All Forum Posts by: Jerry K.

@Jay Hinrichs - I can't imagine having millions in tax liens! I have about 20-30 at any time and it's a handful for me to keep in spreadsheets. This is just a small allocation of my retirement funds. I use them more as high paying Certificates of Deposit. 

The Arizona counties I invest in use online auctions. There are still a few counties in AZ that have the open outcry auctions. Most counties found they sell a much higher percentage of liens by going online. I live in Illinois but I visit AZ every 18 months or so, so I know the areas I invest in. I can bid from home in the online auctions.

I narrow my list by converting the list of liens from a PDF to a spreadsheet (if not already given in a spreadsheet). I then have some website screen scraping macros that grab the real estate type for each lien (vacant residential, home, multi-family, commercial, etc.). I know the parcel numbers for the areas I'm interested in and I filter the list down to just those areas.  I usually filter the list from there by size so I get most of the "slivers" of land off the list.

From there I have other macros that grab the GIS satellite image of the parcels with the property line drawn in so I can see what each parcel is. I can scroll through the images pretty quickly to see if I want to view it closer. 

Many times I look at Google street view if available, but those pictures can be dated, so I take them with a grain of salt. I usually go for vacant residential parcels because they get the highest rates of interest. A street view is just to see if the land is buildable - but many vacant lots do not have street views. 

If I decide to go for a property with a home, it's usually an area I have driven through on my visits. I'll research to see if there have been any fires or news stories about the address (once a house that came up had a story from a couple of years before about meth being made there - it was a nearly million dollar house - I passed on bidding on the lien). I want there to be a mortgage so that I know the bank will pay the lien if the owner does not. 

I really never expect to get a property through foreclosure. I have taken "flyers" on occasion on homes when I see the owners are deceased and there is no mortgage. That increases the chance of foreclosure, but since I don't look at many homes or commercial properties, I don't find too many of those.

I do like to bid on parcels with liens that have billboards or cell towers. If those fell into my hands through foreclosure, then I can get monthly income from the billboard company and my only expense is real estate taxes which tend to to be low if the billboard is the only structure on the parcel. Again, haven't been able to land one of those, but the interest rate is usually 16% until the parcel owner pays the lien. I'm looking at doing tax deeds to see if I can land billboard or cell tower parcels in the future. I have to automate this process even more to sift through all the tax deed states for that!

@London Elliott If you are new, doing what Jay suggests is a good educational start. I did that step - bought somebody elses old tax lien course back in the early 1990's. That way I learned the basic terms and process, but the biggest benefit was I didn't get on the guru's marketing list to get hounded by them for expensive coaching and investment pressure.

I do tax lien investing in Arizona, but not in Maricopa county. I do know most of the details of a tax lien foreclosure having started them in other Arizona counties. 

Maricopa is different from all the other counties in Arizona. In Maricopa more than one tax lien investor can hold a lien on a parcel. Like you describe, you can hold the 2016 lien but somebody else can hold the 2015 lien. (In the other counties, if you bought a tax lien last year and did not pay this year's taxes, then your old lien is combined with the new lien amount and sold to a new investor. You get paid for your lien and interest by the new investor and you are out)

If somebody holds an older lien, then they will reach the 3 year redemption period before you, they can foreclose. You still get paid if they foreclose successfully, but they beat you to the foreclosure and get the property.

If they do not foreclose after the 3rd year of holding their lien, and yours reaches the end of the 3rd year, then you can foreclose. If you are successful, part of your foreclosure is to pay off the other lien holders. You have 10 years to hold your lien. If it is not paid off, or if you don't foreclose, then your lien expires worthless and you lose your money.

You can always offer to buy somebody's older lien on a parcel. All will want their principal back. Some will take a discount from the interest owed them, some will ask just for the amount of interest owed, and a few will ask for a premium (more than what is earned so far) on the interest. I would not pay a premium because the odds of ever getting a property in foreclosure are very slim.

A little over a year ago I had a couple offer to buy two liens I owned. I had liens on two adjoining vacant parcels. The couple owned a house next to both lots. They had called the county to find the owners to buy the property and the county told them I owned the liens and the owners of the lots may have been deceased (they were). 

The couple offered to buy the liens so they could foreclose. I asked for the principal plus interest I was owed. The lots were worth only about $2,500 more than the taxes plus interest I was owed. I figured let them spend the $2,000 to foreclose because I was going to make almost nothing on the lots if I foreclosed and then sold them. This way I made my 16% interest for 5 years I held them and it didn't cost me a dime to get paid. I had not foreclosed yet because I was waiting for the market in that area to rebound. 

Each state is different in how liens are handled and how long of a redemption period the owner has to repay the lien before it will be foreclosed. Arizona is one of the longer redemption period states at 3 years.

I echo everybody's thoughts. Tax liens are not "easy". Some states offer tax liens, some offer tax deeds. You need to learn the difference. Every state has different rules, and within a state there can be different rules by county and sometimes by city. Get comfortable reading legal statutes that govern how a tax lien sale takes place and what you as a tax lien holder must do or - not do - with your lien. 

Basically decide if you are in it for the interest rate returns or if you want to get the underlying property. Tip - if you want property, look at tax deeds instead of liens - it's usually quicker. If you still want to use liens to get a property, look at states like South Carolina or Indiana where the redemption period is short. (See? You'll need to learn what "redemption periods" are from the statutes.) 

Natalie, there is a medium sized billboard company that has a couple hundred billboards in Illinois and surrounding states. They might be interested in buying the land. You can contact them through their website;

dustysmedia{dot}com/Contact-Us 

@Shane Short You've received some great advice here. I run across billboards in my tax lien investing and have a little experience and a lot of research into the business. It is a great income generating business with less headaches than dealing tenants. There a a few ways to make money in the business that I've looked at.

• You can buy or lease a parcel of land that meets the qualifications for a building a billboard. You negotiate a lease or purchase the land - but make sure you can build the billboard on that parcel first.
• You then get the billboard permit from the state - and maybe the county and city. You'll be checking federal, state and local laws on billboards.
• You can build the billboard yourself, which means you get the engineering done (needed for the permit) and then source the contractor and materials, don't forget electrical run to the board if lighted.
• If you retain ownership of the billboard, you'll need to get an insurance policy to cover any damage from the billboard falling over or coming apart.
• You'll have to arrange to lease the space. Usually paid every 4 weeks (13 payments a year). You may have to source the vinyl signage and installers. Your lease negotiation can be on your terms but most are for 6 month or 1 year leases. Discounts are usually offered the business for the longer lease. You can outsource to a billboard "sales company" for finding your renters. You of course pay a percentage of the rent you receive to the sales company.

There is a lot more involved but that is the first way to start a billboard business. A simpler method is to just own the land that already has a billboard. That is how I stumbled into this. I had a tax lien on a parcel along a freeway and it had a two sided billboard on the parcel. When the owner of the parcel did not pay the back taxes, I started a tax lien foreclosure. I researched the area and found the city had stopped allowing new billboards, but this one was grandfathered in. It was run by one of the large national billboard companies and one side had had a long term lease with a business and the other side was coming up for renewal at $1,200 every 4 weeks. 

So that would generate about $2,400 x 13 payments a year = $31,200 revenue each year for the billboard company. My research showed that a land lease is usually negotiated for between 15% and 20% of the revenue. That would mean if I foreclosed on the parcel and became the landowner, I would get about $4,680 and $6,240 a year. All I would owe would be the annual real estate taxes of $500 per year. I wouldn't have to pay the sign upkeep, the insurance, or find the renters - the billboard company does all that. Nice return for doing almost nothing.

There are other considerations - if you just lease the land to the billboard company what do you get if the sign is not rented? How do you make sure the billboard company has the proper insurance on the sign, etc.

The owner of that parcel paid the back taxes at the last possible moment, so I did not end up with the parcel, and I have had other parcels with billboards also pay the back taxes too. Why give up the simple money for just leasing the land an have the billboard company do all the work?

@Mercedez H. and @Henri Meli - Billboards are very interesting from a high level. You get monthly rental and no worries about tenants, termites or toilets. It is highly regulated so you have to learn the federal restrictions an your local restrictions. But those same restrictions make it very profitable when you find a suitable site. You can either just oen the land and leas it to a billboard company who builds and manages the sign for you. Or you can build the sign yourself and manage getting the companies to rent. The second option is the most lucrative. The first option is great to get income with little work. The billboard company will do all the work and you'll earn 15% - 20+% on the monthly rental of the billboard. Biullboards actually run on a 4 week lease (not calendar month) so you really get 13 payments a year instead of 12.

You'll need to understand how to negotiate the land lease with the billboard company. Frank Rolfe is on Biggerpockets and used to run a very large billboard company. He has a course on getting into the business and has a website with it's own forum specifically on billboards. He also has a PDF (I bought it) about how to negoitate a lan lease with a billboard company. He has not been very active here on Bigger pockets for a while, but you can see his posts by searching for his account here and then you can see his posts

@Michael Lazzizzera What did you end up doing with the property/billboard? Curious to hear how this worked out for you.

The 2018 online tax lien auction for Coconino county in northern AZ ended last week and here are some unofficial results. Results can change if investors do not make their final payments for their lien purchases.

Dollar amount sold was about $200,000 less than year. The total number of liens dropped again in comparison to previous years. The number of investors who won liens this year dropped to 68.

Less liens won, dollar amounts down and number of investors who won was also lower. Looks like institutions or individuals are moving away from lien investing as overall interest rates are going up on other investments - but the overall winning tax lien rates this year went down to 4.52%.

I eliminated the "Struck to County" liens which are the liens nobody bid on and are now held by the county. There were 1,923 liens that were struck to the county. A total of $1,588,768.94 in liens not sold.

Number of liens sold to investors:

2018 - 531
2017 - 630
2016 – 766
2015 - 767
2014 - 1,062
2013 - 1,220

Total dollar of liens sold:

2018 - $818,883.67
2017 - $1,023,450.05
2016 - $789,139.40
2015 - $752,379.78
2014 - $1,359,566.57
2013 - $1,868,433.33

Average rate of return overall:

2018 – 4.52% (12.09% if you include the Struck to County which all get 16%)
2017 – 5.91% (12.19% if you include the Struck to County which all get 16%)
2016 - 4.71% (11.74% if you include the Struck to County which all get 16%)
2015 - 6.52% (12.58% if you include the Struck to County which all get 16%)
2014 - 6.58%
2013 - 6.83%

Number of Investors who won liens:

2018 - 68
2017 - 84
2016 - 54
2015 - 68
2014 - 69
2013 - 106

Total Number of bids for all liens:

2018 - 4,059
2017 – 3,601
2016 - 3,348
2015 - 4,311
2014 - 6,254
2013 - 54,255,0890

You bid down the interest rate in 1% increments from 16% down to 0%.
Rate Percent that had the most number of bids overall:

2018 - 4% 832 bids
2017 – 5% 688 bids
2016 - 4% 867 bids
2015 - 5% 551 bids
2014 - 7% 1,162 bids
2013 - 7% 18,001,058 bids

Most bids per lien/parcel:

2018 - Four liens had 25 bids
2017 – One lien had 25 bids
2016 - One lien had 21 bids
2015 - One lien had 35 bids
2014 - One lien had 38 bids
2013 - Two liens each had 482,840 bids

Results by Property Type minus the Struck to County (click on image to make larger):

The 2018 annual Tax Lien auction for Yavapai county Arizona ended last week. I have the raw results data. There may be some slight changes since the official counts come out after all certificates are paid.

Rates were down this year along with the number of liens available, and total $ sold. Total number of bids were up a little this year again, but still nowhere near the 2013 bids.

The previous years are there for comparison.

Number of liens sold to investors:

2018 - 1,739 (1,376 bought by investors - 363 Struck to County as no bidders)

2017 - 2,141 (1,902 bought by investors - 239 Struck to County as no bidders)

2016 - 1,880 (1,600 bought by investors - 280 Struck to County as no bidders)

2015 - 2,039 (1,808 bought by investors - because 231 struck to county as no bidders)

2014 - 2,575

2013 - 2,382

Total dollar of liens sold:

2018 - $1,776,766.27 ($1,594,714.45 bought by investors and $182,051.82 not sold)

2017 - $2,175,069.34 ($1,890,259.85 bought by investors and $284,809.49 not sold)

2016 - $1,874,010.88 ( $1,694,277.89 bought by investors and $179,732.99 not sold)

2015 - $2,678,533.35 ($2,336,551.03 bought by investors - $341,982.32 not sold)

2014 - $3,015,871.87

2013 - $3,435,014.32

Average rate of return overall:

2018 – 6.53% (5.45% by investors when subtracting out struck to county liens which all get 16%)

2017 – 7.26% (5.94% by investors when subtracting out struck to county liens which all get 16%)

2016 - 6.28% (5.25% by investors when subtracting out struck to county liens which all get 16%)

2015 - 6.75% (5.40% by investors when subtracting out struck to county liens which all get 16%)

2014 - 5.86%

2013 - 6.55%

Number of Investors who won liens:

2018 - 87

2017 - 97

2016 - 74

2015 - 89

2014 - 116

2013 - 201

Total Number of bids for all liens:

2018 - 11,898

2017 – 10,550

2016 - 8,823

2015 - 10,525

2014 - 18,812

2013 - 99,073,789

You bid down the interest rate in 1% increments from 16% down to 0%.

Percentage with the most number of bids overall:

2018 – 5% had 1,783 bids

2017 – 5% had 1,315 bids

2016 - 4% had 2,680 bids

2015 - 6% had 2,391 bids

2014 - 7% had 3,542 bids

2013 - 4% had 36,251,623 bids

Most bids per lien/parcel:

2018 – 1 lien had 28 bids

2017 – 3 liens had 23 bids

2016 - 3 liens had 20 bids

2015 - 7 liens had 24 bids

2014 - One lien had 41 bids

2013 - One lien had 470,295 bids

Created a Pivot table where I grouped the liens by "Property Use Description". The county had no Use Description (#N/A) on 77 parcels that did sell in the auction. This table is based only on the liens that were purchased by investors. I eliminated the Struck to County liens that all received 16%:

Click on image to see larger version of table.

@Kevin Glover I don't buy certificates in Maricopa county so I hope someone who does will respond. I do buy in other Arizona counties and their process is different than Maricopa.

My understanding for Maricopa tax lien certificates is that the if you buy the first certificate on a parcel, you have the option to pay the taxes the next year if it is not redeemed. Not sure if Maricopa notifies you that you can buy the next year's tax certificate or not. In other AZ counties the county does notify the holder that the owner did not pay the taxes again and gives the investor first chance to pay.

The difference between Maricopa and the other counties in AZ is that Maricopa will sell a new certificate just for the next year taxes and somebody else can buy it. That results in two people owning certificates on the same parcel just for different years. 

If you own the previous year taxes, first call the county and see if you can still purchase the next year taxes - you may not be able to do so since the online auction is so close to starting. If you had purchased before Maricopa's deadline, then I believe you get the same interest rate as your first certificate.

In the other AZ counties I invest in, they do not allow more than one investor to own the certificate on a parcel. So if you bought the certificate last year and did not pay this years taxes, then those counties bundle your year old certificate with the new certificate and put it in the current year auction. If I bought that new certificate, I would be paying off your certificate with all the interest you earned plus the new year's taxes. You get your money with interest from the county and you're now out of the investment. I hold all the back taxes on the parcel and I hold the right to foreclose in the future for taxes, if I paid the next year taxes, and the owner never redeemed.

Since you did not pay the current taxes before the Maricopa deadline to do so, it seems you may have to bid on the certificate in the auction this year - if you choose. However, you don't have to do that in Maricopa to keep your right to foreclose for taxes. A new investor can buy this year's certificate and they have to to wait 3 full years from the date of the certificate to foreclose. 

However, your older certificate already is one year old and you get to hold it without buying any subsequent taxes. In 2 more years you can start a tax foreclosure to get the property. The investors who bought certificates after yours have to wait until their certificates hit the 3 complete year mark. 

Your foreclosure would mean you would have to pay the other investors, who bought after your certificate, their investment plus interest, but you end up with the property. Note - you need to check if there were tax certificates sold on the parcel in the years BEFORE you bought yours. If there were, they are closer to the 3 year time frame to foreclose than you are.

Rules that differ by county like this in Maricopa versus the other AZ counties is why tax certificate investing is so difficult. 

Maricopa investors please correct anything I misstated. Maricopa tax certificate investing is not my focus.