What states conduct their tax lien auctions online?

Question

Does anyone know what states conduct tax lien auctions online? Thanks a ton for any leads...

Wayne Brooks · Answer

The biggest problem with tax liens/certificates being readily available online from various states, is you need to learn the laws, rules, strategies and traps for each jurisdiction.  They are a very easy way to lose money.

Ned Carey · Answer

Many of the Maryland counties have online bidding.  However Baltimore city uses a different company (grant street group already mentions) vs most of the other counties.

As already mentioned you should know the laws in the particular jurisdiction you are bidding. The laws can greatly affect the strategy you should use. Also keep in mind one of the key things to know regarding your bid is exactly what you are bidding on and more importantly you need to know the value of that property.

I see many bidders that bid based on the assessed value. In baltimore city values can be off by 300% ($35K neighborhoods assessed over $100K+

Mickey Harrison · Answer

New Orleans has one going on right now started 9/20 i think it ends on 9/22/ and there will be another in oct. civicsource.com

Jerry K. · Answer

@Lakshmi Kotagiri  @Wayne Brooks is giving the BEST warning/advice on tax lien/tax certificate investing to heed. Yes it's fairly easy to buy tax liens online but the laws in the states, and sometimes counties, vary quite a bit.  You really have to know the laws in the state/counties you are investing in.  I take a long time to learn just the laws before I jump in to a new area.  I spent 2 or 3 years looking at Florida laws and auctions before I ever bid on any certificates there.

Yes you need to register in every county auction.  I wrote a BP blog post about the nuts and bolts of most online auctions in terms of setting up accounts and providing deposits etc.  Basics for Online Tax Lien Auctions is the link to he post.

Jerry K. · Answer

Lynda,
There are some IRA custodians who will handle Tax Lien certificates, but the only way they can give you funds is via a paper check and not through ACH transactions.  Since most online auctions will only take ACH (wire transfers) of funds as a deposit and payment, you have to look to a more expensive option.

That's the type of account you describe.  You create an LLC where you are a non-owner manager of the LLC.  You open an IRA (or IRA Rollover) and buy 100% of the shares of the LLC.  Thus you own shares of the LLC just like you would buy and own shares of a mutual fund.

The IRS allows you to own shares of mutual funds. LLC's etc.  The LLC can open a business checking account.  So by buying all the shares of the LLC, the money the LLC receives from you goes into the checking account.  You as a non-owner manager of the LLC can then use that money to invest in stocks, bonds, tax lien certificates, etc.  And because it's in a checking account you control and not the custodian, you can ACH the funds to an online tax lien auction site and buy tax lien certificates and pay via ACH.

It costs money to have the LLC created with you set up as a non-owner manager.  That is where the costs can get to be a couple of thousand dollars.  There are  some companies that help you get it all set up and they charge the higher-end fees of $2k - $4k.  You need to have a custodian who will work with the setup you described.

If you are ever audited, you need to have crystal clear documentation that proves every penny that went into the LLC company was used to purchase investments.  No money can be taken out and used for personal use - otherwise it is an IRA withdrawal and subject to penalties and taxes.

I'm looking to get this set up for an IRA rollover account of my own.  I have a meeting with my accountant to discuss the best way to put this together without all the high setup fees.

Jerry

Jon Fadil · Answer

Eva-

Sounds like you're talking about two different states--are you looking at New Jersey regarding the municipal liens?  (They are not selling liens online, yet).  Often times, the property has neglected paying their water and sewer bills, but paid their property taxes.  If they are under $1500, you're only going to receive a max 8% rate.  However, buy owning the lien, you then have the right to buy subsequent liens, including the property taxes if they are not paid, and you earn 18%!

Lakshmi Kotagiri · Answer

Hi Jerry,

Do we need to register with each and every county to participate in auction?

Thanks

Jerry K. · Answer

Sophia,
There are many counties that conduct tax lien auctions online.  Several people here have mentioned RealAuctions.com which host the auctions for counties in AZ, CO, FL and more counties added each month/year.  They also host Tax Deed auctions for several counties in FL.

Grant Street Group www.GrantStreet.com creates and hosts online tax lien certificate auctions for counties too.  They are behind the huge Maricopa AZ (Phoenix) online auction.

While it may seem Illinois has online auctions, you need to look closely at the auctions.  You can do research and bids online, but to actually bid, you have to be at the county building the day of the auction.

I've been using online auctions for Tax Lien Certificates for the past few years and love it.  You can get a lot of auction data from the previous year and create a spreadsheet based on last year's results and create a bid strategy for the next auction.  I received 16% (the top rate) for all my AZ liens last year.

Jerry

Lynda Duke · Answer

I'm interested in buying delinquent tas liens using my self dir IRA,   When I moved my 401K to a self dir IRA I thought I was taking the right steps.  Now I've been getting a lot of conflicking info.  I'm now being told I need to set up an IRA LLC or a checkbook control IRA.  Before I spend any more money does anyone know where I can find true information.  I've also been quoted the cost can be from $400 to $4000.  Why the big difference?  I'm open to any suggestions about this pros and cons of this process.

Eva Marin · Answer

Hi Jon Fadil,
thanks for your comments, really helpful!

Few counties in NJ are having their tax lien sales very soon, in october.
I got some of the lists, but you have to show up and register in advance.
Most of what i saw were sewer and water bill. No sure if that is what i gonna go for.

Thanks,

What states conduct their tax lien auctions online?

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