County Tax Sales: How To Speak With Owners

Investor · Venice, CA · Member since 2016 · 163 posts · 49 votes

I've noticed that a tax sale in a particular county I invest in has hundreds of properties listed on the county site. Weeks before this number starts to drop. The week of only a fraction of these homes are still on the list.

I attribute this to a couple of things, but I could be wrong:

1. People pay their bills

2. Investors scrub the lists, make contact with the owners and make a play to purchase the property before the tax sale.

If the 2nd is true, does anyone have a success rate or strategy they like for acquiring these delinquent property owners? (I'm looking at you @Ethan Summers )

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

number 1 is what is done 99% of the time

number 2 is 1%

number 3 is lender steps up and pays tax's before the property is lost and adds it to the mortgage

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
number 1 is what is done 99% of the time
number 2 is 1%
number 3 is lender steps up and pays tax's before the property is lost and adds it to the mortgage
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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
8y
Michael,
1. Yes people do pay these at the last minute, crazy but that's what many people do.
2. This happens to a smaller degree. I have done this and gotten a couple places cheap or literally given to me. Many of these people can't be reached and you would need to skip trace them when their letters come back undeliverable. It is a list of potentially motivated sellers.
Two years ago I ended up making loans to people that didn't want to sell. I got a REALLY good interest rate. I made them Quit Claim their property to my ROTH IRA and my Roth gave them a land contract to buy their house back. Land contract says it is cancelled if they miss 2 payments. My ROTH wouldn't have to foreclose because they already deeded it to my ROTH. So far they are all paying like clockwork. One sold their house cheap to someone and paid me off early. I missed that opportunity. I will add in a first right of refusal to purchase to the Land contract if I do this again.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
@John Underwood that would not be legal in many states IE miss two payments and your out..
did you check that with a lawyer.. but regardless that's a nice way to set those up.
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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
8y
Originally posted by @Jay Hinrichs:

@John Underwood that would not be legal in many states IE miss two payments and your out..
did you check that with a lawyer.. but regardless that's a nice way to set those up.
Jay, I used a local attorney to create the document and they filed it with the county register of deeds.
They fully explained this to the person borrowing the money.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
@John Underwood I get it .. just saying in our state that would not fly... judge would make you go through full foreclosure so buyer had his rights to cure..
Just like in some states you can do an eviction in 30 days some it takes a year ..
or in some states like GA you can foreclose in 90 days or less and in New York it can take 3 to 5 years.
just commenting in general that's all.
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Mike Hartzog
Lender · Redmond, WA · Member since 2014 · 553 posts · 490 votes
8y
@John Underwood I like your creative approach. I suspect you find many of these properties with little or no equity. Is that the case?
@Jay Hinrichs - Agree that land contracts can be problematic from legal and other perspectives as well. What is your view on using mortgage/DOT with a pre-confessed DIL? I suspect these would be frowned on by the courts in a consumer scenario as well but have never looked into it much. I have seen them used on commercial loans from time to time.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @Mike Hartzog:

@John Underwood I like your creative approach. I suspect you find many of these properties with little or no equity. Is that the case?
@Jay Hinrichs - Agree that land contracts can be problematic from legal and other perspectives as well. What is your view on using mortgage/DOT with a pre-confessed DIL? I suspect these would be frowned on by the courts in a consumer scenario as well but have never looked into it much. I have seen them used on commercial loans from time to time.
I know pre signed DIL s are common with some hard money lenders but out here on the west coast those would not fly.. and really.. the DIL is valid the day you execute it.. so when you do the loan and execute the DIL you have legally given it back the day you bought it.. just because the doc is not recorded does not make it invalid..
we know this chasing down old deeds that were never recorded right ????? :)
I suspect if an owner pitched a fit he would get this scenario over turned and the owner would have to go through the legal motions to foreclose.
I know in Oregon if you record a lease option and have a fight the judge with require a full blown Sherriff sales which takes a year..
I don't care what attorneys say some will say its fine but it not their money on the line. I have learned this the hard way.. attorney can argue a point of law but if the judge see's it another way.. does not matter or a regulator..
What folks that do these deals rely on is unsophisticated buyer who is really a glorified renter and just folks their tent..
that's my experience . as well.
Now on to more important things are the Springers running yet ???
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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
8y
Originally posted by @Mike Hartzog:

@John Underwood I like your creative approach. I suspect you find many of these properties with little or no equity. Is that the case?
No not at all. All of the ones I am dealing with have no mortgages or liens against them. I then get the property Deeded to my IRA. It then owns it. If they don't pay me back I don't have to foreclose on a property I already own. Then and only then do I pay off the back taxes and sell back the property for the cost of the back taxes pus interest.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @John Underwood:
Originally posted by @Mike Hartzog:

@John Underwood I like your creative approach. I suspect you find many of these properties with little or no equity. Is that the case?
No not at all. All of the ones I am dealing with have no mortgages or liens against them. I then get the property Deeded to my IRA. It then owns it. If they don't pay me back I don't have to foreclose on a property I already own. Then and only then do I pay off the back taxes and sell back the property for the cost of the back taxes pus interest.
that's a good approach.. although I would think you have to pay some tax's so its not lost.. in essence your just buying the property from the owner and leasing it back..
our state Oregon and I think WA and CA out lawed that as it relates to foreclsoures not sure about tax sales. No more foreclosure rescue lease backs.. that was one of my favorites for years until they made it illegal in 2007.. severe penalties
although out our way improved properties rarely if ever get that far.. I can see this working in older areas of sub prime type properties for sure.. way to think it through !!!
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Mike Hartzog
Lender · Redmond, WA · Member since 2014 · 553 posts · 490 votes
8y
@John Underwood - In the defaulted notes investing space I have run into liens which were the result of lending to pay off delinquent taxes. I think it is a valid and useful service for folks who get into trouble with taxes. As I recall, there were some large companies doing it (Midland comes to mind), but the liens were not of DOT/Mortgage type. Perhaps UCC, but not sure.
@Jay Hinrichs - Not sure about the springer fishing this year. I typically wait for king season to open in mid July.
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Rachel H.
San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
8y
@Michael Glaser Most I've known to go this route buy at the tax sale. There's some opportunity before the tax sale but it's a lot of work to find/talk to these people and make contact. Like anything, those I've known to be successful in this niche become regulars at multiple tax sales. Good luck!
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