Re: tax lien certificate investing - Posted by Robert E
Posted by Robert E on July 13, 2002 at 06:11:05:
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!
