tax liens - Posted by KeithF


#1

Posted by Margaret on November 24, 1998 at 12:34:06:

Nah–not nearly that much. We have an investment club-about 7 of us who put in anywhere from 500 to 2000 each to start. We’re making great interest, but we’re buying near home where we know property values, etc. Yes, the heavy hitters come in, but they don’t know as much about the property as we do. You can do it! Just do your homework.


#2

tax liens - Posted by KeithF

Posted by KeithF on November 18, 1998 at 09:06:04:

I have been researching many investment options in real estate, and I recently came across the concept of a tax lien. I was wondering if anyone out there had any experience with this sort of thing. It seems like such an easy thing, and when something seems too good to be true, I believe it usually is. Once the lien has been acquired, how does one go about enforcing the payment of debt? Do tennants usually comply, and if not, will the law intervene with eviction? I appreciate any attention given to this inquiry. Thanks,
Keith


#3

Re: tax liens - Posted by Bud Branstetter

Posted by Bud Branstetter on November 19, 1998 at 16:40:21:

When you do your research you will find that in many states you bid down the interest rate you will accept for the lien. Those liens are not enforceable for various times up to several years. There are a few states like Texas that the tax lien is sold as a judicial foreclosure. You get a sheriff’s deed and the right of possession. The state laws govern time frames and procedures to evict to gain possession. The sale can be all cash and can be in the range of a few thousand to near FMV. Clear title is usually not promised and can be a mess.

John Beck has some articles on it and sells some material on this site. Remember if it sounds too good to be true let the rest of us try it out first to see how much money we can make.


#4

Re: tax liens - Posted by Irwin

Posted by Irwin on November 19, 1998 at 06:55:02:

In as few words as possible: A moneymaker for sure, but no place for the beginner, especially one with limited investement capital, i.e. under a million. Start somewhere else.


#5

Re: tax liens - Posted by Ben

Posted by Ben on November 18, 1998 at 10:02:32:

Keith:

I have been purchasing tax liens for three years and can tell you that the concept is definitely true, i.e, that
there is high yield without an inordinate amount of risk. However, economic reality dictates that where an instrument like this exists, the competition for it is beyond fierce. There are billion dollar Wall Street
institutional giants which dominate this industry making it very difficult for the small or even
medium size investor to make any money. It always
irks me when I see these cheesy infomercials touting
that there is NO competition, BS! I invest in NJ and can name about ten institutions here, many which invest nationwide. It is also very time consuming to
do proper due diligence to find sleepers that the big boys may overlook. Therefore it is not a part-time buisness either, as some would have you believe.
Check out the “16% Solution” by Moskowitz, the best book on the market for tax liens. Good luck!

Ben


#6

Re: tax liens - Posted by Dennis in Denver

Posted by Dennis in Denver on November 20, 1998 at 14:49:20:

A million bucks? What state are you in? I attended the Arapahoe County (in Colorado) tax lien sale this past week. I started with an initial account of $2500, bought 8 liens, and when the sale was over I still had $495 in my account.

Dennis


#7

Re: tax liens - Posted by KeithF

Posted by KeithF on November 18, 1998 at 14:55:56:

Thanks Ben. I appreciate the information, I had no idea that the large firms were in on this. I definately will try out that book when I get a chance. By the way I am from New Jersey as well, maybe we could talk some time. I have only been doing this for a short while, but you are the first person that I have seen that is from New Jersey. Thanks again.

Keith


#8

Re: tax liens - Posted by Irwin

Posted by Irwin on November 20, 1998 at 19:35:38:

It’s nice to hear that small investors can do tax sales somewhere. In most of the midwest to the east coast however, the tax sales are dominated by some very big players with Wall Street funding. They’ll spend a couple million dollars in a few hours, because they’re buying yield.
A few years ago someone was selling a small stock offering in a company that was going to specialize in CO tax sales. I looked at the prospectus and the CO tax sale system, and frankly couldn’t see how you made money there. In fact, you could actually lose money in certain circumstances.
It would be interesting to hear how you come out on your investment. Although, if you do really well, the best thing to do is keep it to yourself. Why invite everybody to CO for the next tax sale?


#9

Re: tax liens - Posted by CRAIG

Posted by CRAIG on November 18, 1998 at 21:42:46:

I WANTED TO KNOW WHAT COMPRISES DUE DILIGENCE IN RESPECT TO PURCHASING TAX LIENS. ALSO; WHAT WOULD YOU SAY IS A FAIR MINIMUM AMOUNT TO INVEST WITH IN ORDER TO BE A PLAYER.

THANKS IN ADVANCE


#10

Re: tax liens - Posted by Dennis in Denver

Posted by Dennis in Denver on November 20, 1998 at 23:29:09:

There were definitely some big hitters at the auction. Here’s a brief explanation on the auction- there were 955 liens for sale, and about 250 people showed up. Some were couples that bid as 1, so probably about 200 or so actual bidders. On liens between $300 and $3000 it was offered on a rotation basis for the amount due. If bidder #1 wanted it they got it. If not #2 was offered it, and so on. In the normal rotation bidding, my number came up 4 times. So on those 4 bids I had no competition.

On liens below $300 and above $3000 it was open for bidding. A nonrefundable premium is bid above the amount due. During this open bidding is when the big guns cleaned up, however I was the winning bid on 4 open bids. These were under $300 and the big guys didn’t really bother with this chump change.

The interest rate is 14%. Redemption period is 3 years then you can apply for a Treasurer’s Deed. All 955 liens were sold in 3 hours. It was my first auction and will attend several other county auctions next year.

Dennis


#11

Re: tax liens - Posted by Ben

Posted by Ben on November 19, 1998 at 17:39:58:

The level of due diligence depends on what you are interested in. Residential property is very low risk,
check assessed values, do a curbside inspection and a cursory title search, i.e. if there is a big mortgage,
you have almost no risk since the tax lien takes priority over the mortgage. On the other hand, if you are looking at industrial property,it can be contaminated and incur large clean-up costs, etc.
To be a serious player? Ballpark figure-Ten Million.

Ben