Any advice for Tax Lien starters?

Tax Liens & Mortgage Notes
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Any advice for Tax Lien starters?

Jack Zuchars
Real Estate Investor · Brooklyn, NY · Member since 2011 · 21 posts · 0 votes

Toying with the idea of tax liens. Mostly because it seems to involve somewhat lower cash outflow. My questions to the group are,

-what should I absolutely watch out for?

- I've heard FL and TX are good states to start with tax
liens, is it true? Any advise here?

- I find it hard to believe someone who is behind on
property taxes will pay the lien holder back taxes and
15-20% interest! Do Lien holders almost always end up
evicting the owner? Isn't that a long process?

Thanks again.

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Adrian G.
Real Estate Investor · Chicago, IL · Member since 2008 · 318 posts · 30 votes
15y
Originally posted by Joe Donohue:

- Don't buy a lien on a property that you have not seen! I think this is the golden rule for tax lien investing.

Where did you pick up this "Golden Rule" from? I been buying tax liens for a few years and even though I have been to a few properties locally I can honestly say that I almost NEVER go see the properties that I acquire. Although I must say, I do a ton of research before I buy a lien.

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  • Joe Donohue
    Real Estate Investor · Cincinnati, OH · Member since 2010 · 26 posts · 7 votes
    15y

    Jack

    - Don't buy a lien on a property that you have not seen! I think this is the golden rule for tax lien investing. Also, be careful with parcel numbers, be attentive at bidding, do your homework prior to sale, follow the state guidelines.

    - At least if you are just starting out, start in your own state or nearby state. Where are you located? Both FL and Texas are great but the competition is fierce.

    - Yes it does happen. The process is state mandated. And it can take a really long time.

    Hope that helps. I recommend you read what you can, go to a couple auctions in your area and get a feel, then get involved.

    Best,
    ~Joe

    1Reply
  • Stephen Moore
    Real Estate Investor · Lake Charles, LA · Member since 2009 · 271 posts · 52 votes
    15y

    joe i see that u are a lien and deed investor,where all do u invest and do u take over the property or get the interest monies

    0Reply
  • Kyle Meyers
    Residential Landlord · Indianapolis, IN · Member since 2010 · 592 posts · 138 votes
    15y

    Make sure you see the property, they could be inacessible or the property could be very damaged. Also, be sure you know the process for your state. In many places you will need to pay immediately after buying and will not be allowed to leave the building to get funds. There is usually some notification involved to make sure you can get the deed if they don't redeem.

    If there is much equity or if there is a mortgage it is more likely the lien will be paid off. If the taxes are 1% of the assessed value and they have to pay the interest and fees it would still probably not be any more than 2 or 3% of the assessed value so it is in many owners interest to pay the lien to keep their property.

    0Reply
  • Account Closed
    Private Financing Consultant · Honolulu, HI · Member since 2010 · 132 posts · 27 votes
    15y

    Look for the properties that you think the owners would want to keep otherwise the owners could rather let go of the properties than to pay the lien off.

    0Reply
  • J G.
    Lien Investor · Elko, NV · Member since 2010 · 8 posts · 1 vote
    15y

    I don't think you'll be able to buy liens in TX...I believe you need to be approved to do so in the state and those approvals are pretty limited.

    If you're just starting out, I would stick to buying tax liens on better quality properties. You'll probably get redeemed out by the taxpayer quickly, but it will limit your risk.

    0Reply
  • Annelise A.
    Homeowner · Walla Walla, WA · Member since 2010 · 82 posts · 21 votes
    15y

    My advice is this:
    1. Find out if you want to do a Long Term strategy or Short Term. By this I mean, do you just want to recoup your cash or do you want to use the lien as a start into rentals.
    2. If Long Term... Get a lien where the owner doesn't have a mortgage. They will be less likely to pay the lien back if that is the only thing they owe on. If short term, go for lins that have mortgages, are newly purchased, or are owned by younger people.
    3. Do your due dilligance. Always always ALWAYS see the property before purchasing the lien. If you're not careful, you could end up buying a lien on a house that is half demolished by a tornado or something... No good.

    Also, read up on the property as much as possible. Hope that helps!

    0Reply
  • Jack Zuchars
    OP
    Real Estate Investor · Brooklyn, NY · Member since 2011 · 21 posts · 0 votes
    15y

    Thanks Guys. Keeping it local definitely seems to be the consensus here. At least for newbies. I need to attend a few auctions before making a real purchase. thanks again.

    0Reply
  • George P.
    Real Estate Investor · Baltimore, MD · Member since 2008 · 1k+ posts · 268 votes
    15y
    Originally posted by Jack Zuchars:

    - I find it hard to believe someone who is behind on
    property taxes will pay the lien holder back taxes and
    15-20% interest! Do Lien holders almost always end up
    evicting the owner? Isn't that a long process?

    Actually, it's the exact opposite, most of owners redeem, and the majority will redeem rather sooner than later to avoid paying much interest.
    0Reply
  • Lynda Duke
    Vancouver, WA · Member since 2010 · 78 posts · 15 votes
    15y

    I'm also looking to invest in the delinquent tax liens. I've been doing research for a few months now and still feel I have tons to learn. Any good advise for someone just getting their feet wet would be appreciated. I've been looking into Fl, AZ mostly because I heard that you can buy the county held liens instead of waiting for the yearly auction to come around. Some times these have been referred as over the counter.

    0Reply
  • Adrian G.
    Real Estate Investor · Chicago, IL · Member since 2008 · 318 posts · 30 votes
    15y
    Originally posted by Joe Donohue:

    - Don't buy a lien on a property that you have not seen! I think this is the golden rule for tax lien investing.

    Where did you pick up this "Golden Rule" from? I been buying tax liens for a few years and even though I have been to a few properties locally I can honestly say that I almost NEVER go see the properties that I acquire. Although I must say, I do a ton of research before I buy a lien.

    2Reply
  • Lynda Duke
    Vancouver, WA · Member since 2010 · 78 posts · 15 votes
    15y

    What states/counties would you recommend for someone just starting. does anyone use a SDIRA LLC I'm looking to set one up.

    0Reply
  • Adrian G.
    Real Estate Investor · Chicago, IL · Member since 2008 · 318 posts · 30 votes
    14y
    Originally posted by Lynda Duke:
    What states/counties would you recommend for someone just starting. does anyone use a SDIRA LLC I'm looking to set one up.

    Lynda,
    Well that all depends, when you say you will be "starting out" does that mean you will be doing 1-2 liens or 20-30 liens? There's no point in spending money you dont have and definitely no point in making things harder when it doesnt have to be.

    0Reply
  • Sherry Lewis
    Rehabber · Fort Walton Beach, FL · Member since 2011 · 240 posts · 48 votes
    14y

    If you are going into tax liens just to build equity and "hope" that someone doesn't pay then you might also consider bird dogging or wholesaling. These are 2 other ways to get started into real estate without using your own money. Just a thought. You will make more money going one of these 2 routes.

    0Reply
  • Stephen Moore
    Real Estate Investor · Lake Charles, LA · Member since 2009 · 271 posts · 52 votes
    14y

    Adrian from talking to u several times before about this because I know youre so successful wih it,what recommend starting out with as far as numbet of luens concerned? id be wantibg to flip these for profit as im pretty sure u know

    0Reply
  • Adrian G.
    Real Estate Investor · Chicago, IL · Member since 2008 · 318 posts · 30 votes
    14y

    Well you have to take into account every lien/property is different, some properties that I purchase tax certs for only have 1-2 liens, then another can have 3-4 or even 5 in some cases. I usually buy the liens/certs that are 2 years prior so that I can immediately file the tax deed app (if you file the tax deed app you must pay all past due tax liens) If there is 5 liens at $100.00 a pop then you owe $500 plus tax deed application fee, REMEMBER, I prefer not to get my money back and to acquire the deed so I can sell the property immediately (99% of the time I get the property). Also remember that once you file the tax deed app it can take 2-3 months to get the property via tax deed. Now when I first started I did 2 or 3 cheap ones ($400 total including tax deed app fee) at the same time and then moved on to do more.
    So finally I put my self in a position where I am getting deeds every month and I turn around and sell them (wholesale)online.

    @Stephen to answer your question, I guess it all depends on what your budget is. I like to buy a bunch of cheap liens where I believe the properties will sell for double and even triple its value...

    Believe it or not, I have purchased tax liens where I was $400-$500 in the whole, the land was valued at $900.00 (You know I love doing land) and the property sold at auction for $1,700.00. There was another case where a lot of mine sold for almost $3,500.00. The online market never ceases to amaze me.
    Now some of you might say YOU spent $500.00 waited 3 months and only got $1,200 bucks???? (1,700-500= $1,200...It varies). Yes I did that, now times that by how many properties/liens your doing and think of your profit.....MONTHLY.

    0Reply
  • Stephen Moore
    Real Estate Investor · Lake Charles, LA · Member since 2009 · 271 posts · 52 votes
    14y

    Hmmm basically your budget permits everything as youre making majority of yours in volume,hence making a dollar outta 15 cents.

    0Reply
  • Joshua Houchins
    Real Estate Investor · Raleigh, NC · Member since 2011 · 142 posts · 39 votes
    14y

    Adrian, where do you sell the liens at online?

    0Reply
  • Eva Marin
    Bronx, NY · Member since 2011 · 21 posts · 0 votes
    14y

    Hi Jack

    the new york real estate institute here in manhattan have a seminar on october 8 and 9 on tax liens and tax dees investmentas, the cost is 49 and you can bring a guess.

    i am already signed up. Maybe will see you there.
    Also few NJ counties are having their tax lien sales on october as well.

    EM

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  • Eva Marin
    Bronx, NY · Member since 2011 · 21 posts · 0 votes
    14y

    Adrian,

    About what you said before, when you file the deed application after paying all the back taxes of the property (tax properties taxes + sewer +water bills) you get the deed but you do not get the property. In order to get the property you have to follow the foreclosure procedure whatever it is for that particular county after the redemption time pass (2 years in some cases)?
    I am right here or not?

    So, what you do here is: you go to the sheriff sale or deed sales auction conducted by the county and you sale your deed to another investor that is going now after paying you for it execute the foreclosure process to really get the property finally.

    Please can you clarify this for me?

    And also on the county sale you are the first person to have right to buy really the property because the deed is on your name, but I guess you rather to sale the deed you own to another investor and not get involved in the foreclosure process which might take months and more money to get it done.

    Am following you here or not?

    Thanks guys for all the posts here, they really help to get a better picture of how tax liens and deeds work.

    And thank you very much adrian,
    EM

    0Reply
  • Kyle Meyers
    Residential Landlord · Indianapolis, IN · Member since 2010 · 592 posts · 138 votes
    14y

    As I understand it, when you get the deed the property is yours. You may have to evict the previous owner, but it is your property and you have all the rights and responsibilities that go along with that.

    0Reply
  • Adrian G.
    Real Estate Investor · Chicago, IL · Member since 2008 · 318 posts · 30 votes
    14y
    Originally posted by Stephen Moore:
    Hmmm basically your budget permits everything as youre making majority of yours in volume,hence making a dollar outta 15 cents.

    Well yeah of course, if you got 400-500 then thats basically property (at least for the counties I do, assume that there are 3-4 liens 40 bucks each +app fee).

    Originally posted by joshua houchins:
    Adrian, where do you sell the liens at online?

    I literally post them everywhere, **********, craigslist, forums (are the best though).

    0Reply
  • Adrian G.
    Real Estate Investor · Chicago, IL · Member since 2008 · 318 posts · 30 votes
    14y
    Originally posted by Eva Marin:
    Adrian,

    About what you said before, when you file the deed application after paying all the back taxes of the property (tax properties taxes + sewer +water bills) you get the deed but you do not get the property. In order to get the property you have to follow the foreclosure procedure whatever it is for that particular county after the redemption time pass (2 years in some cases)?
    I am right here or not?

    Yes and no, yes because you have to wait the 2 years in some case and NO because I 2 years prior...so if its 2011 then I buy 2009 or older so I can immediately foreclosure/file tax deed application

    So, what you do here is: you go to the sheriff sale or deed sales auction conducted by the county and you sale your deed to another investor that is going now after paying you for it execute the foreclosure process to really get the property finally.

    Technically, you get the property if it doesnt sell at the sheriffs/county auction which it NEVER does (at least in my cases because of the deals I choose). After the auction the tax deed is yours.

    And also on the county sale you are the first person to have right to buy really the property because the deed is on your name, but I guess you rather to sale the deed you own to another investor and not get involved in the foreclosure process which might take months and more money to get it done.

    If it does not sell at the county sale/auction then its yours. I always sell online and usually who buy from me are investors or people building there portfolio.

    Am following you here or not?

    Thanks guys for all the posts here, they really help to get a better picture of how tax liens and deeds work.

    And thank you very much adrian,
    EM

    No problem, let me know if you have any other questions or PM me if you want or got more.

    0Reply
  • Eva Marin
    Bronx, NY · Member since 2011 · 21 posts · 0 votes
    14y

    Thanks adrian,

    One more question: Do you do a title search on the prop, before or after you buy the tax deed? and do you do what is call a quiet title after obtaining the deed?

    Sorry, but there is a lot to learn here and it seems that your system works for you pretty well, so any advise is great!

    :)

    0Reply
  • Jack Zuchars
    OP
    Real Estate Investor · Brooklyn, NY · Member since 2011 · 21 posts · 0 votes
    14y

    Eva
    Thanks for course info. Do you have a signup link?

    0Reply
  • Eva Marin
    Bronx, NY · Member since 2011 · 21 posts · 0 votes
    14y

    no Jack,
    just go to the NYC real estate institute and look for the courses section, it should be there..:)

    it is on Oct 8 and 9 (2 days.

    :) See ya

    0Reply
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