Hello everyone, my name is Dante. I recently went to a few delinquent tax sales to purchase a few properties and in my research of the properties I noticed that some of them were owned by banks or investment companies. My question is why would these banks let the homes go to tax foreclosure, they surely have the money to pay a couple thousand in taxes. Can someone help out with why this happens? And should invest in these.
@Dante Covington - simple answer - they don't have an infrastructure to flip and sell at market value. With the inventory of foreclosures banks have, they would need to create entire departments dedicated to the work that flippers do. They have plenty of money to pay the taxes, but that's not the business they're in. They'd rather get that money back and lend it again, because that's the business they know and are set up to do.
Thanks Kevin. I racked my brains trying to figure out why. There are no liens or other red flags besides being bank owned. I've driven by some of the properties and they are vacant. They have to be incurring cost for the maintenance and upkeep. Here in SC we have to wait for a year to foreclose.
@Dante Covington Let us know if you get the properties and how much you had to pay for them. Interested in knowing what the sales are in SC. What county are you in?
For the state of SC most of the sales are held in the last three months of the year. I won two properties in Georgetown county and awaiting on my bid in Richland county. The interest rates are 3, 6 and 12% I believe. I will keep you guys posted.
Many times they have made an economic decision not to put any more money into the property. Most banks have REO departments for selling bank owned property, but if the spread is not great enough they won't throw good money after bad. As mentioned above, their business is not investing in real estate when the margins are small.
Thanks for the feedback Emmett, I will gladly take those small margins they don't want.
I experienced the same thing in Lake County Indiana. It seemed as if the explanation offered is right considering all the work we do to manage these properties.
Thank so much John.
They never spend any money on the property after the foreclose. I guess they have already lost enough money their objective is to REO the property and try to get back as much as they can, not spend more money. It's bureaucracy type thinking and "other people's money". They will let a property fall apart instead of making simple repairs to mitigate the damage. They will get liens against the property for not maintaining it, cutting grass, paying HOA dues etc. They never pay the taxes, nothing. They move so slow, that sometimes the property can be sold at tax sale and the redemption period expires before they get it sold. In a lot of cases they will fight the suit to quiet title as then it finally "hits the radar" that oh crap we need to do something before we lose this. Other times depending on the property and it's value they are ok with letting it go and its not worth paying the legal fees to fight to keep it.