Tax liens, TDA, to build for lease to owner financing
So in the first example, it is certificate number 2626. And I bought the liens on 9/9/2017. My intention was to hold the liens until redemption, collecting the 18% interest.
Not long after, I became excited by the idea of filing a tax deed application and actually acquiring the lots to sell on the open market, hoping to make a profit.
filing a tax deed in Florida requires that the persons filing, settle all outstanding liens so in the case of lien number 2626 the outstanding liens were $2471.69 plus a charge of $10 for the wire transfer fee.
this starts the tax deed application process which generally lasts from about 3 to 6 months to settle out. A couple of things can happen you can be redeemed by the person who owns the property, you can also basically be redeemed by anyone out bidding you at the auction, or you can win the property at auction if no one else bids above the opening bid which is all of the money that you have put into the property thus far plus interest
those of you using TDAs to acquire property should expect to be hit with administrative fees of all sorts. These fees had to be paid before the auction could be held. The amount paid here is added to the total opening bid.
after winning the auction, in order to issue the tax deed there are more recording fees and a surprise “Omitted Years Taxes” WTF! Just roll with it and make sure you have reserves. FYI, I had never expected these added fees. I initially thought I’d be all in at the TDA cost.
then you get the document of your year long process. You’ve won!
Holding cost for vacant lots are generally low. The lawn on this particular lots was No cost to maintain and the taxes are as follows:
$196.64 for 2018
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@Jermaine Chad Ingram Yeah, buying tax certificates as a means to actually acquire the property, as you see, is not effective. When you Do get a property this way at the tax deed auction, after you went the whole tax certificate, application, paying off all the other liens, etc......it simply means you already have more money invested in it than any other bidders are willing to pay for it. You’re better off just bidding at the tax deed auction when someone went through the process.
And a hint....the tax certificates that Do yield 18%, are the ones that no one wants to own for the costs it takes to do the whole process, which you detailed well above.....hence the reason the interest rate wasn’t bid down at the tax certificate auction.
Originally posted by @Wayne Brooks:@Jermaine Chad Ingram Yeah, buying tax certificates as a means to actually acquire the property, as you see, is not effective. When you Do get a property this way at the tax deed auction, after you went the whole tax certificate, application, paying off all the other liens, etc......it simply means you already have more money invested in it than any other bidders are willing to pay for it. You’re better off just bidding at the tax deed auction when someone went through the process.
And a hint....the tax certificates that Do yield 18%, are the ones that no one wants to own for the costs it takes to do the whole process, which you detailed well above.....hence the reason the interest rate wasn’t bid down at the tax certificate auction.
I do get your point, but I must say that this trade was/is successful as I have a signed contract right now to sell the place for $9000 which does give me a nice little profit for 18 months work. and since I have 57 other liens in the area going through this process I should be able to acquire several multi unit lots as well as capital to help cushion future projects. I know that it will take time but in Florida we have a ton of areas that have been devastated by storms. no one is paying property taxes and the entire community is starting to become more and more resource deprived. since it’s an area that I want to retire to I feel it is my duty to help try to revive the area and the only way the area is going to be revived is if someone pushes these lots onto the market. On the open market the lots are selling for twice (knock on wood) what I get them for if I’m lucky enough to have no one else bid against me
I don’t like the stress of auctions so I could hardly participate in one of them and hope to get a lot at a reasonable price. Know they self
More on the $9000 contract soon @waynebrooks has a point.
Out of the 100 tax liens I’ve invested in 47 have been redeemed for the 18% over 2 years and I have filed TDAs for 5 lots total.
If you’d like to know the criteria by which I choose the liens I buy, just ask.
@Jose Young https://www.biggerpockets.com/topics/759186 I’m working through the process now and have been keeping track of my progress. It may help you.
Hi jermaine , thanks for the input . So a couple of questions . If in Florida the tax lien is 18% max. Is it an annual percentage rate or it is flat 18% regardless of when the owner redeems the property. The other question is how much time do you spend working in tax liens as an average per week. Since you bought around 100 I would assume you have a good capital and I also assume you spend seriously your time.
Thanks again
Jose
@Jose Young Florida tax liens pay out 18% simple interest per year and it accrues monthly @ 1.5%.
As far as time is concerned, I don’t spend too much time on them. I spend more time studying the city and neighborhoods than on lien search. Once you set the criteria for what you’re looking for it gets much easier. The auction is mid year so for about 30 days after the auction I’m combing through the liens held by the county. I determine which ones I want and then I purchase them according to my fund availability.
I do not bid at the auction because in Florida it is mostly pointless due to the global competition.