Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
I bought a tax lien against a lot at the local tax sale last year.
It had a 22k FMV. I talked to the previous owner after sending them a letter and found out they were not planning to redeem the property. I didn't really want the lot as I prefer houses that I can quickly rent out after the deed shows up in the mail.
11 months had passed and in 30 days or so I would end up owning this lot.
So I advertised on CL and on the local Real Estate Club Yahoo Group email.
I offered to sell the lien on the property since I did not own the property itself yet.
I had less than 3k in the property and sold the lien for 5k. There were no closing costs, lawyer fees or even recording fees as the Tax office just reassigned my Tax lien to the person who bought the lien from me.
Not a bad return on my money!
The person buying the property from me plans to do a Quiet Title Action and sell the property on MLS.
We have seen large institutional investors too, making BIG rookie mistakes. I went to the tax office and asked who could answer a few questions, within a few minutes I was able to do the research and try it out. Started small and learned more each year, now up to hundreds of properties being purchased and just under 50 maturing each year...best to you. Just an fyi, late night info commercial inspired me to pursue but educating myself was the key!
We had a very profitable month with tax liens, had 45 mature, sold 43 to reseller at 24% return, sold one back to company that lost it, final one we are doing a lease purchase. Last two were very large roi's...
To learn the basics about tax liens I took a tax lien attorney to breakfast. Since then I have read the state tax lien statutes many times. I have been doing this for 10 years and have improved the way I do things every year.
Because I know the laws so well, I have been able to make deals happen that others wouldn't know how to approach.
@Joe Bertolino Be certain to recognize that state laws vary greatly.
Ned is willing to study and invest in his education and has drilled down into the effect on title in each state he works. Learning title is critical before risking serious money (money you can't afford to replace).
CA is a Tax Deed state and there are some debts that are super-priority liens and not necessarily wiped off by tax sale.
Other investors (in your own greater Sac market) use tax sales as triggers to chase owners prior to sale. Others track sales and pursue overbid (surplus) funds from sales.
The best investment you'll make is in your education.
Ned Carey
Thanks for the response. The complexity is what attracted me, it a barrier to entry that probably cuts out a huge percentage of your competition. Same with probate issues.
Ned Carey Rick Harmon
Thanks for the response. The complexity is what attracted me, it a barrier to entry that probably cuts out a huge percentage of your competition. There will always be competition but I suspect the investors that know the dirty details inside and out get into deals with much larger margins than those that don't.
Thanks for the response. The complexity is what attracted me, it a barrier to entry that probably cuts out a huge percentage of your competition. Same with probate issues.
Actually in my area the complexity is not a barrier to entry. It is a barrier to making money. We see a regular pattern, new investor comes in and bids too high. They don't realize the mistake or losses until 2-3 years later, then they pull out. This often as not is big money that thinks they are being smart.
We have seen large institutional investors too, making BIG rookie mistakes. I went to the tax office and asked who could answer a few questions, within a few minutes I was able to do the research and try it out. Started small and learned more each year, now up to hundreds of properties being purchased and just under 50 maturing each year...best to you. Just an fyi, late night info commercial inspired me to pursue but educating myself was the key!
Mississippi is great place to invest if you want passive income from rentals! I would like to learn more about tax liens myself and I don't live so far from Hattiesburg. But it would need to be lunch, not breakfast.
not exactly on this conversation just a general question is it still in these days 20 & 30 cents on the dollar deals or due to the competition out there it something more like 60 & 70 cents on the dollar?
Yes there are still deals to be had. The key is due diligence and not getting emotionally attached to a property and holding out for the diamonds in the rough.
Smaller counties have less competition and therefore typically better deals can be had.
Yes, half priced and lower if you can see beyond a mess, furniture, lawn, sometimes just wait the bank out! This took 9 months, stayed firm on price, finally agreed but they said can you close in 6 days, of course I can, needed lawn mowed, interior clean and paint, had it rented in just a few days!!!
not exactly on this conversation just a general question is it still in these days 20 & 30 cents on the dollar deals or due to the competition out there it something more like 60 & 70 cents on the dollar?
Yes some deals are 20-30 cents on the dollar. I did one last year that was 2 cents on the dollar! But I have also done some that were 120+ cents on the dollar and lost money.
I am going to have to increase my meal and travel budgets.
Either that or move to Mississippi. I live in a 1700 square foot house which I purchased for 30K with a loan from my solo401K. Can you do that where you live?