All Forum Posts by: Joe Donohue

Depends on how much you have invested. Of course the expense will change your ROI, but always lowers risk. Most everything should be in title work. If you choose not,at least go to county recorder/auditor and look up what you can freely.

Jack

- Don't buy a lien on a property that you have not seen! I think this is the golden rule for tax lien investing. Also, be careful with parcel numbers, be attentive at bidding, do your homework prior to sale, follow the state guidelines.

- At least if you are just starting out, start in your own state or nearby state. Where are you located? Both FL and Texas are great but the competition is fierce.

- Yes it does happen. The process is state mandated. And it can take a really long time.

Hope that helps. I recommend you read what you can, go to a couple auctions in your area and get a feel, then get involved.

Best,
~Joe

Corey,
Where are you living? Because whichever state you choose you will need to be one the road a lot in that area.

What is your goal - interest or deed?

Of those states I have only been to NJ. NJ has a 18% bid down the interest system. Lien holders can bid down the interest to zero, then a premium is established. Also, there is a 2,4or 6% penalty. If you are going for deed in NJ, there are many legal steps you must go through to get the property. I recommend the book New Jersey Tax Liens by Peregrino (sp?).

NJ has several syndicates that attend auctions with big lists. My understanding is that Xspand dropped out, but other big players are still there. They will try to purchase any homestead property lien. Go to smaller auctions (in smaller counties) and you may get lucky in beating a local.

- $10k is plenty. Most of your small homestead liens will be 1,000-4,000. Vacant land liens will be much less. Remember to have at least 25% of your funds set aside for the various legal fees.

Best of luck and keep us updated on your progress.

~Joe
PTI Serivces, Inc.

I recommend for all beginners to go to the auctions and simply learn the process first-hand.
DO NOT buy tax sale lists online.
DO NOT buy "training" programs.

No offense to CI, but the previous posts are annoying. The fact that he repeatedly posts his links says to me that he makes more of selling "education" than he does in tax sales.

There are probably more of these people selling "education" than there are attending the sales.

~Joe

I know both Florida and Arizona do a lot of online sales. However, in FL the site is outsourced by asn online auction company and is only up for a limited amount of time prior to the sale.

~Joe

""My thought was that the foreclosures might actually be the bigger money maker if done correctly - if the tax lien holder forecloses the mortgage gets wiped out all together so you ownt he property free and clear (barring and IRS or other senior liens) In this scenario you get a house at a steal of a price.""
--That's true. I'm sorry my point about the 1/10 was in the case that you hadn't done proper due diligence. Typically the 1/10 can be a good profit. However, you must factor in additional foreclosure fees and TIME. Not to mention the TIME it takes to sell. These factors must be considered in your overall return.

Best,
~Joe

"When you say you attended 5 auction to meet people and get a feel before ever making a purchase - that sounds like a great idea but my tax lien sales only happen once a year and im not going to wait 5 years to get involved - how did you go about this?"
- Go to neighboring counties. Most of the major players go to several counties or have reps at other counties.
- Im not sure about Kenutcky, but, in some states, the larger counties/cities have auctions more frequently.
- Join your local REIA to find players
- (Last option) Get a copy of the bidder list from the last auction and try contacting these people directly.

What do you mean by macro-economic and demographic criteria - being the property type, locations ,details (zoning etc)?
- I mean is this a productive area (growing population, economically growing) If you get a property will it be marketable in that area. Basically I mean understanding the entire county. Obviously you want to buy in an area that is growing not declining.

Also in terms of the title search - you essentially pass thru the cost and bill the property owner the cost of the title search as a fee when they settle their debt?
- It depends on your state/county, but in some places, the title work is added to the redemption amount.

Also, I hear that only 1/10 gets foreclosed on, so you want to make sure it is worth it in a worst case scenario - this would be where i'd imagine you get burnt - buying a lien that noone intends to pay and foreclosing on a worthless property - this is probably also why you'd want to avoid properties with prior liens?
- Exactly. While you may make interest on 9/10. That one you foreclose on and get stuck with could sink your entire profit. Typically properties that have had prior liens (liens purchased at a tax sale) are worthless properties bought by an investor who didn't do his homework. He/she realized it was worthless and dropped it.

In my state those who have previous years liens on a proeprty get precedent to buy this years liens again - why would they do this? Why not foreclose using last years liens then let it keep dragging out and buying more and more years of liens on the same property?
- I read an article on this topic some time ago and I'm sorry I don't remember where to find it. This is my answer to this question (to my understanding). Yes as a certificate holder you may foreclose after one year. However the process is time consuming. Many veteran tax lien certificate investors have a different strategy in Kentucky. Rather than go through this strenuous foreclosure process, they simply opt to instead hold their lien longer, thereby prolonging their interest into a second year. Also, they don't pay the subsequent taxes due, and those go delinquent and also go to the auction. There, the previous lien holder gets first dibs on this lien because he already owns the first. Kentucky allows this to avoid the confusion (that often happens in NJ) between lien holders. Now, most likely the investor of the first will use this opportunity to purchase the second. Now this holder has one lien earning interest into its second year and another earning interest as well. These investors "stack" liens up year after year, all in hopes that this property owner will some day pay them off. Interesting eh?

Best,
~Joe

I just bought 3 tax liens in Henry County Indiana. I think I know the next steps, but I want to make sure.

1. I need to do a title search after 30 days, I am not sure exactly what I need to search for so some guidance would be helpful. I tried calling a title company, but they didn't seem to have experience with tax liens and weren't sure what I needed.
--There are many Tax Lien lawyers. MSG or email me for their contact info. Typically they will do both title and noticing for an amount that equal to the reimbursable amount set by the county.
--Be sure to file a 137B form to the county (this adds your expense to the tax lien amount owed)

2. Notify interested parties, I assume it will be clear who I have to notify once I have the correct title search. I am not sure exactly what to include in the notification, but I assume it is pretty clearly explained in the law, or the county can tell me.
-Again, you need to talk to an attorney to know exactly what to say in the notice.

3. Wait for redemption period to end. I think that it is likely that at least one or two of my liens will be redeemed within the one year time frame. I know there is someone living in one of the properties, one looks vacant, and I am unsure about the other.

4. Petition the court for the tax deed, from what I have read this is pretty straight forward if the notifications have been done properly, I would also have to notify again about the foreclosure I believe.
- This process can take a lot of time and your physical presence unless you have an attorney

5. This is where I am confused, if i get the tax deed, what does that mean. I own the property? What do I do if there is someone living there? Is there any chance they will come back and take possession of the property? I know some states have a redemption period for the tax deed, but I don't think Indiana is one of them. Also, I have seen that the deed I will get is not good enough to sell the property or get title insurance. I would like to be able to either rent or sell it soon after the tax deed is granted to me, is that realistic? What would I have to do to get a "quiet title" or whatever it is that I would need to sell the property?
--A tax deed gives you legal right to the property. You own it. However it is not a clear title, there could be others interested in the property. If you file "quiet title" you will ensure that you and you alone have the property. Then you can get title insurance. I would say that 99 percent of quieting the title happens without a hitch, because you have done everything you needed to and no one said anything. Even if you get contesters they basically have no ground.

Be sure to pay the taxes!! Pay any due during the redemption period. These can also be reimbursed with the 137B FORM!

Best,
~Joe

feel free to contact me with any questions as I have been doing tax liens in Indiana for many years.

Get list of delinquent taxes in your county

Go to county auditor/assessor/recorder and look up property card, etc. Search for a GIS map or online mapping services.
(Do the free things first, that way you aren't spending any more money on something worthless)

go and inspect condition, repairs, vacant or not, ARV, etc.
--Have them all mapped out, make a route, and go to all in one day.

For those properties you're interested in search with the local authorities for building violations and mandates, and then perform a title search to see the current liens.
--DEPENDS ON STATE title searches are typically done after a successful purchase and it is reimbursed by the property owner with redemption.

Perhaps perform a title search and building ordinances the week of the sale as well to make sure nothing new has been filed.
--Smart

Go to the auction and buy the liens at a price which you ar willing to pay
-- Have a price point written down. And don't go over it. Emotions will get you burned.

I also believe that macro economic/demographic criteria should be met before any othis.

Hope this is helping

Best,
Joe

What exactly do I look for besides the condition and location of the property, etc.?
- IRS tax liens (mentioned), Environmental issues, Sewage issues.
- Also, look at history of property (if it has been purchased in a previous tax sale, there is probably something very wrong with it) (Also if you have time, look into the owners)
- Also be sure to set macro-economic criteria.
- Land Type/Classification.
- Land Zoning laws in that area. I got a tax deed to a nice property once but was short 10 feet to make it a buildable lot. Had to file an ordinace.

What do the big tax lien funds look for?
Typically they look for large land parcels and/or homestead properties WITH Mortgages (guaranteeing a payoff)

What is senior besides federal, and do all junior liens (including mortgages) get completely wiped clean?
- EPA and IRS are all I can think of. Remember if you get a tax deed you should still quiet the title

In my research I am still not certain that I know enough not to get burned, what should I do to feel fully prepared and confident to invest in liens in my state come August '11?
- I suggest going to a few sales and make it your first priority to meet others in the game. I went to probably 5 sales before ever bidding.

Also, assuming you are in Kentucky, remember that there are others that have been in the game a much longer time who get first round bidding privilege on many of the liens.

My suggestion to you is to come up with your own criteria for evaluating a property.

Best,
Joe