First time tax lien purchaser from WV

6 Replies

Hello, I'm new to the forum and new too any type of real estate investing. I've spent a few years buying items from auctions and selling online but I'm looking to get into something bigger. I've done a lot of research on the tax lien process which is coming up in two weeks in my county. I've also done research and visited approx 50 properties in interested in. I have about 5k cash to throw into this adventure. Just looking for any tips to become successful. My game plan for my first time is too not get into an overbid scenario. Only buy property with no homes with em the the exemption of 4 I've looked at. In wv there is an 18 mo redemption period with a 1% return per month I hold the lien. Thanks for everyone help.

Mike, I don't know anything about West Virgina tax liens, but 12% interest with an 18-month redemption sounds pretty good. Here in Arizona, it's a reverse auction that starts at 16% and can be bid down to 0% with a 3 year period before foreclosure. 

Keep in mind that my experience is with AZ. My strategy is I buy for the return of interest not expecting to get a property. It is unlikely to foreclose on a property through a tax lien, I just look at it as a rare bonus. Many amateurs bid a lien down to 0% thinking they are going to pick up that multi-million dollar home for $10,000. Unfortunately, they don't realize that many people purposely let properties go to the tax lien auction because they get the equivalent of a low or interest-free loan and will pay it off before the foreclosure period ends.

Many people also make the mistake of buying worthless junk at tax lien sales, especially land. Often times the owners let the taxes go because it can't be built on and they don't care if someone forecloses on it. Some examples: Floodway or no legal access properties, toxic dump sites, and HOA common areas. There is a recent funny situation in California where someone purchased a private driveway to over thirty multi-million dollar homes and is going to charge them for parking. I think I would install a toll gate! :) http://www.latimes.com/local/lanow/la-me-ln-presidio-terrace-purchase-sf-20170808-story.html

I would start small and not throw your whole five grand in at once. Learn how the process works, and as you get experience then start investing more. 

Good luck.

Thanks Matt. I live in a semi rural area so that's the reason for going after land more specifically. 1.) if I do end up getting a deed it seems like a much simpler process too obtain full ownership and 2.) A lot of people have property in this area and live in other states. I am also looking at it for the return of interest but would like to eventually take ownership of land to build a house on or a small lot along the river to have a nice getaway close to home for the weekends I am off. Do you have a lawyer handle your title and lien search or do you perform them on your own ?

@Mike Bell make sure you know the rules. Know how the laws affect your return and costs to acquire a property. 

It is not practical to do your own title work.  If you screw up you have bad title, and even if you do it correctly no one will give you title insurance. In many states, MD for example, the owner has to reimburse you for any legal fees. So doing your own title work only saves you money if you wind up getting the property.

@Ned Carey WV also requires the owner to reimburse legal fees and those fees are also subject to interest. There is a large amount of properties being sold at once due to it being an annual sale so I'm only going to go after properties that I wouldn't mind keeping for myself if the slim chance that they don't reclaim the property. This will be my first sale so I'm not sure of the competitiveness for these liens so I have comprised a list of more than I can afford as sort of a back up plan. If everything goes well and its something I enjoy and gain more knowledge in I would like to branch over into MD and VA with some other funds I have available since I am not far from either of those states, but that's a bit down the road since I'm not sure of the laws in either of those states.

@Mike Bell

I have comprised a list of more than I can afford as sort of a back up plan.

That is a good plan. we only win perhaps a fifth of the properties we bid on. If you limit your biding to a small number of properties the odds are against you.  Good luck.

Originally posted by @Mike Bell :

Thanks Matt. I live in a semi rural area so that's the reason for going after land more specifically. 1.) if I do end up getting a deed it seems like a much simpler process too obtain full ownership and 2.) A lot of people have property in this area and live in other states. I am also looking at it for the return of interest but would like to eventually take ownership of land to build a house on or a small lot along the river to have a nice getaway close to home for the weekends I am off. Do you have a lawyer handle your title and lien search or do you perform them on your own ?

 I do my own research. I used to do a lot of land sales, so I have experience researching parcels. 

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here