Iowa Tax Lien Sale Online
Real Estate Investor · Indianapolis, IN · Member since 2014 · 316 posts · 165 votes
Iowa Tax Lien Sale Online
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West Des Moines, IA · Member since 2017 · 3 posts · 1 vote
7y@Kent Braaksma ... And of those two counties with less bidders than parcels, how long before the auction did you see those numbers? I ask because redemptions happen every day clear up until the auction plus new bidders could register clear up until the Thursday before, so that can really skew the bidder:parcel ratio. I know in 2018 I registered online at several counties that looked good, just to have one drop the parcels available to bid on by 30-40% (!) on the Friday before the auction - a day AFTER registrations were cut off, so I was locked in. They apparently waited until the last minute to bulk remove all their redeemed properties from the list. :(
I got several emails over the weekend (since I put in some pre-bids), receiving one just 4 minutes BEFORE the auction started stating "The parcel (xxxxxxx) has been removed from the sale for cause.". So apparently they can remove them clear up until minutes before the auction starts.
I'm also nearly positive the large institutions are bulk bidding on nearly everything, just playing the numbers game. While the auctions were under-way, you could see almost all parcels (even very poor ones) had large numbers of bidders bidding. I think 5-10% single-digit returns are fine by those large groups. That's double or triple the 2.5% CD rate. From my experience if you bid on anything in some of the smaller counties/towns, you should really pay someone to do a drive-by before paying any subsequents. Many small county assessors have large assessed lot values, when really you can't give lots away in some of these small towns as they are all migrating away.
I can tell you doing online for 3 years now, each year has been more competitive, even with many more counties going online. I think it was 30-something last year, but almost 60 this year. I know my county treasurer and this was her first year online and she loved it - much less hassle (and cost!) than holding a live auction.
On another note regarding profitability, I did research other states: NE, IN, etc ... and found that Texas Tax Deeds are my 2nd and next choice to look into. I like the fact they hold auctions every month and there are several hundred counties to choose from. This once-a-year thing in Iowa is hard to plan and budget for.
Sorry to ramble on, just hoping this info might help some folks make an informed decision ...
19 Replies
- Investor · Cedar Rapids, IA · Member since 2009 · 143 posts · 29 votes11y
I didn't realize there were places in Iowa the did online tax lien sales. I'm not familiar with the online bidding process so I'm probably not much help with your question. But proxy to win sounds like it keeps bidding down for you until you win. If multiple people do that, everything would get bid down to 1% ownership.
Personally, I don't see why anyone would think bidding down the ownership interest is a good idea. It would make foreclosing on it a big mess since you'd only end up with partial ownership. So basically it would become a gamble that they pay rather than an investment backed by good collateral.
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
could it be they were bidding down the interest rate .. not ownership.. I have never heard of any tax sale or foreclosure process that would put strangers together in ownership
but I have heard of and am familirar with the bidding down of the statutory interest rate.
its extremely common in FLA and AZ the gurus say one can make 16 to 18% but the reality is those that know the game and are bidding on for real collateral not strips of land.. will bid down the returns into the 4 to 8% range..
- Real Estate Investor · Indianapolis, IN · Member since 2014 · 316 posts · 165 votes11y
@Adam Moehn There are about 10-15 counties online. Dubuque being the biggest one. Pottawatamie was another big one (relatively). I participated in the Muscatine auction. Never heard of Muscatine but they had a lot of good properties. Even an assisted living facility valued at 1.6m.
You can put limits on your bid downs. I would imagine going below 50% would not be smart. You would want a majority ownership. Never found anything online about getting deed with partial ownership and selling it.
Iowa is pretty unique. Bid down ownership is correct.
Some bid down to 1/4 % in FL since there is at least a minimum 5% penalty
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
learn something knew every day... have to check that out... this seems to be something that could be a cluster with multiple owners who don't know each other on a tax cert or deed. I wonder how you perfect title and such?
- Investor · Cedar Rapids, IA · Member since 2009 · 143 posts · 29 votes11y
I suppose if you stay over 50% you'd at least have a controlling position. But at the one auction I've been to everything either went for 100% ownership or 1% ownership, nothing in between. I figure the people bidding down to 1% are either crazy or know something I don't. I suspect the former....
I'd definitely be curious to know how the process and legalities would work with partial ownership. I'd imagine the other owners would be uncooperative at best, since they'd probably view you as the bad guy that took part of their property. So it'd probably come down a lot of legal hurdles.
- Rental Property Investor · Saint Petersburg, FL · Member since 2015 · 33 posts · 18 votes9y
@Dennis Weber
I stumbled upon your post since tax lien sale time is upon us. I normally only invest in Florida, but I heard about Iowa and a friend of a friend has acquired quite a few properties through it. Did you ever go back and try again or find out any further information? The partial ownership is definitely confusing and there is hardly any information online. Cheers.
- Real Estate Investor · Indianapolis, IN · Member since 2014 · 316 posts · 165 votes9y
No, since a wrote this post, I've fallen in love with Indiana liens and investing in notes. I prefer live auctions to size up the competition.
- Atchison, KS · Member since 2018 · 28 posts · 7 votes8y
I participated in 2013 Iowa online auction, and most properties were bid down to 1% ownership. I think this is probably what happened in your case. Like others on this thread, I understand what a cluster it would be to foreclose on the lien in the event the owner didn't pay back taxes. I only know of one Iowa attorney who is competent and thoroughly knowledgable of the foreclosure process. I wish Iowa would change that law, but understand it was meant to help to keep people in ownership of their piece of Mother Iowa.
- Atchison, KS · Member since 2018 · 28 posts · 7 votes8y
Back in 2011, I held the tax lien on a 160 acre parcel in rural Henry County. This was from an in-person/live auction. Henry County wasn't online back then. So, after the required year and a half or two, and owner still not paid up, I started the foreclosure process. A few days after the last notice of intent to foreclose, the owner settled up with the county. Anyway, I still made more in income than the attorney fees. At first, I hired a local lawyer, but his gumption level was very low in dealing with this. I think he was behind the curve and really couldn't be bothered. I had to fire him and go with expert lawyer from DesMoines.
- West Des Moines, IA · Member since 2017 · 3 posts · 1 vote7y
@Juan Jorge I also have bought some Iowa tax liens for several years. The online auctions are extremely competitive now as you don't know how many (# of or $ value) certificates you've won until the end of the bidding window when they are all settled and last year they didn't send those emails for 15-20+ minutes. There are now 8-10+ counties per bidding window, so you could be on the hook for a lot of money - that's why I see there are a few large entities with 100+ bidder numbers now going in - and that is expensive at $45-$65 PER bidder registration. :( It almost takes an investment group to bid online now.
Can I ask the expert lawyer in Des Moines you recommend for Iowa foreclosures? You are right, if you get one not familiar with the process and does not serve notice correctly or work well with the county treasurers, the can mess the process up. And FYI - now there is some precedent that a 120 day affidavit that should be filed immediately AFTER the Treasurer’s Office issues the tax deed. This is discussed more in Iowa Code 448.15 - this can complicate how quickly you can sell an Iowa foreclosure if you want to be safe.
- Member since 2019 · 1 post · 0 votes7y
I bid on about 15 properties in Iowa this year. I bid 100% with my proxy down to various percentages on each property and some went all the way down to 1%. I didn't win any of the properties. From my understanding it is a random drawing for everyone who is tied at a certain %. Looks like most of the properties in my county went for 100% and a few went down to 90%. i dont understand why if i bid the lower percentage why it was still a random selection at a higher percentage for the proxy percentage. i thought i would have at least gotten one of them so i bid on about 15. not sure what i did wrong. any advice?
- West Des Moines, IA · Member since 2017 · 3 posts · 1 vote7y
@Chris Warren. How many bidder numbers did you have registered when you bid on those 15 properties? Just 1? You are correct, it is a random drawing for every single parcel, with all parcel drawings for a county executed in milliseconds at the end of the "bidding window", so you never see it happen.
Most counties (even the small ones) had HUNDREDS of bidder numbers attending, with more bidders than parcels in every case I saw. As I said in my previous post from a month ago (above) the online Iowa auctions is not a game for small players as your odds are very low. With the huge number of bidders you would have to register to be competitive, it can now take 8-12 months of interest just to make back your registration fees! :( (and you may never make it back if the parcels redeem too soon). I saw bidder counts on the website at may counties go up by 50, 150, or more every day or so, so we know there are large bidder blocks registering.
As far as the bid-down ... almost all other bidders started at 100% and used a 1% Proxy ("low") Bid, so there is no incentive for you to lower your starting bid as the system will automatically lower theirs to match, then whoever wins is just stuck with a lower ownership percentage if you have to foreclose and it's no benefit to anyone.
All counties I saw had almost all bidders going 100% start, 1% bottom, with maybe 5% of bidders were 100% and low of 50%, but again, I don't think it's worth bidding down to 49% to just get a 5% better chance of a win.
I did see Polk County still does live auctions, but it's very expensive. This year $100 per bidder reg fee plus $80 per bidder "agent fee" if the person bidding is not the DIRECT owner of the bidding entity - they were very strict on this in their documentation. I think that's pretty crazy. Not sure how they justify that additional $80/bidder fee.
- Runnells, IA · Member since 2017 · 16 posts · 8 votes7y
I only saw 2 counties, on-line, that had less bidders registered than parcels available. Some of them had twice as many bidders as parcels. I noticed, in one county, there was one entity that had 200 bidders registered (most likely an Investment Bank, or huge holding company). I did register in one of the counties. I placed bids on 23 parcels, some were bid down to 51%. When the auction was in process, it showed that I was tied with 6-8 other bidders on all of the parcels. I got nothing!
Over the last couple of years, the county I attend the live auction in, also has had a steady increase of bidders. Again, mostly Investment Banks/Holding Companies. I usually send 10 bidders to this auction. Normally I can buy 18-21 liens in this county and spend aprox. 18k. Everything is usually sold at 100%. This year, I could only get 15 liens @ just over 13k.
According to my calculations (with a $45 registration fee) each bidder would need to purchase $2250 in tax liens, to guarantee a profit in the second month. In the case of Polk County, the actual registration fee is $125 + $45 "agent fee" = $170 per bidder number. You would need to purchase $8500 per bidder number, to guarantee a profit in the second month.
My guess is that the strategies of these big corporations is to register a huge number of bidders, then hire some 18-20 year old school kids to go to the live auction and say "yes" anytime there name comes up, or buy as many liens as possible on the on-line auction, hoping they get more good liens than bad ones, so they can hopefully make enough to cover the fees and make a profit. If the liens weren't redeemed, they would either sell them on a secondary market, or just walk away from them, depending on the parcel.
It all seems to be playing the odds, and hoping for the best
My investors would NEVER go for that!!
- West Des Moines, IA · Member since 2017 · 3 posts · 1 vote7y
@Kent Braaksma ... And of those two counties with less bidders than parcels, how long before the auction did you see those numbers? I ask because redemptions happen every day clear up until the auction plus new bidders could register clear up until the Thursday before, so that can really skew the bidder:parcel ratio. I know in 2018 I registered online at several counties that looked good, just to have one drop the parcels available to bid on by 30-40% (!) on the Friday before the auction - a day AFTER registrations were cut off, so I was locked in. They apparently waited until the last minute to bulk remove all their redeemed properties from the list. :(
I got several emails over the weekend (since I put in some pre-bids), receiving one just 4 minutes BEFORE the auction started stating "The parcel (xxxxxxx) has been removed from the sale for cause.". So apparently they can remove them clear up until minutes before the auction starts.
I'm also nearly positive the large institutions are bulk bidding on nearly everything, just playing the numbers game. While the auctions were under-way, you could see almost all parcels (even very poor ones) had large numbers of bidders bidding. I think 5-10% single-digit returns are fine by those large groups. That's double or triple the 2.5% CD rate. From my experience if you bid on anything in some of the smaller counties/towns, you should really pay someone to do a drive-by before paying any subsequents. Many small county assessors have large assessed lot values, when really you can't give lots away in some of these small towns as they are all migrating away.
I can tell you doing online for 3 years now, each year has been more competitive, even with many more counties going online. I think it was 30-something last year, but almost 60 this year. I know my county treasurer and this was her first year online and she loved it - much less hassle (and cost!) than holding a live auction.
On another note regarding profitability, I did research other states: NE, IN, etc ... and found that Texas Tax Deeds are my 2nd and next choice to look into. I like the fact they hold auctions every month and there are several hundred counties to choose from. This once-a-year thing in Iowa is hard to plan and budget for.
Sorry to ramble on, just hoping this info might help some folks make an informed decision ...
- Runnells, IA · Member since 2017 · 16 posts · 8 votes7y
@Jeremy Goemaat...I looked at these counties the day before the auction. I don't know about the redemptions, but these were the absolute 2 worst counties in the sate to invest in.
In the county I attend live, I know the treasurer very well. She tells me that she wants to stay with the live auction as long as possible. She prefers the local investors, rather than the big corps and out-of-state investors. If a local investor acquires a property, they tend to revitalize it and get it back on the tax roll, where as, the big corp/out-of-state investor tends to let the property set.
I tend to agree with you, I have been checking the Colorado market (auctions are later in the year). Texas Tax Deeds have peaked my interest as well! That might just be the way to go, moving forward
- Atchison, KS · Member since 2018 · 28 posts · 7 votes7y
@Jeremy Goemaat
I no longer live in Iowa, but if I did I'd lobby strongly against non-small investor bidding. Small guy can do it if he is willing to go through the hassle of setting up multiple entities using Iowa's Series LLC law. Yeah, I did and all the paperwork, tax hassle, etc, plus the bid down to 1% creating uncertainty as to legal title should I have ever gotten to foreclosure, just wasn't worth it. The online bidding process plus all the yield hungry BIG investment pockets, who can afford to set up 100's of legal entities to "outbid" the smaller fries, has frozen us out in Iowa, at least in the online format. It's great revenue for the counties, so they would probably resist any efforts to shut out or severely limit the 1 percenters. I imagine it would take a concerted effort among small investors to lobby the Iowa legislature. I believe in spreading the wealth and vehemently oppose any concentration of wealth in few hands, including tax lien sales and farmland ownership.
- Rental Property Investor · Marion, IA · Member since 2016 · 150 posts · 74 votes7y
It's this perspective that kept me out of tax lien sales in Iowa. I'm not saying that you're right or wrong, as I didn't participate in any tax sales.
I spent a lot of time studying tax sales processes for Iowa and other states. In Iowa, it just seemed like a LOT of effort for a small investor with a small chance of success for exactly the reasons that you've stated @Jeremy Goemaat. - Investor · Cedar Rapids, IA · Member since 2014 · 77 posts · 21 votes6y
Linn county says they issue about 15 tax deeds a year. This means of the 2000 liens they issue, only 15 get the property after 2 years, so your chances of getting the property are pretty slim.
- Rental Property Investor · Des Moines, IA · Member since 2020 · 232 posts · 116 votes6y
At least for Polk County, where I mainly invest in Tax Certs, it's a pretty deep and active market to invest into. But the big thing with tax certs in Iowa, is you absolutely need to understand the rules of the game, and how to play the game to get any traction with this type of investment.
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