Hello to the forum community and anyone reading my first post. I have been doing a ton of research on tax liens and deeds (reading, videos, 2017 tax lien sales records, county websites ect...) My question is specific to the DMV area investors who have found success. I do not want to waste anymore time researching as I was discourage by my findings for Montgomery, Frederick, and PG. It seems that either everything is above 1K to play and or big shops are buying anything they can get hands on with no room for the individual. If anyone can shed some insight on the the following question(s) I would greatly appreciate it....
-Is it even possible to start with 1K bank roll and possibly attack lands as residential seems out of reach?
-Are the OTC liens worth spending the money to obtain and/or research endless hours to find a deal or should I wait until May/June time frame when MD sales begin again?
Anyone who responds let me express my deep gratitude as I see this as unique opportunity to be successful in with minimal to no barrier to entry. Thank you in advance and sorry for the somewhat loaded questions.
You might want to read through @Ned Carey's post. He is the tax lien king of Baltimore.
But to be honest, I think you are going to need a much larger budget. From my understanding, tax liens are a volume business.
@Arin Akopian welcome to BP
As @Russell Brazil says a $1K budget won't get you very far. There is a lot of competition for small liens. The big investors will take any small line and bid it up to a silly number on nice properties. Smaller investors bid on smaller liens because that is often all they can afford.
Our average lien is probably about $2500. In Baltimore city liens start at $500. An attorney I work with bought one for even less than that when the rules were different. He was able to foreclose and get the property. Of course that is the exception not typical results.
Even if you are able to buy some liens, most redeem and most within a few months. So while 18% interest sounds great it doesn't add up to that much money. That is especially true when you consider $100 just to register for the sale.
Your guess is correct, in Montgomery, Howard, PG, Anne Arundle and Baltimore counties you are not likely to get very far with only $1K. i have a much bigger pile to play with and I don't get much there. Usually I don't even bid except in Baltimore city.
That said I was able to make $35K on my first tax lien that was only about $1,800. That was a leftover lien in Mealtime city. The answer to your question is it worth going after over the counter liens - yes. However figure you are going to have to filter through 99.9% junk to find the rare lien worth buying. Some years are better than others.
Thank you gentleman for your replies. Does it cost money to obtain the otc lists and filter through 99% of the junk? I truly want to give it a shot with possibly land in order to start to invest.
Congrats on breaking your cherry in a big way. I'm sure research, preparation, site visits, and some calculated luck had to do with it. As the "king of Baltimore" hats off to you sir! I really want to make it work and will go through hours of research to find something that could give me good results.
Although it's dissuading to hear the truth regarding my small bank roll, I need to start somewhere and somehow even if it will take years to build a bank roll to 10K to start. I know all the research in the world like I'm doing wont substitute for some experience.
I will look at the Baltimore historical sales if they have it available and do some due diligence on what people bought. The premium bid thing in Maryland is a bit strange but I have the formula locked in excel to get what the true cost is. Who ever came up with that breakdown is a mad man.
@Arin Akopian Most counties in MD don't even sell over the counter leftover liens. Baltimore city does and the list is $10. To see historical results go to BidBaltimore.com. The site has a lot of good information about how the tax sale in baltimore city works.
Thank you sir. I will research the site in and out. I want to stay around this multi-state area to drive to targeted properties beyond the typical online research one can do.
A little off topic but have you ever invested in VA (tax Deed state)?
Does DC have anything going on?
Sorry for all the questions but I'm sure you can recall when you first started out trying to research everything under the sun to be prepare as possible.
@Arin Akopian I don't think many properties go to tax deed sale in VA. The properties are valuable enough someone usually steps in and pays the taxes. The may be some good opportunities in the more rural counties.
At this time I don't think tax deeds make much sense for you. In a tax deed auction you are buying a house. People are typically going to bid the current as is value of the house. That means you won't get much with such a limited budget. i won't say it can't happen. Heck someone always wins the lottery. There are probably better uses of your time.
DC has a tax lien system. It was changed several years ago for the worse for investors. The word I have gotten is it is just not worth the trouble. I believe it is still a live auction and I would like to attend one year just to see what goes on.
All of that said, if you are wiling to spend $100 on your education, just by participating in the Baltimore city auction, even if you win nothing, will be a learning experience. You will be better prepared next year when you hopefully have a bigger nest egg to invest.
@Arin Akopian - 1K will indeed not go very far, but do not be discouraged. Even if the property redeems, though the returns in terms of real dollars will be low, the experience you gain will help inform your planning for next steps and will either reinforce your enthusiasm to continue, or will help you determine what other direction to try. That said, with really diligent research, you can significantly raise your probability for conversion to ownership, but that is not the end of the story.
If the property does not redeem, you will have to expend substantially more funds in order to take possession. You will have to pay for the foreclosure process, plus outstanding municipal charges and interim taxes. Expect it to cost at least several thousand dollars to convert any property to ownership and build your budget accordingly.
I've also done VA Tax Deed sales and foreclosures over the years and continue to watch those. I haven't seen a really good deal in years, I live in Northern VA and the returns on investments for the risks involved do not make sense to me. I am apparently in the minority in that regard since the properties continue to sell at high percentages of market value. I'll step over the nickles and dimes and wait for the larger opportunities because the larger opportunities provide more buffer for the unknown. I do tons of research before pulling the trigger on anything.
My reco... do the research and spend a grand on a couple of inexpensive certificates. At the absolute minimum, it's a cheap education, and the upside... you might find a gold nugget.
Best wishes -
@Ned Carey I have been researching the website and will definite participate participate on the sidelines. Pretty much do my own due diligence, visit the properties, and create a target list with what I would max bid with. Just simulate the actions as if it the real thing and gain experience with the auction process. Who knows I may pull the trigger and strike lucky this coming May after getting the hang of the auction process. I extend my thanks as well as an open invitation for a drink or ten afterwards.... I sincerely thank you for your responses and parting of some wisdom.
@Keith Thompson Thank you sir. I definitely have been doing research. Like an idiot I spent the entire evening until 5am this morning researching the Mohave county auction currently happening. Thank you for the intel on the Northern VA auctions. It's logical big boys and banks are all over that. I will look elsewhere.
Another question if you could please entertain.....
Newbie question to anyone who may be reading this.....true scenario ex: .....Find a lien certificate for $100 to bid and you only can bid down percentage (AZ). Dig deeper to see that the actual tax due based on the physical mailing to the owner is almost 2K in total. Something seems strange with this or wrong as the rest of the property certificates I'm researching (300) so far the first 100 listings the tax cert matches the mailer sent to the client. Has anyone experienced this with a property? Will I be held liable for the remaining balance or is this just a mistake (rare?)on the counties part. Any insight would be extremely helpful.
I just wanted to chime in to say "thank you" - this is a very informative thread!
The responses are truly pro. It's only as informative as the quality of responses and I am also thankful for that. Still trying to solve the last question. Not much information on the net or anywhere for that matter. I sent random emails to the book and system dealers for a response as well. I expect them to follow up with pitches to buy into a system but you never know until you ask.
@Arin Akopian I'm afraid that I do not understand the question - let's parse it...
"Find a lien certificate for $100 to bid and you only can bid down percentage (AZ)." - got that...
"Dig deeper to see that the actual tax due based on the physical mailing to the owner is almost $2K in total." - I don't understand this part, If the tax certificate is $100, then it's $100. My experience is that there are always additional fees on a property such as more taxes or water or code violations or other such unpaid municipal services, but the certificate is still $100.
"based on the physical mailing"... - don't understand that either, these could be even be bills unrelated to the auction property, perhaps other properties owned by that individual... too many options to pull. Perhaps you could clarify this...
If there is a another bill due or collection of bills due that equal $2K on the subject property, the Treasurer's office can clear up the source for you if you want to pull that thread. These could include bills that were not submitted in time for the certificate sale, but are still due. In any event, the $2K shouldn't have any bearing on the price of the certificate but might impact the overall value of the deal.
Keep in mind that any conversion to ownership will involve payment of additional fees that will be due prior to recording the deed and taking possession of the property. In my experience, there can be thousands of dollars due against a property that must be paid prior to recording the deed. Budget for that.
"Something seems strange with this or wrong as the rest of the property certificates I'm researching (300) so far the first 100 listings the tax cert matches the mailer sent to the client." - I don't know what you mean here. Are you referring to the notice that the County sends to the owner (client)? If so, are you seeing those in bulk or one/two off, and how are you seeing those? I've only seen the published notices and have not seen the notices that the owners receive. As mentioned above, the discrepancies could come from many sources. I've seen discrepancies announced at the auctions and adjust my bidding accordingly.
"Has anyone experienced this with a property? Will I be held liable for the remaining balance or is this just a mistake (rare?)on the counties part." - As with most things in life... It Depends...
Sometimes, portions of the additional bills are severed by the foreclosure process. The property owner would have still been liable for them in full, but you may not be due to the foreclosure. To be clear, some of those bills won't go away, but they just may no longer constitute a lien on the property. The bills that remain due to you vs those that get severed will vary by State/County/Municipality. You'll need to research what stays and goes.
I notice your reference to AZ and I see that you live in Rockville, MD. I'd suggest you get your feet wet by trying something in your own backyard so you can visit the properties you are considering bidding on. Tax records or tax maps are good data sources, but they are guides only, they are not gospel and are incorrect way too often. Don't trust Google street view either. These data sources make great starting points, but there is no substitute for putting eyes on a property and the surrounding neighborhood.
@Ned Carey @Keith Thompson Thank you both. Very informative to someone flirting with the idea of pulling the trigger at auction this summer. I'm an experienced rehabber and landlord and that half of me doesn't want to take the risk when I have a system that works and I'm still finding deals and the other half of me wants to see what I may be missing out on.
@Arin Akopian you learn by doing. I had no idea what I was doing 2 and a half years ago when I bought my first flip, I had no idea what I was doing a year and a half ago when I bought my first rental. When I buy my first tax lien, I can't imagine I'll have much of an idea what I'm doing either but I'm sure I'll figure it out pretty quick! Take action and buy one!
I'm going to Lake County, Indiana next month for my first tax sale; but I'm also thinking about joining the online sale for Baltimore in May.
I downloaded the list, but it doesn't give much information about the properties. For example, it doesn't have the zip codes listed, so I don't know the best way/criteria to use for sorting/selection process.
Any suggestions or advice?
Thanks in advance!
@Tie Davis many lists can be tough to read. Sometimes they don't even give you the address, just the tax ID number. That is just part of the game.
Baltimore city has very good information on their list. Baltimore county gives very little. Use caution in Baltimore city the tax assessments are notoriously off.