All Forum Posts by: Isabela Montalvo

[Edited text formatting to help distinguish between FSS language and my translation.]

20% is not guaranteed in any way shape or form per Florida State Statutes (FSS).  Please read the FSS, accessible here http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Displ...

197.172    Interest rate; calculation and minimum.
(1) Real property taxes shall bear interest at the rate of 18 percent per year from the date of delinquency until a certificate is sold [...]
Translation: Property owners who are delinquent on their taxes, for which a tax certificate (i.e., tax lien) is sold at auction, are charged 18% per annum.

197.432    Sale of tax certificates for unpaid taxes.
(6) Each certificate shall be awarded to the person who will pay the taxes, interest, costs, and charges and will demand the lowest rate of interest, not in excess of the maximum rate of interest allowed by this chapter. [...]
Translation: Florida is a bid-down interest rate state.  Whichever bidder is willing to accept the least amount of interest is awarded the tax lien certificate.  This could be as high as 18%, per the statutory maximum from FSS 197.172(1) or, very often, as little as 0.25%.

197.472    Redemption of tax certificates.
(2) When a tax certificate is redeemed and the interest earned on the tax certificate is less than 5 percent of the face amount of the certificate, a mandatory minimum interest of an absolute 5 percent shall be levied upon the face value of the tax certificate. [...]
Translation: When a property owner pays their delinquent taxes and thus redeems a tax lien certificate, if the certificate has yet to accrue a total of 5% at the rate at which the winning bidder won the certificate, then the winning bidder receives 5%.

I've been investing in Florida tax liens for three years.  I've been taking it incrementally, so I have plenty more experience to gain and strategies to implement.

Echoing what others have said, yes, the minimum interest rate in Florida is 0.25%.  Nearly all liens on single family homes (and especially those that have homestead exemption) are going for 0.25% because of what @Wayne Brooks mentioned; even if you earn nominal interest at a rate of one-twelfth of 0.25% each month, the state statutes provide for a 5.00% minimum interest rate.  I have had some success implementing the strategy that @Will Sifert mentioned--bidding on vacant land--but definitely not in Miami-Dade County.

Counties typically contract with these service providers (e.g., LienHub, RealAuction, etc.) so that they manage the auctions as they already have the technological infrastructure built.

LienHub is another

https://lienhub.com/

Zoning codes and ordinance codes govern separate aspects of properties and their use.  Zoning covers land use whereas there can be some ordinances that limit otherwise legal uses under zoning.  This seems to be the case in your situation; the structures may follow all density limits, setbacks, height restrictions, parking requirements, lot coverage ratios, etc. of the single-family zoning code, but the use of the structures may be governed further by the ordinances of the municipality, disallowing absentee owners from renting out each structure under a separate lease.  They likely want to discourage absentee owners.

Another common ordinance that restricts the use of a compliant structure is one that limits the number of non-related or non-family individuals in the same dwelling unit.  This is something to give a particular look at when considering renting out a property by the bedroom.

Keep in mind the municipality you're in.  If you're in unincorporated Palm Beach County, all you need to look into is the county's zoning code and ordinances.  If you're within an incorporated city, the city's codes will supersede.

In Miami-Dade County, a mentor of mine has said to take 80% of the sale price as an estimate of what the assessed value will become upon reassessment by the Property Appraiser come January 1st of each year.  So, in your case, the assessed value would be estimated at $720,000 rather than $900,000, and the tax bill would be estimated at $18,000 rather than $22,500.

A good tip that this same mentor told me is to have closing be as early in the year as possible (ideally January 2nd).  This will allow for nearly a full year of taxes at the previous and presumably lower assessed value.

Take these 80% and January 1st guideposts with a grain of salt.  Despite both of us being in Florida, different counties might have their own quirks, so do your due diligence on the tax laws in your county.

In my opinion, your friend's friend is ripping you off.

Think about it... if the purchase price is $70K, then a real estate agent's commission would be $4,200. Is your friend's friend's contribution worth nearly six times what you would pay a real estate agent for finding the deal and helping you through the purchase process and paperwork? Yes, your friend's friend will manage the rehab, but by your own admission it's a light rehab, one which you may very well be capable of managing yourself, even remotely. Think also of the experience you might gain.

I think a fair fee would be about half of what is proposed, or three times what a real estate agent's commission would be on this deal.

Note: My opinion above is exclusive of the fundamentals of the deal (purchase price, rehab costs, ARV, finding, risks, returns, etc.). I address only the fee as it's what stuck out to me the most.

@Account Closed, you might find R. John Anderson and the rest of the folks at the Incremental Development Alliance to be helpful: https://www.incrementaldevelopment.org/

They also have a Facebook group.  Just search "We Do Incremental Development".

@Rita Medeiros Thanks! I'll see if I can make my way over.