Tax sales

[Christopher Coleman]

Hey everyone,

Here in KC MO its just about tax sale time. Our county database is almost out and we will have about a month to research properties and contact owners.

I was wanting to know about any experiences people have had with tax sales, things to look out for or be aware of.

Any input would be appreciated.

Thanks
Christopher

[Ned Carey]

Christopher,
The number one thing to know is the rules. Each state and even each county may have different rules. You need to know these rules and how they effect how you should bid. Tax sale can have hidden costs and risks. I partnered with an attorney to buy a $20K lien on a 250K~ assessed building. Three years later we may squeak out a profit.

Next you need to know the true "as is" value of the property. Since the property is security for your lien, it has to be worth a fair amount more that the lien.

Originally posted by Christopher Coleman:

Hey Tom,
Why is that do you think? People bidding up properties in a bidding panic?

No not a bidding panic but simply unaware of the risks and hidden costs. I see bids that make no economic sense in MD all the time. It is clear from the bidding many do not understand
1) the effective interest rate based on their bid
2) That assessments are way off and may be off by as much as 300%
3) The cost to foreclose and take title to the property
4) That any property they take will likely be in poor condition and worth substantially less that homes in good condition.

Bidding the interest rate down to 4-6% may be fine for some but not an experienced real estate investor. Like Tom Goans said, you can do better.

All of that being said I specialize in Tax liens and do very well. I spend a lot of time prior to the sale inspecting and doing research. You can search my posts here and check out my website in my signature as I write a lot about tax liens.

Good luck - Ned