(CA) Tax Sale Auction Question - Posted by Dirk Roach

Posted by David on January 21, 2000 at 21:33:19:

I’ve been to many tax sales, but none in CA. Very interesting crowd and it varies a lot. The rules in different states vary a lot. Some states sell deeds and others sell certificates. Some sales are lien forgiven, while other carry the liens forward to the new owner. Many properties in deed sates are junk and not worth anything. I have seen people buy sides of cliffs, river bottoms, toxic waste sites, dilapidated buildings, wetlands, etc. I’m sure you get the picture.

Often it seems that these people never looked at the properties and assume that anything must be worth something. There is often a carnival atmosphere at the sales and people get caught up in the bidding and figure that its a gamble, like red on the roulette table. They expect to lose 9 out of 10 times, just like Vegas.

There are 4 basic rules:

  1. know what the local/state law is, redemption if any is a biggie.
  2. know what is your goal here?
  3. always go look at the property
  4. always do a title search

Joel Moskowitz’ book “16% solution” is excellent, I’ve also read Thomas Hendrick’s book, “Real Estate Tax Sale Manual” and Lin Stone’s book, “How to buy land at Tax Sale”. And of course John Beck’s stuff available here at creonline is excellent.

Good Luck,

(CA) Tax Sale Auction Question - Posted by Dirk Roach

Posted by Dirk Roach on January 21, 2000 at 20:32:14:

Hello everyone,
I have a question specifically requarding Tax Sales in the state of CA. I have read Sec 3712 (Chp 7) and also the Mello-Roos Community Facilities Act of 82. So I’m not worried about redemption (or lack of in CA) side of things here. That is pretty much cut and dry.
My question I suppose is more general.
Namely what are the basic’s of this particular game.
It seems to me that these tax auction listings basically are a good way for the state to collect their unpaid taxes. (i.e. Hello Mr. Lot 123 Owner, pay us our money or we’ll auction off Lot 123).
Upon scanning the local listings for my county I have come across several interesting (in that they stand out) groups of properties up on the block.
Namely a few:
estates of; Foreign Holding Corps.; Banks (both national and local); Multiple owner listings and multiple properties owned by the same guy/gal/trust.

Last year I did attend a county “probate” sale and was amazed at the shear number of people there, let alone a few folks that had actually had Carlton Sheets books and what have you under their arms. The sales were out of sight. I actually saw several 1/1 on the bad side of the tracks (only comped out at 50k or so) get bid and sell for like 130k to 150k. Anyhow it was beyond me.

And maybe these Tax Auctions are too. However I don’t know much about them and was curious, like I said was just wondering how the game works?

Any help or insights appreciated in advance,

The tax lien game (long) - Posted by Ben

Posted by Ben on January 22, 2000 at 11:17:45:

Dirk, I am an attorney and a large buyer of tax liens in NJ, (a certificate state). I have been in this business full time for the past four years and have found it to be very profitable yet with little or no risk if done properly. The basic premise is when a property owner does not pay their taxes they are assessed interest of 18% plus penalties until the delinquency is paid. The towns are more interested in getting the money than earning interest so they auction the liens to the public. The buyer then steps in the shoes of the town and begins to earn the interest. If it is not paid within two years the lienholder can foreclose and get the property for about 10% of market value. (This is rare it has only happened to me once so far in four years but will be happening again very soon!) Most of the players in this industry are looking for the interest and not the property. I have seen returns from 8% interest all the way to 2500%. Pick up a copy of “The 16% Solution” by Moskowitz. It is the best on the market. Also check out taxsales.com and investorsnet.com.