Bought my first tax deed land, Arizona

Tax Liens & Mortgage Notes
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Bought my first tax deed land, Arizona

Tom Wolff
Member since 2018 · 5 posts · 2 votes

Long time lurker who bought his first tax deed land yesterday!  State had acquired property almost a decade ago through unpaid tax lien, no redemption period anymore, bought the property outright for $3k.  Called local real estate agent, property is worth 40-45k ... I'm ecstatic.  It's a vacant lot and easement might be an issue, however, I'm looking into that.  Arizona will send me a Quit Claim Deed when all the bidders on all the properties have paid up and my bid will officially be approved in a few weeks.  My next step is to initiate a quiet title action to clear any issues up and put it on the market.  All fees included I'm hoping to net nearly 35 thousand on this one.  Is there anything else I should be concerned about or looking into?  Anything an experienced investor might say I'm missing?  I already have a real estate agent on it, photographing, looking into any current issues, et cetera.

Thanks!

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Randy K.
Investor · Casa Grande, AZ · Member since 2017 · 34 posts · 32 votes
8y

Congrats on the purchase! Your uncle may be right about the 27 acres for $3k in AZ claim, but numbers like that are typically seen way out in the desert, miles from the nearest town (Holbrook, Kingman, St. Johns, Willcox, etc.), and odds are good you'll need a 4x4 vehicle to access the parcel. For him to say, "Land is cheap in Arizona.", is, for the most part, only applicable to the extremely rural portions of the state. That said, Surprise isn't a bustling metropolis or anything, but you're definitely not getting land there for $111 per acre.

Surprise is a relatively well-known city in the NW portion of the Phoenix area. With your uncle being in Tempe (another city in the same MSA), I would've thought he'd be familiar with it. Unless perhaps he just recently moved to Tempe? Whatever the case, personally I'd follow through with the deal, considering the price point you're at. Raw land typically does sit on the market for quite awhile down here, but if you're comfortable with the risks and have patience, keep on keeping on.

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  • Ibn Abney
    Rental Property Investor · Chicago, IL · Member since 2016 · 318 posts · 307 votes
    8y

    @Tom Wolff Wow congrats if it all works out!! Easment is a big one though. Any utilities installed? 

    Getting ready for the tax sale in Chicago in a few weeks myself... Great motivation to keep digging through the 60K PINs.

     best of luck...

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  • Tom Wolff
    OP
    Member since 2018 · 5 posts · 2 votes
    8y

    Worst case scenario the previous owner used to own both properties before the one further back was seized, so I'm pretty confident under existing precedent that the courts would grant me easement under unity of title and necessity.  The property is right smack in the middle of a residential neighborhood so it shouldn't cost too much for a hookup.  I know there's electric at the very least.  Real estate agent said comparable dirt lots with no utilities went for 45-50k back in 2017 and the market value has only climbed since then.  I'm just getting into these types of investments and my only regret right now is that I don't have more capital to keep the momentum going.  

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  • Tim Winter
    Broker · Phoenix, AZ · Member since 2015 · 151 posts · 55 votes
    8y

    Has your agent put you in contact with some local builders in that area? Might be able to find not only a buyer, but also why someone might have passed this one up previously. When you say you bought it after state picked it up a decade ago, then it wasn't through a tax lien, how did you purchase it?

    1Reply
  • Tom Wolff
    OP
    Member since 2018 · 5 posts · 2 votes
    8y

    This was a tax deeded land auction .... which from what I understand is pretty rare in Arizona.  The tax lien auctions are pretty common but the deeded land sales are only every few years.  Real estate agent went by in person today and said realistic resale price is probably around $25k because there are pretty junky lots on either side.  She said worst case scenario it could take a year to sell because she'd need to find the right buyer ... that alone would net me nearly $22k.  I talked to local real estate attorney and he advised me I 100% have easement.  The state took possession of the property after tax lien was unpaid, redemption period expired, state seized it free and clear under a treasurers deed, and then I purchased it.  Real estate attorney also didn't think I currently needed a quiet title action.  He wanted to see the title report first.  I don't know if I should hold onto it, or sell it as is, or build on it and rent it out.  It's a .28 acre lot in the heart of Surprise, Arizona.  Vacant and residentially zoned, suburban, houses on all side.  My uncle, who lives in Tempe, told me land is cheap and to run from the deal.  "Land is cheap in Arizona.  I csn buy 27 acres for 3 grand."  But then again he didnt even know where Surprise AZ was.  I'm still convinced this is a good investment.  I haven't been in touch with any builders yet.  Is there any valid reason I should not move forward with this?  Payment is due in full by Sunday, which is only $3k.  A part of me wants to flip this at a huge profit just to prove my arrogant uncle wrong.

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  • Randy K.
    Investor · Casa Grande, AZ · Member since 2017 · 34 posts · 32 votes
    8y

    Congrats on the purchase! Your uncle may be right about the 27 acres for $3k in AZ claim, but numbers like that are typically seen way out in the desert, miles from the nearest town (Holbrook, Kingman, St. Johns, Willcox, etc.), and odds are good you'll need a 4x4 vehicle to access the parcel. For him to say, "Land is cheap in Arizona.", is, for the most part, only applicable to the extremely rural portions of the state. That said, Surprise isn't a bustling metropolis or anything, but you're definitely not getting land there for $111 per acre.

    Surprise is a relatively well-known city in the NW portion of the Phoenix area. With your uncle being in Tempe (another city in the same MSA), I would've thought he'd be familiar with it. Unless perhaps he just recently moved to Tempe? Whatever the case, personally I'd follow through with the deal, considering the price point you're at. Raw land typically does sit on the market for quite awhile down here, but if you're comfortable with the risks and have patience, keep on keeping on.

    2Reply
  • Tom Wolff
    OP
    Member since 2018 · 5 posts · 2 votes
    8y
    Originally posted by @Account Closed:

    Buy for $3k and sell for $40 ?   Are you sure?    Did you run it by experts?  Was it a one-off?  If you had $6k could you have bought two?

    Im confused.  Did you check Title before or are you just Praying nothing cloudy comes up now.

     It was a one off.  Actually, the second highest bidder was the same family that lost it to a tax lien over a decade ago.  Out of the hundreds of properties listed at the deeded land sale there were only four that looked good.  One was in a flood plain, two were out of my price range, and this was the winner.  Called state, they ran a title check and found nothing.  Independently checked title with real estate agent and it came back clear.  Real estate agent thought it was a 45k property but after seeing how it was a little recessed from the street she reassessed at 25k.  Full Cash Value for the property was listed by assessor at $21.9k.  I'm thinking I may have really lucked out.  Checked with real estate attorney on possible easement issue and he advised I automatically have easement by necessity.  Might cost me a few hundred in court to attach it to the deed if the original owner tries to block access.  

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  • Craig Castro
    Homeowner · Manteca, CA · Member since 2019 · 21 posts · 21 votes
    6y
    Originally posted by @Tom Wolff:
    Originally posted by @Account Closed:

    Buy for $3k and sell for $40 ?   Are you sure?    Did you run it by experts?  Was it a one-off?  If you had $6k could you have bought two?

    Im confused.  Did you check Title before or are you just Praying nothing cloudy comes up now.

     It was a one off.  Actually, the second highest bidder was the same family that lost it to a tax lien over a decade ago.  Out of the hundreds of properties listed at the deeded land sale there were only four that looked good.  One was in a flood plain, two were out of my price range, and this was the winner.  Called state, they ran a title check and found nothing.  Independently checked title with real estate agent and it came back clear.  Real estate agent thought it was a 45k property but after seeing how it was a little recessed from the street she reassessed at 25k.  Full Cash Value for the property was listed by assessor at $21.9k.  I'm thinking I may have really lucked out.  Checked with real estate attorney on possible easement issue and he advised I automatically have easement by necessity.  Might cost me a few hundred in court to attach it to the deed if the original owner tries to block access.  

     I'm curious to know what happened with this land.  I've been looking into tax deed investing in California and am trying to figure out if land is easier to flip than property or if they both have the same issues with the title needing litigation or special services to sell for retail on the market.  

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