All Forum Posts by: Jerry K.

Apache county tax lien auction in AZ is also open. Just downloaded the list. Haven't snagged the property types yet, but I find it interesting that over 71% of the 8,700+ liens are multiple year liens. With a 3 year redemption period, that is a lot of liens closer to tax foreclosure than most other counties. Of course it could be a lot of low value vacant parcels too.

@John Underwood I've followed your posts since you joined BP a couple years ago. I've learned a lot about SC tax auctions through you. These property types in Coconino county in AZ are a new classification (to me anyway) this year. I, too, stress to new investors that you need to drive by or have a person drive by and check out a property that has a building before bidding. I have seen plenty of burned out homes in person that were fine in the Google street view. Google street views can be several years old. 

Although I'm not an investor who flips or holds rentals, I think it's interesting that the county may now have a property type that explicitly identifies properties that are bank owned. That would make it easier for investors to identify those properties by searching the county records online. But until I talk with a county worker to find out exactly what the property type means, I won't make that definitive statement.

The 2017 Arizona online tax lien auctions are opening up last week and this week. I've downloaded the lists for Yavapai and Coconino counties and did some initial work of adding the property types to the lien lists so I can better filter the liens I want to pursue. 

The auctions stay open for a few weeks so the investors can perform due diligence before placing their bids.

The number of liens available is similar to last year in both counties. Many liens will be withdrawn from the auction as the owners pay them off at the last minute, so the final count of the liens available will be smaller than the numbers below.

Interesting that Coconino has a new type listed; "NON-PRIMARY/BANKOWNED/NOT IN OTHER CLASSES RESIDENTIAL". I'll have to investigate what that means. I can't imagine 124 bank owned homes where the bank has not paid the taxes. But then again, it does happen where the banks just let a property go from time-to-time.

@David Ramos You are not "liable" to pay subsequent taxes. You have the option to pay them. In Coconino county if you pay the subsequent taxes (sub taxes) then you retain your lien position - meaning if you pay the taxes for each year during the 3 year redemption period, then you can begin the tax lien foreclosure at the end of the 3 years.

If you choose not to pay the sub taxes, then the county will take the lien amount you paid for your original lien, plus any interest earned, and roll that into a new lien that will also include the next year of taxes. The next investor who buys that lien now holds both years of taxes and already has one year of redemption in the books. They will be able to foreclose in only 2 full years since they bought your lien.  You get paid your investment plus interest the month after the auction if the lien is bought by a new investor. 

Note - if the owner pays the taxes before the 3 years, and you're the lien holder, you get your investment plus all interest back.

Arizona statutes say you can foreclose 3 years after the date of the lien sale. But you don't have to foreclose. You can keep paying the taxes and earning the same interest rate as your original lien for up to 10 years. If you don't foreclose by the 10th year, then the lien expires and you don't get any of your initial investment or interest. Note that each year of sub taxes are their own lien. So if you forgot to foreclose in the 10th year of the first lien, you would only lose that year's lien and interest. If you held all the sub year liens you could foreclose using the 2nd year lien before it became 10 years old.

Sub taxes are whatever the tax bill is for the property for the next year based on the assessment. It has nothing to do with the previous lien amount.

In AZ the winning bidder has the option to pay the subsequent taxes (sub taxes) on the parcel. AZ has a 3 year redemption period for the owner to pay the outstanding taxes and interest. After 3 years (from the sale date of the earliest lien) the owner of the tax lien can begin the tax lien foreclosure process.

An investor does not have to pay the sub taxes if they don't want to pay. That just means the lien for the current year unpaid taxes will be combined with the previous tax lien and sold again the next auction. However, check the county rules - Maricopa county allows an investor to keep their original lien (certificate) without having to pay the sub taxes. So you could end up buying a tax certificate in Maricopa this year that already has another investor holding last year's lien. You both would get paid off when the owner finally pays, but if the owner never pays, the other investor has a year head start on the 3 year redemption and could foreclose before you get the chance. You still get paid your lien and interest, but you may not have a chance to foreclose on the property before the previous lien holder forecloses.

Some investors (outside of Maricopa county) are only looking for the interest rate return. They won't pay the sub taxes knowing the lien will go back into the auction and when the new investor buys the lien, they will get paid at the end of the auction. It acts like a one year CD. However, if nobody buys the certificate, then the original owner won't get paid (until somebody does buy the lien or the owner pays the back taxes to the county).

I have one lien I bought a few years ago in an AZ county on a house currently worth about $800k. It was the second year of unpaid taxes and the previous lien holder did not pay the sub taxes. I have paid the sub taxes since then and next month I can begin a tax lien foreclosure. I fully expect the owner to pay the back taxes plus interest - why would anyone let an $800k house go for under $18k? They are living in the home.  Also, they did not get a mortgage through a bank when they bought it. There is a document filed with the recorder of deeds that shows they borrowed the money from a private party. They bought the home as a bank foreclosure and got it for a bargain (just under $400k and the previous owner to them had paid over $1 million) however, the current owners have been delinquent on taxes for years. If there was a bank mortgage involved, I'm sure the bank would be paying the taxes, but the private lender may not even know the owners are behind on taxes. 

So if the owners don't pay the taxes, I know the private lender will pay once they are notified when I start the foreclosure. The good news in AZ is that the owner/lender must pay all my attorney fees for starting the foreclosure in addition to the lien and interest.

If neither pays - then I end up with an $800k home for taxes and foreclosure fees. Realistically - not going to happen!

@David Ramos I usually do a post on both Coconino and Yavapai each year. Here is the link to the 2016 Yavapai results post from last year.

2016 Yavapai AZ county tax lien results

RealAuction company has added all the bid data, by bidder, for each lien in past auctions. Grant Street Auctions, the other major supplier of software for tax auctions has provided all the bids for several years. I haven't bid in counties using Grant Street software but always liked seeing that data. Now that RealAuction has added it for counties I invest in, I can begin to use it to see what my competition has done in the past and can formulate a better bid strategy.

It's kind of like having a peek at their playbook from past games. I can't see what they're doing in the current auction until it's over, but some bidders do the same  type of bidding each year. By adding the names, parcel numbers and type of underlying property, I can get a better handle on the competition. Did a quick blog post and video showing this on my BP blog; Link to blog post.

@Sandy Uhlmann I have purchased liens/certificates on condo parking lots in the past and mine did redeem before auction. You have to do your research though. Make sure the condo association is still active. Look into the history of the parcel; have they fallen behind on the taxes in the past? Could be a lax treasurer of the association. You want to be sure any condo association is strong or any shopping plaza is rented out that may have liens on the parking lot.

The best way to learn is research the specific parcel then buy a certificate and watch it play out. Know that there is little you can do with a parking lot if the condo building ends up vacant. Parking lots of active condos and commercial can be very good for redemption and 18% is a decent rate. Know that you are really getting 1.5% per month so a short redemption period limits your return.

@Jerome Lanier are you looking for a list of tax liens, or are you trying to fins a list of people who are late on their current taxes - but have not had the lien sold yet? The counties won't create of list of people who are late on their current taxes because they may pay before the sale. They only sell a list of parcels that will be in the tax lien sale.

The states, counties, cities are held to the laws/statutes. In Illinois I have participated in "Scavenger" sales. The county can work with cities, townships and decide to sell tax deeds (actual ownership of the land, not just a lien) for an amount less than the taxes/liens owed. You can try to negotiate for yourself, but that usually does not work since the laws may require public sale.

If you know of areas that have many parcels where the liens amounts are much greater than the parcel value, start talking with the local politicians and show them the lists of properties. Show them how selling the parcels for less than the owed amount will get the parcels back on the tax rolls by having new owners develop the properties and pay the taxes again.

Get in the local papers and media talking about the list of parcels that are not generating any tax revenue. Show the annual tax amounts the would be brought in by selling the properties. It is not easy work, but if people aren't aware of the problem, then nothing happens.

At least that is the method of selling those properties that I have seen in my area. Maybe others have seen different methods.