How many tax deeds must one buy to get a house? - Posted by js-Indianapolis

Real Estate Investing Real Estate Law
1

Posted by Bill H on July 04, 2003 at 12:28:54:

Tim & All

I buy in MS. Interest is 18 percent on the amount of the taxes. There are people there who will bid the taxes up and therefore the interest goes down.

Basic rules for MS are:

  1. Interest is 1.5 percent per month or 18 percent per year.

  2. Redemption period is 2 years. People redeem every month therefore you get a check every month. When you first start, you will get very little for the first year or so and then as you invest year after year it starts to come back.

  3. Any overbid goes to the state…you get NOTHING for it, nada,zip,zero…last year the overbid was just over $400,000…All going to the state…they love the overbidders.

Say a parcel comes up for taxes of $1000.00. If you buy it for the opening bid then you receive the 1.5 percent per month or 18 percent per year. The average time from sale to redemption is about 18 months so you get 18 percent for the first year and 9 percent for the second or 27 percent total. Annualized…about 14 percent.

NOW is you get involved in the overbidding then the interest stays the same but theroetically it is on less money (Opening bid minus overbid). Same parcel…$1000.00 opening bid. You bid it up to $1,250.00…YOU get interest on $1,000.00 but nothing on the other $250.00…it is GONE. Therefore your return comes down. Same as before 18 percent and 9 percent total of 27 percent but you lost $250. So then you still get the interest on the $1,000.00 or about $270.00 for the 18 months but you gave up $250 to get it so your actually only earned $20.00 on your investment for 18 months… NOT a very wise investment.

We have people who consistently overbid. They are told before the sale, each morning and after the lunch break, “You are not buying the property…you are buying the taxes.” They never seem to understand and think that they are going to be the next land barons at the tax sales…it does not happen.

How do you avoid the overbid? Well you have to overbid some in order to participate. What do you do? You sit down and study the computer run and decide, as Ron Starr and others tell you, exactly what you can afford to pay. The rule of thumb amongst us who bid each year is NEVER go over 10 percent over the opening bid.

This means that the $1,000.00 parcel, you can bid up to $1,100.00 on it…so let’s look at that analysis.

Same 27 percent or $270 for 18 months minus the 100 or now you get $170 or about 10 percent per year. If you are careful you can cut the overbid to less than 10 percent and get the return into what we work for or abou 12to 14 percent peryear.

Bear in mind also that they sell in my county about 3-4 million dollars worth each year and if you have the staying power AND PATIENCE to wait until the last couple of days…the overbidders, next land barons, etc., are all gone…and you get the 18 percent in most cases.

I have been around the real estate industy since the 70’s (Yes, I’m an old fart!) and have had a lot of fun, made a lot of money, had my share of heartaches, losses, etc…AND STILL ENJOY THE HELL OUT OF IT!

I hope I have answered most of your questions. If not e-mail again and I will try.

Remember us crazy people get through the woods…on the psycho path.

Good luck,

Bill H

P S…Success is when opportunity, luck and preparation come together.

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How many tax deeds must one buy to get a house? - Posted by js-Indianapolis

Posted by js-Indianapolis on July 02, 2003 at 23:16:58:

For those of you who know, give me your best guestimate. If I buy tax liens from now until the cows come home, how many of those will I actually get a house from?

I’m a little miffed at “gurus” talking about $500 homes worth $75K, over, and over, and over. And by the way, THERE IS COMPETITION!!! How can you sell a course teaching thousands of people to do this, nationwide, and say that there is virtually no one competing?

You think they just want to sell books? Hmmmm…

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Thanks for most replies. - Posted by js-Indianapolis

Posted by js-Indianapolis on July 06, 2003 at 21:09:40:

Barring one reply, thank you guys for the insight. Just to let you know, I am not currently interested in buying tax deeds. This question was posted for the many people I am hearing as of late looking to buy tax deeds to start, “because it’s a cheap way to get a house.” My position has been that it is a cheap way to get a tax deed. Yes, there are benefits. But I don’t see, and it seems the consensus is, that you don’t go buy a couple tax deeds, and get a few $500 homes.

When I?m not so busy struggling to find houses with equity, I?ll get into tax deeds for a ?passive? way of getting a home. Note, STRONG emphasis on passive.

4

Brent Leach EBrent45@aol.com writes: - Posted by js-Indianapolis

Posted by js-Indianapolis on July 06, 2003 at 18:01:25:

Just passing on a ridiculous email I received from Brent Leach ( EBrent45@aol.com and BrentInvestments@aol.com ). I figured he isn?t smart enough to post on the board in public, so I decided I?d help him out. I?m sure he wouldn?t want to keep this private, as it shows what a WINNER he is. Not to mention, great speller, and a grammatical genius. I thought with all the people not knowing who to trust on this board, I should post this here, to let you know what one person is REALLY like. To be clear, this is NOT Brent_IL. Brent_IL is not a Neanderthal.

Begin rude, useless, obnoxious email quote from Brent Leach.**

Brent Leach BrentInvestments@aol.com EBrent45@aol.com writes:

As I said on your post a few weeks ago. This is what seperates the WINNERS
from the LOSERS. You fitting in the losers catagory. You need to do your
RESEARCH and see how your state is setup for tax deeds. In Florida my business
partner has made alot of money on Tax Deed sales.

Nowhere on that John Beck infomercial ( which you can find all that
information for free with RESEARCH ) does he say that their is no competition.
It is
just people like you who want something for nothing think that all will be well
and the deals will start coming your way.

With all this time you have been complaining on the boards about something
you are not even sure what you are tlaking about I have been out doing Real
Estate deals. So, go back to your JOB flipping burgers ( if you really want to
call that a job ) and early next year I will be down in the Virgin Islands
taking
a vacation from my Real Estate business. I am sure you are happy making
someone else rich, if you were not you would do RESERCH.

Regards,

Brent
End rude, useless, obnoxious email quote from Brent Leach.*

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How many tax deeds must one buy to get a house? - Posted by Bill H

Posted by Bill H on July 03, 2003 at 19:07:29:

js

Yep, there is FIERCE competetion. Of all the answers to your post from everybody, Ron Starr is probably most accurate.

I, like he, have been buying for years. It really all depends on what state, what county, what property is up for sale, how much competetion, etc.

As Ron described I buy in a high interest state and buy for the interest and penalties. Works well for me as I have had enough stopped up toilets, bad checks, deadbeat tenants…get a good check every month.

I too have picked up some good bargain properties and sold them for very nice profits…but as the infomercials say in the fine print…“Unusual results --yours MAY vary.”

Go back and re-read Ron’s post. Do your homework, do not get frustrated, find what you think is the best deal(s)for you and go afterthem.

Speaking of competetion…one of my best friends bought $986,000.00 worth last year. How many houses will he get…(?).

Persistence will eventually pay off for you. Tax sales, like the rest of the real estate market, are not a “Get Rich Quick” deal.

Good luck,

======>bill

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oh about one out of … - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on July 03, 2003 at 08:46:29:

JS–(IN)--------------------

Well, there are only two infomercials I know of advertising tax sales courses, John Beck’s “Free and Clear” and Ted Thomas’s which may be called “The Complete Guide to Investing in Tax Lien Certificates” or perhaps “Tax Lien Investing Secrets Revealed”. Slippery Ted is hard to pin down.

Anyway, I can’t comment on Ted’s infomercial, having seen it only once.

However, I know John Beck’s infomercial very well. And nowhere on that infomercial is there ever any claim that there is no competition. There is no mention of competition at all.

Now, first understand that over 90% of all tax liens will not be on “houses.” They will be on vacant lots and vacant land. If you are after “houses,” you will have to do some research to figure out which liens are secured by houses. If you then indescriminately or randomly buy liens secured only on houses, you will probably get about one deed per 200 liens that you buy. If you make sure that the liens are secured by nice houses, especially those occupied by owners or renters, you will probably get one deed per 1000 liens that you buy.

If you do more research and are selective in which liens you actually purchase, you can drive up your “deed-getting” rate considerably higher. John Beck in his “Free and Clear” course does teach how to do that.

When I bought tax certificates over the counter in OK last year and the year before most were paid off. However, some are still not paid off and I can go for deeds. I expect that I will probably get deeds from about 10-20% of those liens that I carefully selected with the hope of getting the deed.

Of course, if you buy in a state with high interest rate or penalty return, when you “lose”–get no deed–you do get a very generous return on your money.

If you think you know of some investment that is better than tax liens and tax sales, please let me know. I am doing fine with them, but would be willing to consider something else.

Good Investing*Ron Starr

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Of Course There Is Competition! - Posted by Lee

Posted by Lee on July 03, 2003 at 07:07:40:

But there are still more opportunities out there than you can possibly handle yourself when you learn how to find them.

Don’t worry about the competition. Focus on finding your own opportunities and take action on them. You will have the deal done before your competition even knows the property was for sale.

Even the Gurus know that most of the people who buy their courses will never do anything with the information. Most of them will talk themselves out of trying anything. Many won’t even read the books or listen to the tapes despite spending good money on them.

I’ve purchased real estate courses at garage sales and on eBay, and the courses were not even opened! They were still in the shrink-wrap.

What does that tell you about your competition?

PS: I have purchased properties at tax sales. Many are redeemed, but some aren’t.

I just got twenty acres with a double-wide and a barn for $2,231.89 at a tax sale. I doubt that it will be redeemed since the county cannot locate any heirs to the deceased owner to pay the four years of back taxes. I already have it rented for $695.00 per month, so I will recover my total investment (including clean-up)in just over four months. If anyone redeems the property, I get my original investment back plus twenty-five percent of this amount. (I’m in Texas.)

Is this sweet or what?

By the way; there were other bidders at the tax sale, so I had competition. But nobody else even bid on this property. I heard several of the other bidders say that they knew it was on the auction agenda, but they didn’t know what they would do with it if they won it. They were only interested in buying properties at the tax sale that they were sure would get redeemed since they were only interested in the twenty-five percent return on redemption.

So much for your competition.

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Seven and a half - Posted by Tim

Posted by Tim on July 03, 2003 at 06:57:31:

I bought tax properties in Alabama in the early 90’s, but no longer go due to idiots over bidding. I bought a grand total of 15 properties, of those I ended up with 2 that I got the deed on that weren’t redeemed. I guess the answer is 1 out of every 7.5, but one was only raw land & the other was a house worth $50,000.

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to which I responded with… - Posted by js-Indianapolis

Posted by js-Indianapolis on July 06, 2003 at 18:03:48:

Brent-
I have no clue who you are, or who you think you are. I am just someone who posts here to help others out, and get help sometimes. Conversely, you are the type of person that has caused other people to leave this site.

My question about tax deeds was ?How many tax deeds must one buy to get a house?? You should reread it here: http://www.creonline.com/wwwboard/messages/77477.html , as you have totally missed the point of the post. Also, I have now asked you three times to provide me with what other post you are talking about, from ?a few weeks ago?.

I?ll take your silly email in order. First, you call me a loser, and then back that up by bragging that your partner has made a bunch of money. And? I?ve got a rich uncle. So there!

Second, I didn?t say John Beck said there was no competition. Hell, nowhere did I even say John Beck. Way to a$$-u-me, buddy.

?It is just people like you who want something for nothing think that all will be well
and the deals will start coming your way.?

What? Listen, bud, I just asked how many you?d buy before you got a house, and said I thought the ?gurus? were exaggerating to sell books. Now I want something for nothing? I don?t get the correlation.

Then, you go just go into a rant about how you?ve been doing deals, and I?m flipping burgers working for someone else, and you are so much better, because you are going to go to the Virgin Islands. Wow! And here I?d thought all along that I had been self employed since I was 20; nearly 9 years.

I?d respond more on that, but I already feel sorry for you. How pathetically insecure one must be to randomly attack unknown people on a message board, to somehow pump yourself up in the process. Especially you, Brent, with all your partner?s tax deed deals making you a such a WINNER. I don?t think a man?s net worth is his self worth, and therefore, I have relegated you into the worthless category. You, along with your email to me, are tits on a bull, son.

Oh yeah, Regards,
js-Indianapolis

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Re: How many tax deeds - Posted by DanG

Posted by DanG on July 03, 2003 at 22:49:47:

Bill, if one buys in a state that you can’t get the deed until after 2 years, do you get monthly payments from the state from the money you paid? How does that work getting the interest money?

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I have 2 questions - Posted by Tim Jensen

Posted by Tim Jensen on July 03, 2003 at 20:44:24:

Bill,

In Illinois, you can get paid up to 36% a year interest, problem is that the competition brings that number down to 2-4% a year. Unless of course you buy a worthless lot.

Question: What state do you buy in and how are you able to get the high interest rates?

Tim Jensen