Tax Lien on Parking Lot

19 Replies

I own tax liens on the parking lot and entrance driveway of a townhouse subdivision. Thinking ahead ... if I end up with the deed via a tax foreclosure, what are some creative things I can do with the entrance and parking lot?

Lynn (FL)

@Lynn Henley Who is listed as the owner? I like liens on parking lots for commercial buildings, apartments/condos etc. - but only when the buildings are being rented. Parking lots of vacant buildings do you no good.

You have to be sure who the owner is - it should be the owner of the improvement.

By the way, 99.9% of parking lot tax liens of viable buildings get redeemed (in my experience). But they tend to provide a high interest rate - great for the investor.

Let us know if this somehow goes to foreclosure. I would be interested to see that happen.

Jerry, the property is in the name of the association. It probably will get redeemed, but it will be interesting to "play the game".

Do you invest in these types of liens to get the property, or the high rate of return?

Lynn (FL)

I see those here a lot. You'll get paid off before it gets to an auction. You realize you'd have to pay off any other outstanding years before you can send it to the auction?

Yes, I fully understand that has to take place. I actually already own the past three years, and could file for a foreclose deed now, but was waiting for some time to past, so I can earn a little more interest.

Lynn (FL)

Lynn, I invest in liens for return mainly. If I want a property then I'll look at tax deeds.

If it's not out of line to ask, what rate are you earning on the parking lot liens?

On these, as I am on most of my liens, I'm getting 18%.

Where are you located?

Lynn (FL)

Originally posted by @Lynn Henley :
I actually already own the past three years, and could file for a foreclose deed now, but was waiting for some time to past, so I can earn a little more interest.
Lynn (FL)

Lynn, Keep in mind that if you foreclose and take the property you don't get any interest. If you are ultimately going to get the property then delaying only dives your costs up. However Like @Jerry K. said a parking lot for an in use building will likely get redeemed. So filing the foreclosure could be the trigger.

To answer you original question, if the parking is necessary for the building and you have the entrance you have some serious negotiating leverage with the owner of the building owner. I have a few similar situations coming up where I hope we get the property because we can get more than the property we take is worth.

18% that's why I like parking lots!

I'm just outside of Chicago but I invest in liens mostly in Arizona and Florida. I look at other states too but haven't picked anything up outside of those states.

Put up signs saying "private parking lot , no parking , cars will be towed at owners expense to xxx towing . Now you set up with a tow company and do a 40/60 split . Or lease the lot to a parking company and take a portion .

Hello All, I am looking into possibly buying a tax lien property. The parcel is for a partial parking lot for a "big name" national bank. The bank parcel adjacent to this lot is a (mostly) drive through location, but per the sign on the front door, they do have bankers onsite for walk in appointments also. They have a total of 9 parking spaces, of which this particular tax lien parcel would cover about 3.5 regular and 0.5 disabled parking spots (see photo attached). In addition, One of the main (there are a total of 3 possible) parking lot entrance / exit points is included in this parcel also. Would any of you say that this is a worthy purchase from the standpoint of trying to sell it back to the bank? It's worth noting that property is deed eligible at this point.

Kevin,


I would go for it, but don't be disappointed when, all of a sudden, it gets redeemed.  

Ask me how I know.   LOL

Lynn

@Lynn Henley so what eventually happened with your parking lot liens? I take it from your previous post that they redeemed.

Yes, they were redeemed.

Originally posted by @Jerry K. :

@Lynn Henley Who is listed as the owner? I like liens on parking lots for commercial buildings, apartments/condos etc. - but only when the buildings are being rented. Parking lots of vacant buildings do you no good.

You have to be sure who the owner is - it should be the owner of the improvement.

Jerry, in an earlier reply to Lynn, you stated that the owner "should be the owner of the improvement". What did you mean by this? Why is this important?

@Kevin S. you want the owner of the parking lot to be the owner (or owned by the HOA) of the improvement (building) otherwise you have weaker leverage. In the case of an office building with an adjacent parking lot parcel, if the lot taxes are unpaid and the office building owner also owns the parking lot - then they need to have that lot for the office tenants and their clients/patients etc. The owner will redeem the lien to keep the lot. If you are getting the deed for taxes, then the building owner will pay you to buy the lot back. (However it would be strange for the owner to not know the lot parcel is up for a tax deed)


If the lot is owned by another entity, then there is strong likelihood the building owner is paying a lease for the lot. If that's the case, and the lot parcel is behind on taxes, then it can be an indication of bad blood between the improvement owner (building) and the lot owner. You have to do some real research on why the taxes on the lot are not being paid. 

1) Could be simple mistake - then the lot owner will redeem to keep the lease payment income from the building owner coming in. 

2) Building parcel owner and lot parcel owner are in a legal battle. Are there issues with sewer, underground power or other infrastructure that requires tearing up the lot? You buy the tax deed or foreclose on a lien and get the deed to the lot and now you inherited the costs of infrastructure and rebuilding the lot. 

3) Numerous other reasons for the lot owner to be defaulting on taxes. If the lot owner is bad with money and is collecting a lease payment from the owner but not paying the taxes - that is not a bad situation for you buying the lien. The key is finding out why the taxes are not being paid.

The bottom line is that it is a stronger position to have the owner of the lot be the same owner of the improvement. The owner will likely not want to put his tenants of the building at risk of losing their customer and employee parking.

@Kevin S. I saw your post above and the other separate post on the same parking lot parcel. The biggest red flag to me is that it only a partial parking lot. Even weaker leverage. The bank or the owner of the building parcel can easily stall you. Why would the bank buy it back or redeem? They haven't paid the taxes for several years if you say it is deed eligible. Why would they change their mind now? 

The owner of the building parcel - sure it's inconvenient to not own the parcel you would buy, but why should they pay you any premium for the parcel? 

What are your options to force either party to redeem or buy the deed from you? Can you shut down the entrance from the road? Can you tear up just the portion of the lot you would own? The city will likely not allow it. 

You have less resources than the bank or the building owner. They can just wait you out while you pile up legal fees and taxes you owe on the lot each year.

The only leverage that you might (emphasis on "might") have is that it looks like there could be a sign on the parcel for the bank. It is a weak position, but you could ask for a land lease payment for the sign. The bank could take it down and just have a sign on the building. With the way banks change ownership they are used to buying and installing new signs all the time. But if there is a pole sign on the parcel that the bank wants to keep, they may pay a lease amount for the land for the sign. It might not be enough to cover the taxes on the parcel though. 

Your other option is to see if the city allows a billboard to be placed on the parcel. The bank and the building owner may not want a big billboard right there, but if the city ordinance allows it, and the traffic count is high, you could get a good income from the billboard. Billboards are a stretch and most cities don't allow new billboards - so you have to research that option before you decide to get the tax lien or foreclose. The threat of a billboard could get the bank to redeem the lien before foreclosure. (but then how much interest will you have earned on the lien?)

Too much work for me with little possibility for a decent payoff.

@Jerry K.

Building parcel owner and lot parcel owner are in a legal battle. Are there issues with sewer, underground power or other infrastructure that requires tearing up the lot? You buy the tax deed or foreclose on a lien and get the deed to the lot and now you inherited the costs of infrastructure and rebuilding the lot. 

I am not sure that is true Jerry. The tax sale would wipe out any lease (I presume - depends on state law). So as owner of the lot he would have no responsibility, perhaps other than to allow the tenant or utility owner to make repairs at their own expense due to an easement. 

@Kevin S. I think you have some leverage because you would own the entrance to that part of the parking lot. However it looks like there is another entrance. your main leverage would be that it would be awkward to the drive through tenants to turn around to exit. It would mean buying you out or re-configuring the parking/drive through/entrance and exit. 

I think the value of the parking spots themselves in minimal. Check at  various times how full those spots are. I bet you will rarely find them full. If that is the case they may get along fine with 1/2 the number of  spaces. 

I would consider the cost of the lien vs how much those spots and the bank in general are used.

@Ned Carey Yes very true any lease might be nullified by a tax foreclosure on the lot (assuming there is a lease). So @Kevin S. you need to also research the easements related to the parcel. 

Really this is just a huge cluster that requires a lot of due diligence on your part. The fact it is only a tax lien you are buying and not a tax deed means you will probably only get the interest earned when the bank redeems. How much would that interest be over the course of a few months? The bank will probably redeem once they are notified of a tax foreclosure.

I admit that money is made where others won't do the work, but what are the possible financial gains in total even if you did foreclose and sold the parcel back to the bank or building parcel owner?

@Kevin S. - It looks like you own the exit of the bank.  Perhaps you could put up a toll - LOL

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