Thinking of trying tax lien sales this year.

Tax Liens & Mortgage Notes
10yFollow

Thinking of trying tax lien sales this year.

Thomas Carney
Investor · Baltimore, MD · Member since 2015 · 8 posts · 2 votes

Last year I was told about trying my hand at tax lien sales but it was after the time that the properties tax certificates were being sold.  I saw the property list last year and they had homes still in good shape for as little as $1000 for the tax lien certificate.  This year I feel like I can get a jump on things because in my city (Baltimore) tax lien certificates go on sale May 1st.  I just want to know is it any pit falls or things I should know about before I pay my $100 fee to participate or should I just stay away because it's not worth it.  Thanks in advance for all advice!

0Reply
22 views

Most Popular Reply

Ned CareyPro Member
Moderator
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
10y

@Thomas Carney there are properties for less than even $1,000. I took a renovated property for a $580 lien. I bid $8000 but it was worth a lot more than that. I think I made $26K on that original $580 investment. 

That is the good side. Tax sale is very competitive. Good properties usually get bid up pretty high. The lower end of the market sometimes goes for just the lien amount but it is very risky.

Like any aspect of real estate investing it can be very lucrative if you do it well. There are a number of older threads here on tax sale in baltimore, that go into a lot of detail. Worth searching out.

5Reply
See this reply in the discussion

19 Replies

Jump to latestLatest
  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    10y

    @Thomas Carney there are properties for less than even $1,000. I took a renovated property for a $580 lien. I bid $8000 but it was worth a lot more than that. I think I made $26K on that original $580 investment. 

    That is the good side. Tax sale is very competitive. Good properties usually get bid up pretty high. The lower end of the market sometimes goes for just the lien amount but it is very risky.

    Like any aspect of real estate investing it can be very lucrative if you do it well. There are a number of older threads here on tax sale in baltimore, that go into a lot of detail. Worth searching out.

    5Reply
  • Mel Griffin
    Real Estate Professional · Elkridge, MD · Member since 2016 · 19 posts · 9 votes
    10y

    That no one else is on this topic is beyond me. My son is currently consulting with an attorney to explore the legality of a niche he's found in these post transactions of these TAX Deeds. Arkansas has 30 Day Redemption period on their TAX Deeds ! ************** is an on-line source for bidding on these. Legally, the counties can only keep the taxes due on these, yet the bids often go beyond the Taxes Due !  This creates an Overbid situation. The overbid balance is supposed to go to the Home Owner who has lost his or her home ! That money rarely gets to them and after a certain amount of years, the counties keep this money ! Yet, the tracers who find this money for people are thought very little of in trying to get people a large portion of this money to where it's supposed to go; at least 75% of it !

    1Reply
  • Mel Griffin
    Real Estate Professional · Elkridge, MD · Member since 2016 · 19 posts · 9 votes
    10y

    If you want the property, buy TAX DEEDS, If you want higher returns on your cash, buy TAX LIENS !  In Florida, the Redemption Period Ends, when the TAX DEED is Sold ! You get the DEED to the house almost immediately !

    1Reply
  • Thomas Carney
    OP
    Investor · Baltimore, MD · Member since 2015 · 8 posts · 2 votes
    10y

    Ned Carey thanks for the advice.  I'll take your advice into consideration.

    0Reply
  • Thomas Carney
    OP
    Investor · Baltimore, MD · Member since 2015 · 8 posts · 2 votes
    10y

    Mel Griffin thanks for the info! Good luck to your son.

    1Reply
  • Mel Griffin
    Real Estate Professional · Elkridge, MD · Member since 2016 · 19 posts · 9 votes
    10y

    Thanks, T.C. !

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Mel Griffin  the Old Joe Kaiser hooked on Overages  routine... counties are really cracking down on that activity.

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    1Reply
  • Anthony Yannucci
    Real Estate Agent · Port Saint Lucie, FL · Member since 2015 · 105 posts · 25 votes
    10y

    I like buying the tax deed versus the lien...I am still relatively new with tax deeds, but I buy in FL because you get the deed 3-5 days later.  You own it!  I am still working on trying to clear the title quicker and sell these properties but there are lots of options.  You can sell it as is right away with a quitclaim deed, you can rehab it and then sell it or you can rent it once you rehab it, and use that money to get a quiet title (which I have done on my first tax deed property).  I just purchased another one, and I am trying to sell it quick for a quick buck, but if not, it has great potential for a big profit with little rehab.  Good luck in whatever you choose, but I think there is money to be made in tax liens and deeds, but as always, you need to do your due diligence!

    1Reply
  • Mel Griffin
    Real Estate Professional · Elkridge, MD · Member since 2016 · 19 posts · 9 votes
    10y

    Making a TON of Money in these Overages, Huh; Jay ?

    0Reply
  • Mel Griffin
    Real Estate Professional · Elkridge, MD · Member since 2016 · 19 posts · 9 votes
    10y

    Crack down, Slap Down !  Counties can't make it right no matter how you slice it, that they should profit above and beyond the TAXES that are due, while forcing people out of their homes. Our Attorney will go to court, and is ready to go to court on this issue all day long !

    0Reply
  • Jeff Cox
    Hurst, TX · Member since 2015 · 34 posts · 6 votes
    10y

    @Mel GriffinI am not sure what you are exactly saying to be honest. Are you against this or for it?

    @Anthony Yannucci Can you explain in more depth what the difference in tax liens and deed are? or link some articles that explain better? I am googling it but im getting conflicting information and since you are actually doing it anything you link will be closer to the actual truth on this.. Can i just ask how much you paid for your first tax deed and how much you sold the house for so i can get an idea on possible returns?

    I appreciate it brother.

    0Reply
  • Mel Griffin
    Real Estate Professional · Elkridge, MD · Member since 2016 · 19 posts · 9 votes
    10y

    Hey, Jeff;

    I believe that Tax Deeds are the cheapest way to get Real Estate known to man ! So, for an investing option, I love these, Jeff. There are political dynamics at play, involving when the bids on these properties go above the Taxes that are due. These counties, Jeff, don't notify the families that lose the house, that the money that the county received went above the amount of the taxes that were originally due. That Overage (the amount over, the due taxes, belong to that family). The counties don't notify the families and after a certain period, the counties keep all of that money. The problem is that Legally, that Overage, does not belong to the counties and the families have no idea that they are due this money.

    0Reply
  • Anthony Yannucci
    Real Estate Agent · Port Saint Lucie, FL · Member since 2015 · 105 posts · 25 votes
    10y
    Originally posted by @Jeff Cox:

    @Mel GriffinI am not sure what you are exactly saying to be honest. Are you against this or for it?

    @Anthony Yannucci Can you explain in more depth what the difference in tax liens and deed are? or link some articles that explain better? I am googling it but im getting conflicting information and since you are actually doing it anything you link will be closer to the actual truth on this.. Can i just ask how much you paid for your first tax deed and how much you sold the house for so i can get an idea on possible returns?

    I appreciate it brother.

     Hey Jeff...no problem!  With buying liens, you are buying a piece of the property...like buying a stock in a company.  You don't own the company, but you own shares.  The liens could yield you some very good interest if purchased correctly.  It is a good investment tool.  In Florida, when the lien sale comes up, you start at 18% and then the bidding goes down.  So whoever is willing to accept the lowest interest on the lien wins.

    With a tax deed, you own the property outright and all mortgages and most liens are wiped away.  IRS liens and county liens, like the cost for the county to mow the property over the years, remains.  In FL, once an owner does not pay taxes, I think it is 2 years before it can go up for sale.  This is when the liens are purchased.  If the owner pays the back taxes, the line holder gets the interest plus what they paid for the lien.  Once the time has expired, and it differs in each state, then it goes to auction, and the highest bidder wins.  In FL, if  you are the winning bidder you get the property and a tax deed comes to your home within a week.

    My first deed I bought in Lee County for $22k, put about $25 into it, so I am all in for about $50k.  I went through a quiet title, which took 6 months, so we rented it out for $700 to help pay for the quiet title. If I were to sell it, I think I could get $75k.  With the rent this past year, we collected $8400.  It is still being rented.  Sadly, it did tie up my capital.

    I just purchased another one in December of 2015 for $40k, needs about $5k in repairs, and could easily sell it for $65 as is.  If rehabbed right, a realtor told me we are looking at low $90s.  So learned to buy, rehab and sell or sell as is.  This way it frees up my capital for the next sale.

    Now that being said, those properties came with a lot of education on tax deeds, the auction, the quiet title, and I am still learning.  Not to mention a lot of researching properties and analyzing to make sure you know what the house is worth, and what you are willing to bid and not going much higher than that.  Always buy in good neighborhoods and research the liens on the property.

    Hope this helps!

    2Reply
  • Mel Griffin
    Real Estate Professional · Elkridge, MD · Member since 2016 · 19 posts · 9 votes
    10y

    Finders Fee Agreements are 10% right ?

    0Reply
  • Mel Griffin
    Real Estate Professional · Elkridge, MD · Member since 2016 · 19 posts · 9 votes
    10y

    Attorneys always want 33%

    0Reply
  • Jeff Cox
    Hurst, TX · Member since 2015 · 34 posts · 6 votes
    10y

    @Anthony Yannucci Ok so you are talking like court steps auctions? So you just do as much research on the properties when they list what is being auctioned to see that there is no IRS lien and the hosue is worth X then go to courthouse and bid up to what you would plus estimated rehab and flip. IS this courthouse or online auction?? DO you get the quiet title so you can flip it? IF i won something like that and just did buy and hold would i still need a quiet title? im a little confused on how people get different titles but ill just look into that.

    Very informative

    0Reply
  • Anthony Yannucci
    Real Estate Agent · Port Saint Lucie, FL · Member since 2015 · 105 posts · 25 votes
    10y
    Originally posted by @Jeff Cox:

    @Anthony Yannucci Ok so you are talking like court steps auctions? So you just do as much research on the properties when they list what is being auctioned to see that there is no IRS lien and the hosue is worth X then go to courthouse and bid up to what you would plus estimated rehab and flip. IS this courthouse or online auction?? DO you get the quiet title so you can flip it? IF i won something like that and just did buy and hold would i still need a quiet title? im a little confused on how people get different titles but ill just look into that.

    Very informative

     I buy through online auctions only...makes it easier doing it from my home computer or any computer for that matter.  I look at the county's website for the tax deeds up for sale, determine which are the ones that are of interest to me, do some research online as far as location, I look at pictures, estimated value, etc...  If I like what I see, then I notice how much the back taxes are and what I am willing to bid up to.  Then attend the auction, and hopefully win the bid.  You can get the quiet title--this just clears all issues on the title and then someone who is getting a loan to buy the property will have no issues with the bank getting the loan.  This takes time and money though.  I am looking into simpler and quicker methods such as finding an investor who will buy it as is and do a quit claim deed, or now I am reading up on another method where a company will ensure the title can be insured and they can do it within 21 days.  This allows you to sell and move on much quicker.  But if you want to buy and hold, put renters in there and use some of their rent to pay for the quiet title--then you can sell if you want.

    1Reply
  • Jeff Cox
    Hurst, TX · Member since 2015 · 34 posts · 6 votes
    10y

    Awesome thats what i was expecting. Great Information thanks!

    0Reply
  • Anthony Yannucci
    Real Estate Agent · Port Saint Lucie, FL · Member since 2015 · 105 posts · 25 votes
    10y
    Originally posted by @Jeff Cox:

    Awesome thats what i was expecting. Great Information thanks!

     Sure thing!!

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free