Specialist · Phoenix, AZ · Member since 2011 · 698 posts · 629 votes
Too long for a forum post, I wrote a case study of a tax lien certificate deal I just completed on two lower value, vacant residential parcels in Arizona. It gives a newer tax lien investor an idea of decisions you need to make after you buy a tax lien in northern Arizona. I had a neighbor of the parcels want to buy my liens or the land - if I started foreclosure. I had to decide which route was better - sell them the lien or foreclose and sell them the land. It also shows how much interest you can earn on a small amount when you accrue 16% interest annually.
Wholesaler · Lehi, UT · Member since 2015 · 333 posts · 144 votes
9y
@Jerry K. Did you ever try looking at the after the auction listings on www.iltaxsale.com to review places that are available in your area? You have to purchase the listing for 25 dollars but almost all of the liens are past the two year redemption period and would be foreclosure ready. There are many tax liens available in Illinois that you don't have to compete on. If you select the county of choice and then down at the bottom of the page you will see assignable certificates and if you click on add to cart you will see how many are available in the listing before you buy it. If you like what you see you pay the 25 dollars and then purchase the liens from the listing at full interest rate. Of course these are ones that did not sell at the auctions so the listing will be limited but may be enough.
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
9y
It sounds like you are making it work where you live.
I'm SC there is only one lien. There is no foreclosure. you get your money back plus up to 12% interest or you get the county issued tax deed in the mail. It is much simpler. Also a Tax deed carries a lot of weight as someone tried to fight one I had and lost.
I understand you need to do business close to your home base.
I am getting a couple of houses every 12 months so it is paying off pretty quick.
Specialist · Phoenix, AZ · Member since 2011 · 698 posts · 629 votes
9y
@John Underwood I've been following your posts and SC seems like a friendly place for lien investing. I actually live in IL and after seeing how the auctions were run in the old days here where the best parcels ended up being awarded to only a few investors in the crowd, I stopped investing here in the early 90's. I found the online auctions in AZ about 8 years ago and since I get to AZ about every 12-18 months, I know the areas I invest in.
As you know, one of the keys to successful investing is knowing the statutes in your area. AZ has a long redemption period at 3 years, but that I'm not after the property, so it plays to my advantage of getting high interest. Owners take longer to pay back when you have a longer redemption.
This part of my investments is targeted for passive income with little oversight. Tax certificates in AZ can get higher rates for longer periods. I'm not a person who wants to be a landlord or flip properties. But I do have to be prepared in case I end up with a property through foreclosure.
There are a few other strategies in real estate that result in income producing properties that have no tenants and I look at other states to find those. SC has been on my radar based on your posts - so keep 'em coming!
Specialist · Phoenix, AZ · Member since 2011 · 698 posts · 629 votes
9y
@Roy Oliphant and @Tom Yung thanks. What I do is not for everyone, but I get questions via BP all the time from new investors so I try to share some real cases to give a sample of what it really is like to invest in liens/certificates.
Wholesaler · Lehi, UT · Member since 2015 · 333 posts · 144 votes
9y
@Jerry K. Did you ever try looking at the after the auction listings on www.iltaxsale.com to review places that are available in your area? You have to purchase the listing for 25 dollars but almost all of the liens are past the two year redemption period and would be foreclosure ready. There are many tax liens available in Illinois that you don't have to compete on. If you select the county of choice and then down at the bottom of the page you will see assignable certificates and if you click on add to cart you will see how many are available in the listing before you buy it. If you like what you see you pay the 25 dollars and then purchase the liens from the listing at full interest rate. Of course these are ones that did not sell at the auctions so the listing will be limited but may be enough.
Specialist · Phoenix, AZ · Member since 2011 · 698 posts · 629 votes
9y
Thanks @Josh Carr. I've looked at OTC liens in IL and found my time is spent better elsewhere. There are opportunities in OTC Illinois liens, but I can find returns easier in other places with better underlying properties. Tax liens are not my main investment strategy, so I try to allocate my time accordingly.
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
9y
Thanks for the interesting case study ... I've heard that this strategy, like many others, is much harder today as the profits have been all but bid out of these liens in AZ, especially in Maricopa county (Phoenix). Are you seeing this as well? Perhaps you are focused on N AZ counties where the competition is a bit tamer?
Specialist · Phoenix, AZ · Member since 2011 · 698 posts · 629 votes
9y
@David Faulkner I haven't waded into Maricopa tax sales. Lots of people with way more experience than me for the area. When I get my butt out of Illinois and into AZ full-time, then I might give Maricopa a chance. When I travel to AZ, I tend to spend more of my time in northern AZ so I know it better than Phoenix.
I post the auction results each year on BP for Yavapai and Coconino counties in the north and Pinal to the south. Example : Yavapai 2017 results post. Average rates are trending a little higher since 2013 as the number of bidders has dropped. I think institutions are falling away as interest rates of other investments are starting to move higher. The big boys can get higher returns for less work elsewhere.
I don't invest to get the property so I'm not a good person to talk about profits from tax foreclosures. Reading about the lack of deals in Maricopa for flippers and buy & hold investors seems to indicate using tax certificates for eventual foreclosures is not easy in the current market.
Any Maricopa certificate holder that is near the conclusion of the 3 year redemption period is probably seeing the owners of their underlying properties are getting prospected pretty hard by investors with cash offers "before the property is foreclosed and lost for taxes".