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?
- 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.
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!
:)
Ahhh I forgot to mention that I only do land/vacant lots/acres because in all honestly its Sooooo much easier to deal with then acquiring actually houses (I dont wanna deal with evictions, or other fee's). I dont have to worry about local houses/competition or anything if I decide to sell. I NEVER do a title search because there is almost never anything on the title because majority of the time the lot has always been vacant and free of anything. (But I do research on my own). I also do not "quiet title" because I usually sell everything as "Sold as-is" and I do highly advise all bidders or buyers to do your due diligence...NO REFUNDS or anything which is why I sell them wholesale and not retail...
Its very simple I get in and get out as fast as possible and with land it works perfect for me.
yeah!! sound like a very clean in and out process.
Adrian, few more questions:
do you use a lawyer for any of this?
and one more question because i am confuse in this step.
Let's say that you pay all the tax liens and get the deed of the property, then the county conduct a deed sale, which will notify at the owner of the land, and other people and will be in the newspaper.
at the auction: if someone bid on and win the prop, how much money you get? remember at this point you pay between tax prop, bills, deed feet with the county and all that probably let's say 800 dollars.
let's say the winner at the aution bid for 1400 dollars, so you pass the deed to the winner person, and get the 1400 for a profit of 600, That's the case?
No I do not use a lawyer, although when I started to learn about deeds I did have a lawyer right one up for me (a while back) and I learned off that. Never really made mistakes , cause if you do then the county will send it back. (every county is different, once in a while they send it back to me regarding requiring 2-3 witness's).
First, if you wish to acquire the tax deed you must pay all past due taxes/liens on the property. If any body the liens are 2 years old or older (Which is the only ones I buy) then you can file the tax deed application (its to acquire the deed). At that point the county post the info in the news paper and it goes to county court (2 1/2-3 months) which in that case it goes to auction at the county steps (supposedly) if nobody buy its at auction (which in my experience nobody ever does) then it becomes your property. Lets assume someone does buy it at auction, then its total is for your investment plus interest...and that depends on the county your in. (I do states/counties where its at least 18% or higher). Remember I dont want the money back I want the land because I can make more money from it. When you say "bills" I think your confusing that with buying liens for homes (which I never do) so theres no bills ever.
Adrian, are you talking Illinois law or New York law? In Colorado, it is 3 years and you get a Treasurer's Deed and a non-marketable (for 7 years) title so in this state you can sell it as-is or file a quiet title.
I'm interested in giving this a shot in Illinois (Boone and Winnebago counties). Do you have any experience with them? Also, is there a good reference that you could point me toward regarding the process in Illinois? I know things vary by county, but hopefully they're variations of a state process...
I'm interested in giving this a shot in Illinois (Boone and Winnebago counties). Do you have any experience with them? Also, is there a good reference that you could point me toward regarding the process in Illinois? I know things vary by county, but hopefully they're variations of a state process...
Thanks.
Sorry for the delay, I dont get on the forums as much anymore. I dont really do those counties/illinois, there is way to much competition and the process...sheesh. I prefer to do out of state since its much less hassle and IMHO..more profitable.
Aaron,
Did you see the response I had about IL tax lien auctions to your comment on my BiggerPockets blog? I agree with Adrian that IL makes it too cumbersome and competition in the northern counties tend to be "interesting" since Chicago politicians have a lot of "friends" that need favors.
Tax Lien auctions in IL have been manipulated for years. If they ever go truly online - not the "online" version they use now - then you may get a fair shot for tax liens.
Even downstate IL auctions are not without controversy. See this article: http://www.stltoday.com/news/local/crime-and-courts/article_117c30c5-ccaa-50de-b4a1-d5b688a58042.html
And an interview where a county board member discusses the controversial auctions in the mid 2000's where many of the people who were campaign contributors to the then county treasurer, won certificates at the maximum rate of 18%. Yet in most surrounding counties the rates were bid lower. So why did all those liens get sold to campaign contributors at the maximum rate of 18% in only the one county?
http://youtu.be/5AYxutnteW8?t=2m1s
After that treasurer left office, the next elected treasurer instituted a new system and the average rate was 9%. Interesting, but a reason that I don't like IL certificate auctions. Until they are put on the internet where all can bid, I'll stay out.