Re: A Question for Ron Star about Tax Sales[Long] - Posted by Ronald * Starr
Posted by Ronald * Starr on September 22, 2001 at 19:26:57:
I like what you have said. You have been studying rather than rushing out and possibly running into trouble. You don’t mention having taken classes, which I recommend in my “longggg” post. I think that might still be valuable for you.
In most states you have to be a real estate licencee to do property management for other people. Be sure to check out the law where you live. If necessary, you might be able to get a real estate licence fairly quickly. You might find those courses helpful to prepare for the license exam.
I see no reason not to do as you mention: management for cash flow, holding for appreciation, maybe tax benefits, and possibly some cash flow, and rehabbing and reselling properties for “forced” or “instant appreciation” and selling to produce cash flow. Now please note that you have several activities aimed at cash flow. If you get enough cash flow from the management and the rentals, you might plan to hold some of the fixedup properties as rentals. Advantages: no income taxes. If you refinance out cash on them, that is a none-taxable event.
Here is a reply I just made to William on the main bulletin board of CREONLINE.COM about tax sales.
In Reply to: Tax Lien Auctions posted by william on September 22, 2001 at 13:44:54:
If you are already knowledgeabout about investing in houses, this can be a good way to go. If you are not knowledgeable about houses and buying, renting, selling them, you probably will need to study before racing out with your cash to buy at tax sales.
Understand that you get no guarantees about the property from the former owner or the taxing authority.
You need to know how to study for toxics issues, including methemphetamine labs which might have been run in the houses. You need to study up on the possibilities of problems with water wells and septic systems for rural property. You need to be able to look at a property from the outside and guess about the condition inside. Depending upon state law, you may be liable for some other obligations on the property. I can’t tell you for Ohio, every state has different laws and I have not studied the laws for Ohio.
And there is a lot more to the whole thing. If you want to learn about the tax delinquent foreclosure process itself, I can offer you three suggestions: read the anotated statutes of Ohio on the topic. Buy either or both of John Beck’s “Free and Clear” Course or Roy Stubblefield’s guide to Ohio tax certificates and sales. Just put their name into an internet browser if you don’t find what you want here on CREONLINE.COM . John’s program offers information about every state in the union, the providences of Canada, and territories and possitions like Guam and Porto Rico.
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To find out about the sales themselves, study the law in your state. Contact the tax collector’s or treasurer’s offices and ask them when they will be having their next sale. I usually send a short letter, duplicated off from my computer simply asking when they will have their next sale and putting me on the list to notify when they will have there sale, if they maintain such a list. Many will do so for free. Many want you to supply a SASE which they will put in a box and stuff with notices when they have a sale. Some will want a payment for putting you on their list. Typically about $2 or $5, but some are as much as $25. I always enclose a SASE so they can put it in their box or so they can tell me their procedure and any associated costs.
In some states the dates of the sales are set by law. You can often get a list of the properties from the office conducting the sale. Seems like all states require newspaper publication of the sales in the legal ads or public notices section of the local newspaper – typically from about 3 to 6 weeks in a row. If the county office doing the sale wants too high a price for their sale list, just order a copy of the local newspaper where the list was published–Typically this costs $1.50 to $2.50. Some papers will send you a free sample copy of their paper, and let you specify the date – which of course would be one of the dates with the tax sale list in it.
These days a lot of the tax collectors/treasurers have websites where they will post their sales dates and sometimes the sales lists. I love it when they have on the internet the complete list and then remove properties pulled from the list right up until sale time.
Understand that over 90% of the properties at tax sales will be vacant land. However, most of the houses will be rundown and need work – just right for you guys! Be sure to set limits on how much you will pay for the houses. There may be amateurs who will bid up the prices too high, you don’t want to pay too much for the properties.
Also check about possible title insurance issues. If you hold the houses as rentals and don’t get loans against them, this won’t be a worry. But if you plan to resell or get loans on them, it could be difficult or even impossible. At least, without doing a quiet title lawsuit.
Also, please note, I follow my family tradition of being prolifigate with "r"s and spell the family name with TWOO.
Good InvestingRon Starr*