Hi Ben. I am curious as to how or what courses you have studied about TLC’s. I live in Florida, and the Tax Liens are sold once a year by June 1st. There are 2 or 3 counties I would like to buy liens in. Plus, Georgia looks like it has some pretty good returns on the liens! Can you give me any advice on how I can know if a property has contaminated water, or other nuisances? I have read the “16% Solution” and have looked at Florida statutes on tax liens. How do you go about searching the properties? Do you drive out to each and everyone of them? I plan on having ALOT of money in reserves by next years auction! I would like to buy them for the returns, and if I acquire a property here and there that would be great! I would appreciate any tips you can give me.,
tax lien certificate investing - Posted by Jack Palmer
Posted by Jack Palmer on July 13, 2002 at 05:38:51:
From time to time I get emails about tax lien certificate investing. Does anyone in this group actually buy property for back taxes? If so is how hard is this transaction to do? What are the risks, and where can I go to get legitimate information on how to do these deals? thank you. Jack
I am a tax foreclosure attorney and my company has been buying tax lien certificates full-time for seven years. I buy primarily for the interest rate which in NJ can be as high as 18% plus penalties. Over the seven years I have purchased close to ten thousand liens and have taken title to about 12 properties. In the rare cases a property is acquired the returns have been astronomical, (my best deal to date was a beautiful mansion acquired for 7 cents on the dollar!) However, I cannot stress enough that this is the exception, not the rule. Most investors in this business are looking for above average returns with little risk. As far as risks, the number one risk is buying a lien on a bad property, (contaminated, underwater etc). The second risk in my opinion is not having enough liquidity to pay subsequent delinquent taxes,see the lien through foreclosure and litigate any challenges along the way. If you run out of money, there is no secondary market for your lien, you are stuck. You can probably sell it at a deep discount. For a good overview, get “The 16% Solution” by Joel
Moskowitz. Also check out Ron Starr’s archived posts as well as JT-IN, David Krulac and Bud Branstetter.
Also check out taxsales.com. Good luck.
Robert, Ronald Starr has posted on this site about this. If you do an archive search on his name you should find some more info. Also, John Beck offers some books on the subject that are a good value.
Jack - I recently looked into this issue in great detail. Where I live, tax sales are listed with foreclosures in the local paper as a means to fulfill the statute of making that information public 4 weeks prior to these sales going to public auction. It’s typically a bidding process whereby the tax deed is sold to the highest bidder. The minimum bid is ths cost of back taxes; in most cases…county porperty taxes. The successful bidder holds the deed for a period of twelve months and then has the right to foreclose on the property. Title search of the property in question is absolutely essential for purposes of understanding the value of the tax deed (certificate) with respect to the ultimate profit you expect to gain. During the twelve month period, the record of owner can make good on the taxes and have the lien removed from the property thereby reclaiming all rights to the property as the owner of record. Though not without more cost to he or she. In my case, the cost is the amount paid back to the holder of the deed; to include the price paid at auction plus a 20% premium plus acquisition costs. Good protection and decent return on your money depending on your discretionary cash and your willingness to carry it. Again, after that 12 months (or whatever time frame is prescribed for your jurisdiction), you have the right to foreclose. If the property is otherwise free and clear of any liens or you are also willing to pay to clear those liens, the property becomes yours. There is also a “period of prescription” (in my case 4 years) where the tax deed holder becomes record of owner by default. Important to note that unitl you actually take legal title to the proerty, you can’t do anything with it. Depending on the property FMV, the costs required to fix up the property, its marketability, your cost of acquiring the deed and your willingness to carry the cost without a return for at least 12 months and go thru due process of securing legal title, the gains can be substantial. Title search, financial analysis and property analysis are key to the process. Your county tax commissioner (or whatever jurisdiction is relevant in your area) is the place to begin seeking detailed information. I walked in and received a 10 page pre-printed booklet. Good luck!