Tax Sales Advice

I am 23 years old. I have just purchased a $550 tax lien certificate. the property is valued at $40,000 and near a very desirable river, and being new to the RE game I would be forever grateful for any advice anyone out there may have on what next steps to take with this investment. Thank you fellow future millionaires.

New to this all....found a property in Pa going to auction on the 25th September for $1789 in taxes. My friend/realtor is heading to courthouse to get info~ I am re-reading Dean's Chapter 18, but~~Any advice on what we might want to be looking for??? Thanks!!!

I would like to be more clear on the tax sale of a property process...Let say you find a property, grass is overgrown and it is aparent that the house is not occupied. I run the address on the county site and it shows the owners are way behind on their taxes and lets say there is still a mortgage on the property. Would this property be a possible tax sale or would it just go into the normal foreclosure process ?.....What dictates a tax sale vs a standard foreclosure ? What is the best source to locate tax sales of properties ?
Thank you.....B.A.

Bicino,

In direct response to your tax lein question above and others in general. This is one area of REI that I have been looking into and tho my state only does sales once a year (June) the redemption period is only 6 months. Quick turn in MD - tho most aren't online. My understanding of the process, tho I am by no means an expert.

Best place to find tax sale info is your local tax assessors office in your county. Or there are numerous sites on line that give you tax sale info as far as where, when, and if they are online.

In your example above - any property that the taxes are behind is a possible tax sale. At your counties auction any properties that have not been brought to date will be offered for sale. If the morgage company or bank has not paid the taxes and started forclosure by the sale date the property goes to tax sale. The owner or any principal (ie mortgage holder) has until the end of the redemption period to pay the lien back and retain control of the property. If it is not paid by the redemption date the purchaser of the lien can record deed in their name and the property is theirs. The only thing that overrides a county or state tax sale as Sully said is an IRS lein.

So in your above example - Grabup the tax lien if it is available at the auction. You can't just go in and buy anytime, unless the property did not sell at the last auction then your assessors office will have it for direct sale. If the bank wants to forclose they have to pay off your lien by the redemption date. Alot of time banks may not receive notice due to note being sold back and forth, but if it gets to auction IT IS YOURS>

There are two Basic types of tax auctions - liens and deeds that are two very different things. Some states have tax deed sales - actually a full tax auction. In a tax deed sale the property itself is sold to repay the taxes. You buy it you own it outright. Once bought you would have to have the sherrifs office perfotm an eviction etc ... and my understanding os that any amount in excess of the taxes that the property sells for goes back to the owner, but I may be wrong on this.

The other type is the lien sale. In the lien auction you are buying an interest in the deed, not the property itself. Say a 100,000 property has 500 in deliquent taxes. Buyer would bid on the amount above the 500 they were willing to pay to "buy" the lien. High bidder geta a lien on the property and in order to get back the rights the owner has to pay the full amount auctioned for plus your state approved intrest to the tax assessors office. If they don't by the end of the redemption the lien holder can do a deed transfer and owns the property.

Basic gist - deed sales are immediate property sales, liens are not.

what the difference in these sales other than i no a tax lien you only r buying lien on property.
joycesman

Buying the lien is not buying the property, but it gives you the advantage of making money from the sale of the lien or from acquisition of the property by holding the lien. It gives you first dibs, so to speak.

What did you buy for $1700? The tax lien that did not redeem Or did you buy the deed itself?

I have a line on Several Manufactured homes from tax sales. If i were to buy them they are just the Manufactured homes them selves not any properties. They would be able to be moved to a park somewhere. Is there a market for that if I were to Buy them from a tax sale?
Thanks for any help I can get.
Christa

I just saw this post but I can tell you there is a big market for that. Of course it depends on where you are. Hope it worked out well for you.

I have invested in Michigan for their tax sales. I have just sold 3 of the houses I got out there. I got them for 3500 each so there are some great deals there.
All of the Michigan tax deeds sales are going to be coming up at the end of summer. They will usually start the end of July or beginning of August. Now would be the time to learn how they work and the rules of the auction. These sales will be online auctions so you will not have to travel anywhere to do these sales.
some of the auctions will be online through www.bid4assets.com but majority are going to be at www.tax-sale.info

Good luck!

I just wrote this huge long thing and the computer timed out and I lost it all. So I am going to condense this and if you need more info you can reply.

Michigan is going to be a great state to buy tax deeds in. I had purchased 3 houses there for $3500 each. So you can really get some good things that we can sell or rent for cash flow.
All of the Michigan tax sales will start at the end of July or Early August. So I recommend start getting ready and knowing the rules.
You will be able to do some online sales for Michigan so you will not have to travel anywhere to do them.
the websites that do them online are www.bid4assets.com and www.tax-sale.info

Good luck.

Yes it is always best when you have already paid all your liable tax, either what kind of these are. And when your home is already free of tax that is really a great pleasure.

Currently I am in PA caring for an ill child and happened to stumble into tax sale auctions in the area. Here in the area where my daughter lives, they have two(2) auctions and one of those is coming up in mid-December. The minimum bid on a property is $750, though there are some properties that are subject to being started out at a higher bid. My question is this: how do I take advantage of purchasing a property at one of these sales WITHOUT using my own money? I tried to save up in order to be able to participate but I am not so sure that I have enough to really get the property. Plus I attended the auction last year to get a feel for the process and one of the stipulations set forth is that you have roughly ONE HOUR to pay for the property before it goes back into the auction process. Any suggestions? Thanks in advance!!

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"Nay, in all these things we are more than conquerors through HE that loved us..."Romans 8:37

"You can be discouraged by failure - or you can learn from it. So go ahead and make mistakes. Make all you can. Because, remember that's where you will find success. On the far side". - Thomas Watson, Sr.

first determine if you want tax liens or tax deeds. Then see what kind of state you live in. We might be able to start in your own backyard. If your state is not something you want to do or they dont have auctions right now then lets find some left over properties in other states that you can buy through the mail.
If you need to respond to this and tell me what state you live in and I might be able to help you get started.

I'm a newbie so bare with me. i understand how you can get a property with paying the tax lein on it that has no mortgage, but how do you get one that has a mortgage. Don't all the mortgages you get now have the taxes and insurance included, which means the mortgage holder pays it out of your escrow. What am I missing?

I'm certainly no expert on tax liens, but from what I understand when you buy the tax lien and then it gets paid off, you get your money back plus all the interest and fees that your state tags on. That's where you make your money. And SOMETIMES you get the property.

If there's a mortgage on the property, most likely the mortgage company would pay the tax lien in order to gain control of the property. If the mortgage company had a $100,000 loan, they would certainly not lose it because there was $1000 in back taxes. They would rather pay the tax lien and then take further action like foreclosure and sell the property for as much as they could get.

Mbjoseph is correct.
The bank is not going to want to lose that property for back taxes if the still owe a lot on the mortgage. They will pay your liens off and then you will get your money and interest back. Rarely you will get the property and then you can get the mortgage cleared off or any other liens that might be on the property.

Usually the only properties you get are the ones that are already free and clear or the owner does not owe enough to make the mortgage holder even care. Liens are very safe investments because the only 2 scenarios are you get your money and interest back or you get the property. If you buy something good to begin with then there is not much risk.

You would think that the bank would protect their investment, but that is not the case. When the taxes,are not included in the payment, the mortgage company is leaving it up to the person with the mortgage to pay their property taxes. If the mortgageee does not pay the taxes the mortgagor loses if both parties were notified prior to the forfeiture. This does not happen often, but mega bank does make mistakes and the holder of the tax lien benefits.
Mossy Oak

I'm also new here. How do you know if the property has Tax Liens and how do you pay for for it?

Real estate 101 in investing teaches that there are 3 primary investing criteria, location, location, location or education, education, education to know the right location. Tax liens rules vary from state to state. County records office can provide a wealth of knowledge. Investing in tax liens does have its risk such as the tax lien on the property could have hefty cleanup fees or environmental dangers. Many tax lien properties forfeit to unknowlegeable investors to later be forfeited to the state. The tax lien matured to the investor to find out that the investment is practically worthless. Before investing in tax liens knowledge to go along with research, research, research is advisable .
Mossy oak

When the Redemption Period has expired (the stipulated time period allowed the delinquent tax payer to "buy back" his property by paying all back taxes due, fees, if any, fines, if any and the interest due the tax lien purchaser)and the process of putting the property in your name is completed...the property is yours..free and clear. A tax Lien purchase takes First Position over any Mortgage, IRS lien!!! yeah. etc. The last statistic I saw re redemptions was that 97% of tax Lien sales are redeemed. Meaning you don't get the property but you get the interest owed you...a lot better rate than you would have received on your savings acct, CD's etc. so it is still a Win Win Win situation. State Laws vary re redemption periods, procedures etc. so you do need to check them out. Once in a while you get lucky, if your goal is to get a property for pennies on the dollar. Good luck.
Semper Fi D-LO

As long as you have not used the dart board approach, your chances of obtaining a property are improved. Of course sometimes by some miracle you do hit a bullseye. Other times the random approach will allow you to obtain a property that has hefty demolition fees, environmental hazards, and other properties that you did not want as you only wanted to collect your interest. You do not receive any interest if the worthless property matures to you and that you have a hard time giving away. Research, research, research.

per wmark1963: "IRS Liens are NOT removed." Makes sense to me, but.. Two different Tax Lien/Deed education sites I visited specifically stated IRS Liens are also removed...the third..the Tax Lien/Deed program my son bought for us at Dean's seminar stated "many Government Liens" (includes IRS Liens) "run with the land." I'm confused! But will research this item more fully and report back. Coaches, can you help give the proper info to these dgers? Semper Fi D-LO

Both answers are right. IRS liens will stay on property, however a lot of times IRS will just remove the lien. The IRS usually dont want to punish the new owner just the person evading taxes.
I have had people buy liens with IRS liens against them and they were removed. Also if you have to you can negotiate down the amount owed. I have seen one dropped from 40k down to 12k.
So be careful with IRS liens but a lot of times we will be safe.

I am so glad to stumble in to this forum, I bought 3 properties on tax lien sale almost 2 years ago for 4K +
the smallest one got redeemed 6 months after, the last two I foreclosed on ,2nd property was redeemed and the 3rd was not redeemed.I got a released paper from the bank and still waiting from the IRS release .I received a settlement statement from my real estate lawyer and the closing date was postponed until we receive papers from the IRS. I am hoping IRS would remove the lien on the property. I bid 15K on the property at auction plus closing cost would amount to 21K on a 84K to 112K assessment value. I do not have funds to close so I contacted banks for loan but was denied since I already own a home that is upside down. I contacted investor and I was offered 8K profit in our first walk through in the house.I think it is a good deal but I can use all use your advice on how to finance my deals now or next time. according to lender I have to have the tittle in my name before they loan me money. Any advice would be appreciated.