Tax Lien redemption period

[John Tran]

Hello all,

I want to look into tax lien sale and have a question regarding protecting your investment during redemption period.

I am in Georgia.  Here there is a 1 year redemption period during which I can't do anything to the property.  What if I purchase a house and during that redemption period the property get damaged or totaled?  What should I do to protect my investment?  If the house is totaled and the previous owner doesn't redeem the property I will end up paying a lot for an empty lot.  Scary!!!!

Thank you for any advise.

John

[Will Sifert]

Quote from @Ned Carey:

@John Tran that is one of the risks of tax sales. No one talks about risks like these but it is a real risk. You can get insurance but I don't believe you would be repaid for your insurance costs if it redeems. 

 A lot more risky with tax deed states because you pay so much more for a deed vs a tax lien. 

My general rule of thumb is I try not to buy tax liens on properties where the demo costs + legal (foreclosure) + sub taxes exceed the value of the land. 

For example if the house catches fire or a storm tears off the roof etc and it becomes something I have to pay to demolish 10-20k cost plus the legal costs here 1500-2k plus the cost of the tax lien and sub taxes. So basically I would want the land to be worth at least 25-30k so I know worst case I still don’t lose money. 

If the land is only worth 10k and you have to pay 10k+ just to clean it up (demolish, haul off debris etc) it’s a risk. 

I try not to take any risk if possible where I would lose money. But it still happens some times lol.