All Forum Posts by: Jerry K.

@Rachelle Seaton Make sure the condo is still standing. Several years ago I found a Florida certificate on a condo unit, but the building was torn down. Don't trust Google street view. Some of those street views can be several years old.

@Ashley Watkins I invest  a portion of my portfolio in tax liens mainly for interest rate. Take a read through my BP blog link in the link below for some insight into what I do. There is a link to a video or two in those posts. My oldest son is 23 and he bought his first liens at 19 while he was in college for interest rate return. He did well getting 16% returns in Arizona liens.

@Greg Scott Sorry to hear of the situation. I'm about 30 miles away from Hopkins Park and Momence. Not a lot going on there. I invest in liens in Arizona even though I live in Illinois (for now). I'll take a look at the liens you're stuck with and see if I know anybody that might be interested. My profile has my email address or PM me.

@Ned Carey It's really out of the ordinary. Once the lien hit the one year mark and they hadn't redeemed I did further research on the owners. I already knew there was no mortgage, but there is a trust deed recorded that shows they borrowed the money from a local person - not a bank. The house was purchased previously for over a million dollars in the early 2000's. That owner was foreclosed upon and the current owners bought it at the bottom of the real estate bust for about $360k in 2010. They paid the first couple of years of taxes in full. Then they only paid partial taxes once or twice. They last paid $300 just over a year ago, but they have not paid off the entire lien, nor subsequent taxes.

Not many details on the husband online. The wife is an attorney.

Should be interesting. I expect the person who loaned them the money to pay the taxes once she knows there are liens. That won't happen until I hit the 3 year redemption date next February.

Normally I don't bid on this type of property, but when I found the private loan during my initial research, I knew there was a chance it may go longer than a year. The interest rate is only 3%. I take a flyer on a couple of these high value property/low interest liens every so often. Makes for good conversation.

@Gayle Horak I do a lot of Arizona because I have learned the areas in which I invest (I live Illinois... for now) and they have a lot of online auctions. @Ned Carey is correct - online means it's easier to bid so many people participate and the rates get bid pretty low on good parcels. 

I bought a few liens a couple of years ago in northern AZ and surprisingly the owners have not redeemed yet. I'm using my i401k funds for these liens and since there is a 3 year redemption period, I have to pay the subsequent years taxes to keep my liens. So I didn't buy an new liens this past year and may not again this coming year unless these owners redeem.  

I expect them to redeem at some point. One lien is a nearly million dollar home. Until then, I'll earn my interest and wait it out.

@Carole Fiedler@Account ClosedI started in tax liens back in the late 1980's in Illinois. I, like you two, was overwhelmed at first. (It didn't help there was no public internet back then either) 

I eventually found that, just like all things in life, you have to give up the ghost on feeling like you need to know everything, before taking an action. That's not to say jump in blindly, but once you realize how massive the sea of different rules are related to tax lien investing, you narrow down your focus to one county, preferably local (if your state is tax liens vs. tax deeds) and then just learn the rules of your one county. From there you attend an auction to see how it is handled. Take a local real estate attorney (who is working with tax lien investors) to breakfast or lunch and ask some questions. 

Then if you still like what you know about lien investing, jump in. Don't go big. Buy a lien on a piece of vacant residential land in a decent neighborhood and maybe a lien on a home or duplex. Then follow the rules. Some states, like Illinois, have actions you must take after a few months of holding the lien. Most other states want you to remain silent and never contact the owner. That's why I say just start with one county, learn the rules and make a small investment.

You will learn the differences for liens on vacant land vs. improved property. But the main thing you will have done is - taken action. Yes there is a lot to learn. 

Remember learning math in grade school? Did the teachers try to have you learn addition through partial differential equations right when you started in first grade? No, they taught you the number line, then grouping, then addition and subtraction - and that was it for the first year! The same goes for tax liens - learn in bite size chunks. 

Learn one county and make an investment. You'll quickly learn the ins and outs once you hold a lien or two. Then you can expand from there. Or move to other REI if you don't like liens.

I wish you both good fortune!

@Ned CareyYeah old PTL. I tracked them down to an address in a home in California when we talked about them last. They used to bid on anything. Doesn't surprise me in the least that they have low value properties. I've made my mistakes in the past too, so I'm not going to completely degrade them. They just made mistakes with a lot more capital than I did!

@Ned CareyMore number of bids than bidders? Are you referring to the #NA in the image? There were 2 liens that were bought that did not have a Property Type. There were only 2 bids in total so each lien had 1 bid. If I'm wrong on the specific situation you're talking about - let me know.

These auctions are "quasi-live". The bidding time spans a couple of weeks. You can't see other bids, but you can see a count of the total number of bids for each lien. You are allowed to modify your bid before the auction closes. They close the liens in "batches". Usually a couple of hundred liens per batch. Each batch closes at specific time. 

Some counties close there batches on the hour over a day's time. Some close a batch every half hour. The results of the batch are available in a TXT file about one minute after a batch closes.

What I like to do is look at the first two batches that close and I can see how the results are going. For some reason the institutions tend to bid one interest rate for every lien they bid on. If I see the liens that had the most bids are won at specific interest rate (say 4%), then for any of the batches still open, I'll look at the liens I'm bidding on, and if my bid is over 4%, I'll either drop my bid to 3% or just let it sit knowing I probably won't win it.

As for your last two questions, I did a post on my BP blog a few years ago about the changes counties have made to eliminate institutions from opening hundreds of thousands of accounts for bidding. Here is the link; https://www.biggerpockets.com/blogs/2682/21497-flo...

Basically, institutions still play and they are willing to accept lower rates in the present low interest environment. 4% is still way above a CD or T-bill rate. Since most liens are paid in a year or less, it's a better return than other short term investment vehicles. My guess is as rates eventually rise, so will the average interest rates being bid in future auctions. 

Also, the number of bidders seems to be going down because individual investors came in droves a few years ago. They were soundly trounced by the big boys and have moved on to other investment choices. You and I see it all the time here on BP - where someone asks about learning tax lien investing. Several people will answer that lien investing is not worth the time it takes because of the low rates and the small possibility of ending up with the property - all very true statements. 

It takes deep pockets and very systemic procedures to make tax lien investing worth your time if you expect to make a living at it. I only do it part time myself for my i401k. 

The 2016 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 and number of liens sold was flat this year for Coconino compared to 2015.

I eliminated the "Struck to County" liens which are the liens nobody bid on and are now held by the county. There were 1,227 liens that were struck to the county. A total of $1,303,047.86 in liens not sold.

Number of liens sold to investors:

2016 - 766

2015 - 767
2014 - 1,062
2013 - 1,220

Total dollar of liens sold:

2016 - $789,139.40
2015 - $752,379.78
2014 - $1,359,566.57
2013 - $1,868,433.33

Average rate of return overall:

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:

2016 - 54
2015 - 68
2014 - 69
2013 - 106

Total Number of bids for all liens:

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:

2016 - 4% 867 bids

2015 - 5% 551 bids
2014 - 7% 1,162 bids
2013 - 7% 18,001,058 bids

Most bids per lien/parcel:

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):

@Ian Cox Institutions have actually fallen off a little bit in the past couple of years in AZ counties that have limited each bidder to one ID. But with low interest rates overall, getting anything above 2% for a year is better than a CD or Tbills. As rates rise, I think lien rates will rise too in states where you bid the interest rate down.

The overall number of bidders fell, the number of bids fell and even the number of winners overall fell. Looks like the institutions are moving away even more.

Here is a list of the top 15 winners in the acution based on the total dollars invested. Note "Struck to County" are those those liens that did not have any bidders. (Click on image to see a bigger view)

I will be posting similar stats for Coconino county soon. Maybe Pinal once the auction closes.