Colorado Tax Lien Investing
Keith ThompsonPro Member
Investor · Centreville, VA · Member since 2016 · 109 posts · 65 votesWe're heading to CO to visit our son & daughter-in-law soon and currently invest in Tax Liens in MD. As part of our effort to spend some time near them, we're looking to start up with TLs in CO. I don't see much information that is specific to CO in the forums or podcasts and thought I'd turn to the VAST knowledgebase that BP represents.
Are there some CO TL investors willing to share the low-down on the auction/OTC process and ins & outs of CO TLs & foreclosure and/or point me to a few good reference sources - either in the within the forum or via private messaging? Our desire is to end up converting some of the investments to ownership. I see that some counties in CO use RealAuction and notice that there are some auctions underway now and another starting in early Nov.
TIA!!
@Keith Thompson CO has an interest rate that is 9% plus whatever the federal discount rate is set in September. So if the federal discount rate is 4 points then the interest rate is going to be 13%. Since the federal interest rate has been kept at a low over the last few years it makes for a lesser interest rate. I believe it is currently 1.75 which will take it to 12%. The thing about CO auctions is that the liens go to the highest bidder and the bid increments are 1 dollar. So if a tax lien is 1000 and you bid it up to 1050 you have just bid almost half of the interest rate away. Think about it like this, if a property owner decides to redeem half way through the year then you will make approximately 10.00. That's not a huge net. One thing that CO does offer is "over the counter" liens or after the auction liens at the full percentage of interest and if you find one that is already past the three year redemption then you can start with an immediate foreclosure. Denver rarely has any over the counter liens so it can be very tricky in the respect that you have to wait out the three year redemption period that makes it possible for the property owner to redeem. There are many people who have received a treasurer's deed from their investment which is where you will make the most money from your investment. Let us know how the auction goes. Many are online hosted through www.realauction.com All of the CO auctions will be from October to December. The over the counter auctions are considered county held liens. You will go to the Treasurer and look for "county-held liens". Pull up the listing and research the property on the assessor's website. You will find links connecting the property you are researching take you to the tax amount where you can see what the outstanding balance is.
We're heading to CO to visit our son & daughter-in-law soon and currently invest in Tax Liens in MD. As part of our effort to spend some time near them, we're looking to start up with TLs in CO. I don't see much information that is specific to CO in the forums or podcasts and thought I'd turn to the VAST knowledgebase that BP represents.
Are there some CO TL investors willing to share the low-down on the auction/OTC process and ins & outs of CO TLs & foreclosure and/or point me to a few good reference sources - either in the within the forum or via private messaging? Our desire is to end up converting some of the investments to ownership. I see that some counties in CO use RealAuction and notice that there are some auctions underway now and another starting in early Nov.
TIA!!
Keith, so I know some folks that have bought tax liens here. Colorado is not considered a great tax lien state. It takes three years to be able apply for a tax deed and then there is a redemption period after you apply. The City and County of Denver has a pretty good web page on the process if I remember right. Over the course of time I have run into a few tax lien investors. The summary is that you invest for the interest returns (10-12% if I remember right) and if you actually get a property it's a bonus. The chance of actually owning a property from your tax lien investing is likely less than 1 in 1,000.
As you mentioned some sales are online (mostly large counties) and some are in person sales. Years ago when real estate was hot, a friend's husband went to an in person sale in the county they lived in. Almost all parcels were bid on which meant the returns were less than the 10-12%. Some parcels even sold for negative return. People were speculating that they would get a shot at the property ownership.
@Keith Thompson CO has an interest rate that is 9% plus whatever the federal discount rate is set in September. So if the federal discount rate is 4 points then the interest rate is going to be 13%. Since the federal interest rate has been kept at a low over the last few years it makes for a lesser interest rate. I believe it is currently 1.75 which will take it to 12%. The thing about CO auctions is that the liens go to the highest bidder and the bid increments are 1 dollar. So if a tax lien is 1000 and you bid it up to 1050 you have just bid almost half of the interest rate away. Think about it like this, if a property owner decides to redeem half way through the year then you will make approximately 10.00. That's not a huge net. One thing that CO does offer is "over the counter" liens or after the auction liens at the full percentage of interest and if you find one that is already past the three year redemption then you can start with an immediate foreclosure. Denver rarely has any over the counter liens so it can be very tricky in the respect that you have to wait out the three year redemption period that makes it possible for the property owner to redeem. There are many people who have received a treasurer's deed from their investment which is where you will make the most money from your investment. Let us know how the auction goes. Many are online hosted through www.realauction.com All of the CO auctions will be from October to December. The over the counter auctions are considered county held liens. You will go to the Treasurer and look for "county-held liens". Pull up the listing and research the property on the assessor's website. You will find links connecting the property you are researching take you to the tax amount where you can see what the outstanding balance is.
Thanks @Bill S. and @Josh Carr for sharing your knowledge. I have registered for the upcoming auction on Nov 6, which is online through Zeus. I'll be in Denver for a visit and intend to visit several county seats and am planning to attend 2 meetups. IRROC and one by Josh Carr. I'm also looking for a lead on a couple of Attorneys that handle TL Foreclosures so that I can set up a meeting to pick their brains. An hour or two of their time will be well worth the investment. Any recommendations in or near Denver?
Again - Thanks for your knowledge!
@Keith Thompson thanks for opening this thread. I am curious to hear about your experience with the tax lien auctions. What interest rates were most properties being bid down to? Were you ever able to talk to an attorney about the tax lien process? It would be great if we should get this thread going again as there are several Colorado counties that will be holding their auctions in the next two weeks.
In FoCo it wasn't an auction at all. You get a number and they gave us a list. The go from the front of the room to the back one chair at a time. When they get to you raise your number to buy, or say pass and it goes to the next person. I didn't end up buying anything. I was just there to see how it worked.
My experience with it is that each county has a different "personality", both in the bidding process, how much competition exists, the premium someone's willing to pay (if the county does premium bids, and let's you choose the parcel), whether it's online or in-person, and just the demand on a particular parcel too. From talking to very seasoned TL investors at some of the in-person auctions, it seems that this fluctutates too, based on the economy. The premiums I've paid vary substantially, from next to nothing, to 50% or more on the tiny parcels, but lets say, average 8-10% or so.
So this means you'll likely lose a little money if it gets redeemed the first year (many do). And yes, few actually go to Treasurer's Deed, but, particular parcels have a higher likelihood, if you're willing to do some homework. Once you get a Treasurer's Deed, most title companies consider it a cloud, and won't give title insurance for merchantability. So, you either have to quitclaim it to someone (and disclose this), hold on to it for 9 years, and the cloud disappears by statute, or do a quiet title action on it to clear it.
It's a numbers game, and a game of patience. But worth it if you have the personality for it.
Hope this helps, also, hope I'm not too late, I know most of the auctions are already done this season, but there are 2 more counties on my list this month. Good luck!
My experience with it is that each county has a different "personality", both in the bidding process, how much competition exists, the premium someone's willing to pay (if the county does premium bids, and let's you choose the parcel), whether it's online or in-person, and just the demand on a particular parcel too. From talking to very seasoned TL investors at some of the in-person auctions, it seems that this fluctutates too, based on the economy. The premiums I've paid vary substantially, from next to nothing, to 50% or more on the tiny parcels, but lets say, average 8-10% or so.
So this means you'll likely lose a little money if it gets redeemed the first year (many do). And yes, few actually go to Treasurer's Deed, but, particular parcels have a higher likelihood, if you're willing to do some homework. Once you get a Treasurer's Deed, most title companies consider it a cloud, and won't give title insurance for merchantability. So, you either have to quitclaim it to someone (and disclose this), hold on to it for 9 years, and the cloud disappears by statute, or do a quiet title action on it to clear it.
It's a numbers game, and a game of patience. But worth it if you have the personality for it.
Hope this helps, also, hope I'm not too late, I know most of the auctions are already done this season, but there are 2 more counties on my list this month. Good luck!
I am interested in Colorado tax liens and have been reading through title 39 and noticed the section that allows for a person with a disability to contest a deed issued by the treasury for up to 9 years after the date the deed was issued. I assume this is the 9 year title cloud you were referring to. Are you aware of any other situations where someone could contest the deed after it was issued (other than being disabled?). Also the quiet title suit, how involving is that? Here in Louisiana, we are not issued deeds. After the redemption period has expired we have to bring a suit to quiet title in order to receive a deed. It's a pretty simple process, but involves attorneys and takes more time. We provide notice to all parties with an interest in the property, give them a certain amount of time to file a suit to annual the tax sale (fight it) or we win the judgment and extinguish all liens. This still usually isn't good enough for most title insurance companies but it gives us merchantable title to legally possess and or sell the land.
Thanks, Will
I would like to resurrect this topic from a couple years ago.
I have been investing in tax liens in Louisiana for over 10 years and have a lot of experience. But I am aware every state is very different. I would like to start bidding on tax liens in Colorado with a strategy to acquire property and hold it. My focus will entirely be on vacant land and I will be targeting properties that have a higher chance of not being redeemed.
I have done a lot searching on BP and reading older posts and I have read through most of the title 39 sections pertaining to property tax sales. It appears the majority of counties in Colorado are now online auctions, almost all of the larger ones. I have picked out about 10 different counties I will be focusing on. I will research each of the properties I am interested in.
I understand the premium bidding and that Colorado has a 3 year redemption period. If the property is not redeemed than as soon as it goes 3 years you can request a deed from the Treasurer. The Treasurer will spend between 3-5 months to try to located and notify everyone that has an ownership interest in the property. It is my understanding if they locate someone with an ownership interest that wants to keep the property it can still be redeemed during this time - all the way up till the moment a deed is issued it can be redeemed. So technically the owner has more than 3 years to redeem the property. As the tax sale lien buyer, if I do not request a deed with in 15 years than my tax sale lien is removed.
I read where even after receiving a deed, someone could contest the deed if they are legally disabled at the time the deed was issued and they have up till 9 years to contest it, or up to 2 years after they are no longer disabled.
Is there any other situations where someone can pop up after the deed was issues to contest it?
When the deed is issued does it remove any other liens against the property? Or do you have to go through a suit to quiet title to remove other liens that may be filed against the property.
I know here liens prescribe after 10 years, so if they are not reinscribed before 10 years is up, then they are invalid.
Louisiana and Colorado are very different, the pitfalls we have here is nothing like in Colorado. I am sure minerals, mining, water rights etc are issues in Colorado that I know nothing about. Can anyone share some common "what to avoid" and what to watch out for real scenarios that in Colorado tax sales? I hate learning things the hard way and sometimes it's impossible to research everything you don't know.
I also read that in Colorado adverse possession is 7 years for deed, tax situations. I wonder if after 7 years of having a deed and paying taxes you would be good if nothing else through adverse possession.
Any feed back and guidance would be appreciated, thanks !
Bump for Colorado tax sale auctions. Several counties are now open for registration and auctions stating soon. Anyone else here bidding?
I got carried away and ended up buying about 200 liens. Anyone else buying in Colorado? There are still some sales left this year but I am tapped out.
Just saw this, and the season is over now, but, this business has WAY more competition now than even a few years ago. You're right, most auctions are online now too. There are more bidders, and, most of these parcels are getting bid up to what I'd consider crazy premiums. (Most of these redeem the first year, so, please take this into account).
The only other way someone can come back, to my knowledge, after a treasurer's deed has been issued, is if they can prove they were actively serving in the military at the time the taxes became delinquent. A quiet title can clear this claim though.
As for mineral rights, yes, if you're doing land parcels in CO, oftentimes, the mineral rights are separate, and, there can be tax liens on just the mineral rights too. Just part of the game! Also, another thing I see with land parcels is that bidders don't take into account topography - especially in the mountainous counties - some parcels look great on a map, but, in real life, they're more like a steep drop-off, and not accessible at all!
Best wishes, hope you found some gems this year!
Just saw this, and the season is over now, but, this business has WAY more competition now than even a few years ago. You're right, most auctions are online now too. There are more bidders, and, most of these parcels are getting bid up to what I'd consider crazy premiums. (Most of these redeem the first year, so, please take this into account).
The only other way someone can come back, to my knowledge, after a treasurer's deed has been issued, is if they can prove they were actively serving in the military at the time the taxes became delinquent. A quiet title can clear this claim though.
As for mineral rights, yes, if you're doing land parcels in CO, oftentimes, the mineral rights are separate, and, there can be tax liens on just the mineral rights too. Just part of the game! Also, another thing I see with land parcels is that bidders don't take into account topography - especially in the mountainous counties - some parcels look great on a map, but, in real life, they're more like a steep drop-off, and not accessible at all!
Best wishes, hope you found some gems this year!
I have had about 20 redeem already (10%). It hurts a little each time I get a check but I keep reminding myself I know that almost all will redeem, so it's part of the process. It's about what is left over after 3 years that will matter. I bid in about 12-15 counties to try out different areas, next year I will spend less and focus just on 3-4 counties.
It's likely rare, but it's in the CO statutes that if someone is disabled at the time the deed is issued they have like 9 years to try to get it back. I believe a quiet title suit would take care of that exception.
Most of the areas I bid were flat but the counties that were in the mountains I made sure to look at the topography maps and there were some that had big issues with terrain.
Almost a year later, what do your redemptions look like?
To all. I just went through a Baca county, Colorado tax lien sales auction. I am extremely puzzled on why people would bid 30%, 50%, 100%, and even 500% the face value of a tax lien. These were for property tax liens and not the mineral ones.
WHY pay such high premiums?
Note that the county pays 15%.
Again it is a Tax Lien sale and not a Tax Dead sale. It would not
make sense for the owner to do it. It would not make sense for an
investor to do it, since they will lose the premium when only the face
value is paid by either the owner or 3rd party that has an interest,
like a 1st mortgage loaner. With this county, all of the premium
gets paid immediately. Not like some places where only the face value
is paid and remaining premium paid only upon getting the deed via tax
lien certificate.
Explanation for this please.
To all. I just went through a Baca county, Colorado tax lien sales auction. I am extremely puzzled on why people would bid 30%, 50%, 100%, and even 500% the face value of a tax lien. These were for property tax liens and not the mineral ones.
WHY pay such high premiums?
Note that the county pays 15%.
Again it is a Tax Lien sale and not a Tax Dead sale. It would not
make sense for the owner to do it. It would not make sense for an
investor to do it, since they will lose the premium when only the face
value is paid by either the owner or 3rd party that has an interest,
like a 1st mortgage loaner. With this county, all of the premium
gets paid immediately. Not like some places where only the face value
is paid and remaining premium paid only upon getting the deed via tax
lien certificate.
Explanation for this please.
The counties sure are making a fortune off of property tax sales. I blame the online auctions for making it so easy for people from all of the world to bid, many of which don't understand what they are doing. Some counties are worse than others but yes, the bidding is crazy high. I participated in one today (Clear Creek Co.) Where some of the smaller tax liens sold for 866% over face value. A $72.54 tax lien sold for $701.00!!! 99% of these will be redeemed. That is a lot of money that will be lost in the hopes of getting one of these properties. And some of these the owner just purchased! Come on guys, if someone just bought the land in 2022 for $199,000 do you really think they going to forget about it and let it go? But someone paid 153% over face value, that type of property will redeem 99.999% of the time. Makes no sense. In the past I figured out who a few of these crazy bidders were and asked them a few questions and it was apparent they did not have a clue on how it works. Sad for them and for the rest of us.
@Will Sifert in Colorado do you get the premium back if it is redeemed? Who does gets the premium? Does it go to the former owner if a deed is issued?
If the premium does not go to the homeowner but goes to the county, then Colorado tax sales are unconstitutional. From what I see in this thread Colorado tax sales seem on pretty shaky ground legally.
How have your liens done and did you buy any more the next year?
Interesting to see these newer posts, and see that the crazy bidders are still out there en masse. I stopped doing tax liens a few years ago because of this. Clear Creek county used to be such a good one at one time, but you won't even come close to winning on a reasonable bid now, it looks like. I used to think that the wild bidders would learn their lesson by the next year, maybe they do, but they just seem to be replaced each year with a new batch of wild bidders!
As for the premium on these in CO - the county just keeps it! They make a nice haul too, for nothing.
@Will Sifert in Colorado do you get the premium back if it is redeemed? Who does gets the premium? Does it go to the former owner if a deed is issued?
If the premium does not go to the homeowner but goes to the county, then Colorado tax sales are unconstitutional. From what I see in this thread Colorado tax sales seem on pretty shaky ground legally.
How have your liens done and did you buy any more the next year?
The moment you buy the tax lien and pay the premium that is profit for county. They keep it no matter what happens. So they are perfectly fine with not issuing deeds as long as people keep paying them premiums. It really wouldn’t be enough money to make it worth an owner going through a process to get it. In most cases you talking about a couple hundred dollars. But for the county if they selling hundreds of tax liens that adds up to a nice windfall for them.
I agree 100%