If you've got any questions about those topics discussed in the show, be sure to ask in the comments below the show notes or in this thread so @Ankit Duggal can answer them for you.
Thanks Jerry. I am the king of bad jokes so I will take that as a compliment. You are absolutely correct that due diligence is what kills you in the business. With the right systems and spreadsheets, it can go a lot easier and once you have your market narrowed. Thanks for the listen
I am seriously Interested in tax liens auctions here in the SF Bay Area With that being said Ankit the strategy that you talked about on the podcast about how I could write my local tax office with a self addressed envelope(paid postage) to get a list back ..Is that a good place to start?Also how much capital should Will I need to really see on of these deals thru there entirety ?
@David Mora I uploaded a spreadsheet to the FilesPlace under Resources here on BP. California does allow for Tax Lien sales, but they do not currently do them. They do Tax Deed sales where you are buying the property itself. Not all states sell tax liens.
Note that tax lien statutes change all the time so you need to check the latest statutes and rules. The spreadsheet has the name of the state, the redemption period (the time the owner has to pay pack the taxes before you the lien holder can foreclose), the maximum interest rate you can earn for that state, the Bid Type (different methods of bidding are used), and Other information.
@David Mora I have been investing in tax liens online in Arizona since 2009 and in Florida since 2012. I visit the areas I invest in every 18-24 months. I live just outside of Chicago and I do online lien investing. (See my BP blog in the link in my signature line).
This was a great podcast for me since I know NJ has some different rules and I like to learn how others are making money in liens in other areas of the country. You can never know everything about liens for all the states.
Due Diligence is very important. If you can't see the County recorder information online for an out-of-state parcel, then you have go to the county courthouse in person.
If I have questions on a parcel in terms of what is actually on the parcel that I'm interested in, then I'll find somebody in that area to drive by and take a photo and let me know if there is an issue.
I do a lot of vacant land liens. There is less to worry about in terms of issues with the property and the rates you win are higher than improved parcels. But there are also drawbacks to vacant land. The cost to foreclose on vacant land is the same as the cost to close on improved land. Vacant land is usually valued less than improved land, so a foreclosure can really eat into any profits if you end up with the property and have to sell.
It can take longer to sell vacant land versus an improved property. But listen to
@Seth WilliamsPodcast number 39 for some tips on selling vacant land. I have 9 vacant residential parcels in AZ I'm foreclosing on now and my first marketing will be to offer it to the neighbors. If they don't buy, I'll market to builders in the area who may want to bank some land for a good price.
As @Ankit Duggal said in his podcast, you should pick a niche of types of property to buy liens on and become an expert in that area. I see many mobile homes and mobile home parks in the lien sales and I know there are many people here on BP that are experts in that type of investing. They probably already are looking at tax liens and tax deeds for mobile homes.
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@David Mora As Jerry stated that CA conducts tax deeds more than liens. In terms of capital commitment, that will depend on what you are going after i.e. improved land v. vacant land; and where you are going to buy i.e. urban v. suburban market. The best advice I can give in relation to your question is develop an investment strategy and that will help you define your target capital needs and goals.
@Jerry K. thank you for sharing the spreadsheet as it a very useful tool.
Great show again @Joshua D. and @Brandon Turner . I really like that the show is tackling higher-level issues now.
After the podcast I got excited about tax in Colorado and did some research - the going rate is 10% on liens, and they're being bid down to 9-9.5%. Future taxes on the same properties will also be at 10%. With other aspects of REI offering greater returns (hopefully) and the redemption period being 3 years, it doesn't seem like a great route in Colorado. Anyone think otherwise?
@Joshua D. Well, it depends. Stocks will average 8%, but that hasn't been the case the last couple years...25% +. Of course that won't last. Then there's the up to 3 years that the money is tied up.
I guess mostly I was referring to the fact that you could hopefully get much better returns in REI.
@Joshua D. Well, it depends. Stocks will average 8%, but that hasn't been the case the last couple years...25% +. Of course that won't last. Then there's the up to 3 years that the money is tied up.
I guess mostly I was referring to the fact that you could hopefully get much better returns in REI.
Agreed, thing about tax liens is the low financial barrier of entry, get a lien for $1,800, throw in another $1,800 over the next 3 years keeping taxes current, in the 35th month the owner redeems and we get 10% on the money.
Not sure I can buy many stocks with $1,800 that guarantee 10%.
Some empty property that needs work just sits there depreciating with maintenance and repairs mounting, while you wait for a deed the place can cave in. I can't really enter the property, much less make repairs nor would you want to as the owner may redeem and just say thank you.
Most here are redeemed by the owners, you won't end up with title unless the property is a liability. Environmental issues can be expensive so if they don't want them I probably don't either.
I can find a sale transaction and take control of a property and pass it on using less than money for a tax lien.
Heck, I can get an option on a note, get the loan refinanced, buy the note in a double closing arrangement and get a return on my investment that circles the moon easier than buying a tax lien, waiting and hoping, but that's me.
It may be a hot aspect in some other places, it's another way to make money but it never got my engines revving.
I'll go listen now, always up for anything new. :)
Ankit, great podcast! I live in NJ and have considered tax lien investing for a long time. Given it's a tenant-less endeavor, it's clearly attractive to those not wanting to be landlords, like me. In any case, could you recommend a basic guide/strategy around what to expect and how best to prepare to capitalize on this opportunity (homework, how much capital, bidding, continuing to make the quarterly tax payments, foreclosure, risks)? I'm ready to move on this and look forward to attending my first sheriff sale, but I want to ensure I have enough information to intelligently compete and also not make any obvious/newbie mistakes. Please let me know. Thanks in advance.
If you do get to foreclosure, I am assuming that if you want to take FULL control of the property you, as the tax lien holder, would also have to pay off the existing mortgage right?
If you do get to foreclosure, I am assuming that if you want to take FULL control of the property you, as the tax lien holder, would also have to pay off the existing mortgage right?
How does this work?
Rules vary by State, however in most states the tax foreclosure wipes out any mortgage. This is why Mortgage companies escrow for taxes included in your monthly payment. the lender wants to make absolutely sure the taxes are paid.
If I didn't say it earlier in the thread, great job by @Ankit Duggal