Tax sales, whats the down side? - Posted by ScottSC

Posted by Bill Taylor on November 05, 2000 at 20:50:57:

I jsut bought a property in tax sale, the owner here in Indiana has one yr to pay the tax. If he does the penalty is 10% in the 1st 6 months after taht it’s 15% up to the yr. At that time if I have properly notified all parties that have and interest in the property i can file for the tax deed on the property. It is a property in a nice neighborhood worth 60000 and has been abandoned for over 2 yrs. We found out about it by accident and it looks real good for us to be able to take it. You know you are not buying a pig in a poke when you go to the sale you may select which property you are going to bid on and you pick the aras you want to buy in. There are usually properties in all areeas and we try to avoid the war zones.We also stay away from the toxic waste dumps.

Tax sales, whats the down side? - Posted by ScottSC

Posted by ScottSC on November 04, 2000 at 10:58:50:

When you buy the tax cert what do you need to be aware of?

Where can you lose?

Worst case?

What to look out for?


The Upside… - Posted by Paul_MA

Posted by Paul_MA on November 06, 2000 at 03:53:37:

Assuming you do some due diligence, you may end up with a tax sale certificate to a property that the owner will deed to you in an instant, and appraises at 50 times what you paid for the certificate.

Its best to locate the owners before the certificate auction and try to strike a deal then. If the seller lets his property get that far behind in taxes, he’s usually motivated.

BIG down side! - Posted by David Krulac

Posted by David Krulac on November 04, 2000 at 16:28:56:

…The TLC is NOT redeemed and you get the property which is:
a toxic waste dump,
a junk yard,
side of a cliff,
at the bottom of a lake,
condemned by the town,
crack house,
tiny sliver of land, worthless and unusable
I’ve seen all sold at tax sales!

Re: Tax sales, whats the down side? - Posted by Ben (NJ)

Posted by Ben (NJ) on November 04, 2000 at 12:19:04:

Assuming you have done the proper due diligence (i.e your certificate is on the desired property) probably the biggest risk is lack of liquidity. During the redemption period (which varies, but in NJ is two years)you must continue to pay subsequent delinquent taxes or another certificate on the property will be put up for sale. This certificate holder will have priority over you and can ultimately foreclose YOU out, leaving your investment worthless unless you pay them off. Therefore, for every certificate you own you should have a minimum of three years worth of tax payments available in the event it does not get redeemed. I have seen people get squeezed like this and then they turn to the secondary market and try to sell their lien. By then it is heavy discount time! The only other risks are related to due diligence and are entirely preventable, i.e, you bought a certificate on what YOU thought was a nice single family home but which was in reality a contaminated, abandoned Superfund site. When there are no other bidders and you hear snickering from the back of the auction room then you know you screwed up. Have you read “The 16% Solution” by Moskowitz. IMH0 the best book on the market. Hope this helps.