Navigating a Tax Sale: Part 2

So once you have a large pile of cash reserved to pay for your tax sale bids you can move forward with some of the registration procedures. I am sure they vary subtly from county to county and state to state but in my county in Iowa only 1 individual or LLC can buy a single registration to bid. This in many ways swings the cards in favor of the institutional investor who can afford to register many LLCs in hopes of getting many registrations to bid. Also, each registration costs $75 so if you are wanting to bid on 10 properties you will need to register 10 LLCs and then pay the $75 registration fee on all 10. You can see where this can quickly add up as you get to 100+ registrations. 

Tax delinquent properties are posted a month before the sale online and in the newspaper. Obviously these can be redeemed within the month before the tax sale and not be on the sale but this is where you can do your research on which properties you would like and which you would pass on. The fewer you can pass on the better chance you have of getting all your registrations filled up. The tax sale will also go in the order of those properties so it is good to have a list while at the sale and follow along closely with your notes and highlights on the list. 

Once you register your name gets added to a random name generator and it randomly pulls a name up during the tax sale while going through each property in a predetermined order, the order the list was published a month before minus the properties that were redeemed. 

Once the bidding happens it is either a yes or pass when your name is called. yes you will take it or pass you will pass on the property. If you take it you will need to have money ready at the end of the sale to pay the taxes and get the rights to the tax lien on the property. 

Now you may be thinking this is too good to be true. How can I get a house for the cost of back taxes, what is the catch? Well here is the catch. You just got the rights to redeem after the redemption periods are over which will last a long time. Actually over a year. In the first year of having rights to the property the owner of the property can come to the treasures office at anytime, pay the back taxes plus 2% interest compounded per month, and get there property back. This money is then given to the owner of the tax lien. So at least it is a bigger return then sitting in a bank! 

After the year is up the tax lien holder can foreclose on the homeowner. I am not 100% versed in the mechanics of it but essentially you would start a foreclosure with a lawyer and it would get filed. They would have 60 days to pay to get their house back otherwise it would be yours. There is then another 120 day right of redemption past that but this seems to be a bit more harder for them to get their house back with more restrictions (I am unsure on the mechanics of the legal side of the redemption in these final periods. It is best to consult a lawyer versed in your tax redemption law to know for sure once you get your tax lien through the initial parts of the redemption period.)