Posted by Courtney Lane on Wed, Jul 28, 2010 @ 03:15 PM
The upcoming tax sales in Missouri are on one the most overlooked sales in the country by the lien buying public.
We believe this is due to a huge misconception that only state residences of Missouri can bid in the sale. This is not true; however this urban legend has resulted in making Missouri much less competitive than other states. We view this as a great opportunity.
The Show Me State Details:
- Missouri Tax Sales take place each year in August.
- St. Louis City and Kansas City do not hold lien sales – they hold deed sales, the rest of the state holds liens sales.
- Missouri actually offers THREE different sales – the “regular” sale, a second offering sales and a third offering sale.
- The redemption period in Missouri is 2 years, however lien buyers entitled to possession after one year can collect rent.
- The bidding method in Missouri is the highest and best bid, meaning that the lien is sold to the individual willing to pay the most for the property.
- Full interest is earned on the full amount of the bid (including surplus and overbid).
Importance of Due-Dillegence:
As in all states, I cannot over emphasize the need for good due diligence. The lists published by most of the counties have no physical addresses for the properties, so it is necessary to get the situs addresses and determine location of the properties. Each of the cities, like all cities, have undesirable areas that you may want to avoid. The reason I say may, is that I have found that good properties in bad areas are not necessarily a bad investment.
If you would like more information about the Missouri tax sales work, click here and download our white paper on Missouri.
Posted by Courtney Lane on Tue, Jul 20, 2010 @ 04:19 PM
15% per year rate plus a 3% penalty…..these numbers sound pretty good to us! This is what the state of Wyoming offers lien buyers at their tax sales, which happen to be coming up in August. However Wyoming remains one of the states that few people go to to buy tax liens. This is good news!
We find it somewhat strange that the number of folks participating in the Wyoming Tax Sales is so low, considering the high rate of 15% per year plus a 3% penalty. We suspect that part of the reason for this is the long redemption period and the fact that it is the least populated state in the country. Another potential factor is that Wyoming Tax auctions tend to be lotteries. Whatever the reason we feel there is a lot of opportunity there and it is a state worth considering.
What You Need to Know:
If you are interested in attending the Wyoming sales this year here are some things you need to be aware of:
- You should familiar with the Public Land Survey System (this is how properties are described on the tax sale lists).
- There are a large number of liens offered each year that are agricultural and/or unimproved parcels. DO YOUR RESEARCH. Wyoming is a ranching state and these lands can be leased, however you can also end up with a strip of land next to highway or acres of land that has been allowed to lay fallow.
- Subsequent taxes are very important in Wyoming. If you do not pay them, you risk losing your position in the lien. Of course you can use this to your advantage if you did not do your due diligence and determine you made a mistake.
- Wyoming does not allow for overbids. This means that the average tax lien investor can easily participate.
Wyoming Bidding Methods: Wyoming is a Tax Lien State that has a little bit of a different way of doing things. The bidding method in the state is the party willing to offer to pay the amount of taxes, interest, penalties and costs due on the property gets the lien. However the practice in most counties (although not stated in the statute) is to hold a drawing if there are more than two parties willing to purchase the lien.
Redemption in Wyoming: Wyoming has a four year redemption period, but pays 15% per year plus a 3% penalty. Based on our experience in Wyoming, but not on any actual statistical analysis, it is our feeling that the redemption rate is approximately 92% on all liens sold. It can be assumed that the redemption rate on improved properties is substantially higher and the redemption rate on unimproved properties is somewhat lower. So if you have a little patience you could end up making a very nice return on your money.
If you would like more information about Wyoming tax lien sales work, click here and download our white paper on Wyoming.
Posted by Courtney Lane on Thu, Jul 01, 2010 @ 03:17 PM
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Posted by Courtney Lane on Wed, Jun 30, 2010 @ 04:57 PM
If you are looking for a way to invest in Tax Sales this summer, we recommend you consider Georgia for a great opportunity to make money.
Georgia sales are held year round on the first Tuesday of the month unless that day is a holiday and they will then be held on the next day. Most jurisdictions do not hold a sale each month, however there are typically sales happening each month
Why We Like Georgia Tax Sales: Georgia is what we call a redeemable deed state. What that means is that Georgia sells a tax deed that has a one year and 45 day redemption period. What we like best, is that it offers one of the highest returns available from tax sales, being a 20% penalty on the amount bid (including any surplus or over bid) for redemption during any part of the first year after sale and an additional 10% penalty upon filing the Notice of Foreclosure of Right of Redemption (which can be filed one year and one day after the sale).
What that means for investors? It means that a property with an outstanding tax liability of $2,000.00 and a market value of $100,000 may sell for $50,000.00 and the redemption amount received by the deed purchaser would be $60,000.00 for any redemption during the first twelve months and $65,000.00 for redemption after the Notice of Foreclosure of Right of Redemption has been filed. If the buyer files all notices in a timely manner they will either get the property within a 14 month period or make an annualized return on their investment of over 26%.
Simply, this is exactly
why we like the Georgia Tax Sales.
Georgia Bidding Methods: Georgia Tax Sales bidding method is simple. The “highest and best bid” wins, meaning that the individual who is willing to pay the most for the property is the winner. This means that there is usually a substantial surplus or overbid that occurs. This surplus is not returned to the buyer by the taxing authority; rather, it is part of the amount that the property owner must pay to redeem the property. The significance of this is substantial, since it makes the property owner pay an amount that is substantially greater than the tax obligation owed. In the example given above, the property owner would have to come up with $60,000.00 to pay a $2,000.00 tax delinquency.
Importance of Due Diligence: If you know anything about us, you know how important we think the due diligence process is for every Tax Sale. With that said, we believe it might be is even more important for Georgia. Why? Due to the bidding method used, and the likelihood of substantial surplus/overbids that occur, we believe investors have a very good chance of being the next property owner. The lists published by the most of the counties have no physical addresses for the properties, so it is necessary to get the situs addresses and determine location of the properties.
Each city, like all cities, have undesirable areas that you may want to avoid. The reason I say may, is that I have found that good properties in bad areas are not necessarily a bad investment. Again, I strongly suggest that you attempt to look at as many properties as you can. If you follow the due diligence process that we suggest in our training program you will avoid most mistakes.
If you would like more information about how the Georgia tax lien sales work, click here and download our white paper on Georgia.
Posted by Courtney Lane on Wed, May 05, 2010 @ 12:20 PM
The Iowa Tax Sales are fast approaching and it is one of my favorite sales. With a 24% per year inte
rest rate, good inventory in 99 counties and less bidders than other states, it should be one of your favorites too.
Most of the Iowa Tax Lien Sales are held on the 3rd
Monday in June. A few counties will postpone their sales a day or two, but for the most part they all take place in a one – three day time span. This can make it challenging to attend more than one sale in the state, therefore making your pre-sale preparation and due diligence even more important.
Why I Like Iowa Tax Lien Sales:
As I mentioned earlier Iowa is one of my favorite states to buy liens in, due to the very high interest rate of 24% per year, or 2% per month or any part of a month.. The state also tends to have a very good redemption rate. There are 99 counties in the state so it is pretty easy to find a number of counties with a fairly low number of bidders.
Iowa Bidding Method:
The “official” method of bidding is on a “percentage of ownership” basis (the person willing to take the smallest portion of ownership in the property wins the bid), the rate is always 24%.
In reality the “percentage of ownership” bidding rarely is the method used, but rather a round robin method is used.
This means that you will get 100% ownership interest and a 24% return. This is a very good deal!
What is Round Robin Bidding?
Round Robin Bidding is a method used by a number of different jurisdictions and is a fairly simple concept. Basically they go around the room in a fixed order and each person is given the opportunity to the buy a lien. You pay just the delinquent taxes (plus any penalties, interest and/or costs) for the lien. Assuming you are seated in an auditorium environment, they would start with one row of seats and go down each seat and offer a lien to you. It is always your choice, you can say yes I will buy it, or no, I pass.
Importance of Public Land Survey System in Iowa:
Anyone going to bid at a Tax Lien Sale in Iowa should become familiar with the Public Land Survey System. This is how the properties are described on the tax sale lists provided. It is crucial that you understand the system and how it works. Also keep in mind, the publication of the lists can be as little as seven days prior to the sale, which does not leave a lot of time to do your homework.
Tips:
In Iowa it is important to understand that if you do not purchase subsequent taxes a new lien will be sold and the new lien buyer may redeem you out. Subsequent taxes earn 2% for any part of a month from the date of payment.
If you would like more information about how the Iowa tax lien sales work, click here and download our white paper on Iowa.
Posted by Courtney Lane on Sun, May 02, 2010 @ 02:25 PM
Florida is by far the largest sale of any state. In recent years they have sold well over 600,000 tax liens, one year reaching over 800,000.
The tax lien sales in Florida occur during the month of May, usually starting about the 7th and continue through the 1st of June. Every county has to complete their sale by June 1st.
Most of the counties now do their sales online. The two major companies doing the online sales are RealAuction.com and GrantStreetGroup.com. Between them they have 40 sales online (27 by RealAuction and 13 by Grant Street Group). There are a few other of the 67 counties that have sales on line.
The online sales allow you to bid on properties without going to Florida. This is a great benefit as long as you know how to get the due diligence on the properties, which can be done online now a-days.
The online tax lien sales are done in the following manner:
The online tax lien sales are done in the following manner:
1.
You are given a period of time to enter your bids prior to the sale. Usually this runs from 10 days to 14 days.
2.
The sale itself takes very little time because the winning bidder is determined instantly by computer.
3.
In Florida the tax lien is sold to the individual who is willing to accept the lowest interest rate on his investment. Bidding starts at 18% and goes down from there. In years past you saw bidding as low as 1/4 of 1% interest rate - a rate that seems incredibly dumb, but there is a reason they went that low. In Florida you get the interest rate you bid, or a 5% penalty (known as the fast five), whichever is more.
A penalty is different than an interest rate.
Let's assume the tax lien is $1,000.00. If you made 5% interest on $1,000 for 30 days, you would make $4.10. On the other hand, a 5% penalty on a $1,000 is $50.00. Even if the lien redeems in 30 days. People would bid 1/4 of 1% interest if they were betting that the lien would redeem in 30 to 120 days. If it did, they made the following return:
·
Redeems in 30 days - annualized rate of return is 60.83%
·
Redeems in 60 days - annualized rate of return is 30.42%
·
Redeems in 90 days - annualized rate of return is 20.28%
·
Redeems in 120 days - annualized rate of return is 15.21%
The risk here: if the lien doesn't redeem for 18 months, your return is less than 3%.
In recent years, since the sub-prime mortgage crisis, most people have been bidding levels for decent properties in the 8% to 14% range.
You never get the property just from buying a tax lien in Florida.
Repeat - You never get the property just from buying a tax lien in Florida.
If the property does not redeem, it is sent to a tax deed sale and the minimum bid is what you are owed on the tax lien. Let's assume that you are owed $1,235 on your tax lien. That becomes the minimum bid on the tax deed sale. If somebody bids $1 more than that amount they can buy the property and then sell the property to whoever is willing to pay the most for it. You can bid also, but you don't have to pay the first $1,235 of your bid since you are owed that amount on the tax lien. If nobody bids on the property, then you become the owner and stand to make a handsome profit.
Download our Florida tax sales guide to learn the ins and outs of Florida tax sales.
Posted by Courtney Lane on Sun, Dec 13, 2009 @ 10:41 AM
Before you can do any of the methods we talked about in previous posts, you are going to want to spend some time and some money in cleaning up the property. You never know what the interior structure will be like until you actually go into it (we had one property that had a dead body in it – that was a bummer).
In most cases you are going to want to do some painting and in some jurisdictions you will have to bring the property up to code before you can sell it. Interestingly enough, in some of those jurisdictions, you can rent it without bringing it up to code. If you are fortunate enough to have tow or three properties that you take to deed, you want to hire a local contractor to do the fix up work. 
In my experience, a very large percentage of the single family residential properties that we took deed to were rental properties. Right after you insure it you inform the tenant that the rent check will now be made out to you, and you ask them if they are interested in buying the house if the terms are right. We sold a number of houses to the tenants on “contract sales” or where we carried the paper.
The tenants know the house, they are already living there so they have no moving expense – in fact, and they avoid moving expenses they would incur if you sell it to someone else. The other nice thing is that the tenant that buys the property seems to take care of it than when they were just a tenant. Since you still have an interest in the property, this is important to you.
Posted by Courtney Lane on Sat, Dec 12, 2009 @ 10:40 AM
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Posted by Courtney Lane on Fri, Dec 11, 2009 @ 10:40 AM
A third method is the “rent to own” program where you rent the property to someone with a portion of the rent going toward a down payment – after a period of time you have receive your down payment and now you carry the paper for the buyer. 
You have more than gotten your money out of the property through rent and the down payment and still have an interest in the property.
Another prospective method of disposing of the property is to donate the property. You need to talk with your accountant about this, but it would seem to me that you can probably get credit for the market value of the property when making a donation.
Somebody like Habitat for Humanity would love to receive the property (as a side note, Habitat for Humanity has been a bidder at a number of tax sales that I have attended).
I am not a tax expert and I would assume that you would have to get an independent appraisal for the value of the property, but it might be a very nice donation on an after tax basis, if you have the need for a write off.
Posted by Courtney Lane on Thu, Dec 10, 2009 @ 10:39 AM
A second method of selling the property is a a “contract sale”, where you retain title to the property until the contract amount has been paid. Again, here you are the one who determines if you make the deal or not – because of this you have a wonderful amount of latitude to what you do.
I have a friend who has bought tax liens in Indiana for over 25 years. He has properties he acquired from tax liens that he has sold on contract three, four and five times.
What has happened is the people have defaulted on the contract, moved on, and he has sold the house on a contract to another party. They move, or get transferred or just walk out, and he sells the house again.
Because he has so little invested in the property he can accept deals that he would not otherwise consider.
NEXT POST: Third Selling Method