Well, listen to a man who does it. - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on June 13, 2003 at 15:25:42:
Well, I just got back yesterday from OK state and the county tax resales there. These are the deed auctions where one gets title to properties, not just certificates.
I worked hard for two weeks and all I was able to do was buy four houses for a total of about $22K. Then there was the aproximately 4000 square foot, two-story brick commercial building I purchased for $212. Admittedly, it is vacant and not in the best of shape. If I can make a few thousand dollars profit, however, I will be happy.
Oh, wait there are about 120 vacant lots also, for an average of about $300 each. Those I plan to sell on the internet like John Beck does. I know that he makes a lot of profit reselling the vacant parcels he buys.
A couple of the houses are occupied. I hope they are renters, so I can just start collecting rent checks. One needs clean up, as the renters just moved out. One is in rough shape and I may just resell it instead of fix and rent out.
Now, the infomercial is a little dishonest, in my opinion. First, part that is honest. The houses that John shows were bought through tax liens and the people got the deeds to the properties. We don’t know their condition when purchased, although John told me that he only took pictures of houses which had been deeded within a few months before he took the pictures–four months I think. So some of the properties might have been fixed up since being bought, however, I doubt that all of them were.
So that part is honest. What you don’t know is that those buyers may have held the liens for three years or so before they were able to get the deeds. Also, probably, if those were professional investors, they got only a few of the houses that they had liens on. I bought some liens in OK state last year and the year before. Most have paid off. I will probably only end up with four or five houses from the approximately 30 liens that I bought. I expect the auto parts store to pay off too, once I mail a copy of my certificate to convince the owners that I am serious about taking away their over $200K-value building from them.
Now, John says that he has bought thousands of “these kinds of properties for delinquent taxes.” That is true. However, he makes that statement right after you see on the TV screen the houses bought for low amounts. It makes it seem he has bought thousands of houses. That is not true. Mostly, John has bought vacant land and lots. He has bought a few improved properties. That is the part that is somewhat misleading, in my opinion. However, John and Joyce say that they have sold over 2,000 vacant properties in the past three years and have made a profit on every one. I have no reason to doubt them. They acquired the properties at tax auctions, from governmental agencies and from people who have bought them that way and wholesale them to John and Joyce for a quick profit.
You can make very significant money with tax defaulted properties. And yes, there are thousands or properties out there that counties, school districts, and other taxing entities own which can be bought just for what the back taxes were. Or, sometimes for less. I saw a notice of one person who offered $5 each to a county for 75 parcels which probably have assessed values of about $400 to $1,000 each. That is not to say that the person will get them all at that price, as the confirmation of the sale is a “county commissioners” sale, which is a public bid auction. He may face some competition there.
I was in a couple of counties last week where many tax liens on properties can be bought over the counter. There were some properties with 5-30 acres and the lien could be bought for under $100. I don’t know the quality of the properties, and the county has some areas that are hilly. However, the advertisements in the newspapers for parcels of land for sale seem to be at prices of at least $200 or $300 dollars an acre. And some of the liens for those larger properties were already bought by some investors. So, I guess they figure the properties are ok.
But, you will have to learn what you are doing. A lot of the properties that go on tax sales are very poor parcels.
In cities often the opening bid is way above market value because of special assessments added to the tax bills, such as weed mowing and demolition of old structures.
You need to know how to figure out what properties are going to be resellable at a profit and which ones to ignore. This means some study on your part. The good news is that once you know what you are doing, you can continue to do tax lien investing for many years.
You will have to think about what you do. But, yes, you can make some extraordinary deals with delinquent tax liens and tax deeds. After all, I just bought four houses for less than $25K in two weeks time. Plus some other properties.
Now John has taken up with some infomercial people–high pressure sales folk. And it is difficult for him as he wants to give good education for the money. I have two versions of his “Free and Clear” course, the second an improvement on the first. For the cost of the course you cannot get better education on the topic, in my opinion. However, you still will have to do a lot of learning on you own. You will have to learn about which counties have good stuff to buy–not all do. You will have to learn which states have liens, which tax deed sales–that is in John’s educational program. You will have to learn to do research in county records. You will have to learn to evaluate vacant parcels. Or, if you concentrate on improved parcels, how to evaluate houses. You do not get someting for nothing. But, you can get properties for way below market value. If you know what you are doing and actively go after them. As long as you figure it can’t be done and don’t make any effort to do it, you will be right–it can’t be done by you. I do it every year at this time in OK state. Tax lien and tax sale buying can be done in every state, I believe, but I have only done it in six states, so I might be wrong.
Good InvestingRon Starr*