.9% on BP will not. And it’s that 0.1% that DO get serious who make the money.


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Replied Feb 8 2023, 08:09

What resources do you recommend to "go deep" and properly educate oneself in tax lien and tax deed investing? 

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Bruce Lynn#2 Real Estate Agent Contributor
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Bruce Lynn#2 Real Estate Agent Contributor
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Replied Feb 8 2023, 12:38

@Steve Bugnacki I don't consider it a deep dive, but one way to get started is read 16% solution book.  It's a pretty basic book, but gives some overview of the concepts, difference between liens and deeds, and differences in various states.

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Replied Feb 8 2023, 12:55

Thanks, Bruce.  I will read that. Also interested in hearing what Rick H. might recommend as well.  Ned, how did you acquire the knowledge needed to do your deals in Maryland?  I am in Connecticut and have requested to be added to one town's bid list so far.

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Mat O'Grady
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Mat O'Grady
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Replied Feb 8 2023, 15:44

@Steve Bugnacki

Did you find information about buying tax liens in CT? I know that there are the foreclosure auctions held on Saturdays at the property. You buy the property though, not the lien. You can find those sales listed on Jud.ct.gov. 

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Replied Feb 9 2023, 00:08
Quote from @Mat O'Grady:

@Steve Bugnacki

Did you find information about buying tax liens in CT? I know that there are the foreclosure auctions held on Saturdays at the property. You buy the property though, not the lien. You can find those sales listed on Jud.ct.gov. 

Just found a couple towns who sell them and requested to be added to the bid list so far.

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Mat O'Grady
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Mat O'Grady
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Replied Feb 9 2023, 03:37

@Steve Bugnacki Who did you contact to learn about the tax lien sales?

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Replied Feb 9 2023, 04:04
Quote from @Mat O'Grady:

@Steve Bugnacki Who did you contact to learn about the tax lien sales?


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Replied Feb 9 2023, 04:06
Quote from @Steve Bugnacki:
Quote from @Mat O'Grady:

@Steve Bugnacki Who did you contact to learn about the tax lien sales?

I called and emailed the tax assessor's office of a couple towns near me.  One town sells liens at auction and the other one doesn't.



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Mat O'Grady
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Mat O'Grady
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Replied Feb 9 2023, 04:13

@Steve Bugnacki

Ah, thanks for the information!

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Replied Feb 9 2023, 04:16
Quote from @Mat O'Grady:

@Steve Bugnacki

Ah, thanks for the information!


 You're welcome, have you ever purchased a property at auction?

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Brian Tapanes
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Brian Tapanes
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Replied Feb 13 2023, 12:37
Quote from @Rick H.:

Not so fast…
As is often the case in BP, a poster with a state-specific matter gets uniformed responses from those in other states who are applying their limited knowledge. 

California is a tax deed state and does not sell the county tax assessment liens. Each of the (58) counties holds one or more auction each year for back taxes defaulted for five (5) plus years. This is no secret.

The tax sale list(s) can and are used as a hit list for some investors and “finders” who understand that acquiring property PRIOR to auction can be a great way to find super-bargains. However, there’s much to learn in order to perfect your title ownership if you don’t purchase at auction (I never do) and the record owner is unavailable, or deceased. 

Don’t think for one moment these “abandoned” properties are easy to acquire, either. You’d best start by getting a deep education on studying California real estate title research so that you know how to abstract the record ownership, deeds, liens and history since their acquisition (by purchase) or the prior owner(s), if current owner inherited or spousal distributions. 

Some of these properties, you will discover, are actually vested (held) in a trust. Occasionally, all parties are deceased or trustee fails to act.
You’ll see in my older posts (when I was more active on BP) how I organize these opportunities using the PETITO method:

Property, Equity, Title, Interests, Threats & Obstacles, and the Opportunity (is the juice worth the squeeze?).

This is my 45th year as a real estate investor and I have specialized in working inherited property with title and other issues for well over (30) of those years. I’m fortunate because well-over 99% of my transactions are from attorney referrals as I don’t have the patience anymore to deal with people unwilling to “go deep” and invest in their RE education. 99.9% on BP will not. And it’s that 0.1% that DO get serious who make the money.



 Hi Rick! I want to "go deep" . Where can I go to research like the 0.1% did? 

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Mat O'Grady
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Mat O'Grady
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Replied Feb 13 2023, 15:54

@Steve Bugnacki

I have gone to a few, but I haven't bought anything from them. @Kevin Scanlon has bought a couple from them.