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Florida Tax Sales Are Coming - the state with the most tax liens

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 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.