Posted by Brad Crouch on December 04, 1999 at 02:40:39:
Hi Ben,
John Beck has written several courses on this subject. He has a “twist” or two on the subject, and he and talks about actually getting the properties.
I think his materials are still available from the catalog section of this site.
Brad
Using tax liens to get junkers houses - Posted by osirus
Posted by osirus on December 03, 1999 at 20:34:53:
I have discovered that quit a few of the abandoned, junker houses that I have looked at have property tax liens against them.
Could buying these liens be a good way to acquire ownership to these properties…what are the pros and cons? Would a hard money lender lend money to someone to purchase a taxlien? I’d think that they would since LTV would only be %5-%10.
A twist on that idea. - Posted by Rob FL
Posted by Rob FL on December 04, 1999 at 21:45:11:
Usually people who have delinquent taxes against their property have some sort of reason for not paying. Normal homeowners either pay their taxes when they are due or pay them into escrow with a mortgage company. Properties with delinquent taxes are a great candidate for a motivated seller. Instead of buying the tax certificate (which I have done in the past, but only for the nice 18% interest they give us in Florida) why not contact the owner and make them an offer. The property is probably owned by someone with some kind of motivation. Some counties have dialup systems to check tax records. My big county here in Florida just put all the tax payment info online on the internet 2 months ago. Wow! So much free info at your fingertips.
It is possible but… - Posted by BRnBA
Posted by BRnBA on December 04, 1999 at 12:48:25:
it is a lot of work. Certificate states like Oklahoma are a perfect example for this strategy. First off, it is a VERY small percentage of the properties with
delinquent taxes that can actually be aquired this way.
Common sense will tell you that if the property is worth much, it will usually be redeemed. That said, the best strategy is to figure out which ones are most likely NOT to be redeemed. When the County Treasurer sends out the tax bill a small percentage of them are returned undeliverable. They can be undeliverable for a number of reasons…left no forwarding address is usually the reason but whatever it is, these are the most likely not to redeem. The strategy is to get your hands on the list of undeliverables and buy those certificates at the sale. Some counties hold the sale ‘by the book’ and that is just fine. At least one county that I know of makes it’s own rules and sells them first come first served, meaning whoever is in the front of the line gets first choice, and that is ok too if you know to get there early because most people don’t know that is how it works. There are some problems though, not the least of which is corruption in the courthouse, ‘and that’s all I have to say about that’, in my best Forest Gump voice. The county treasurer and his/her employees won’t let you see that (shoe box) full of undelivered mail but somehow their friends and relatives know which certificates to buy.
You can however create your own list of undeliverables by bulk mailing. The big problem with that is that most counties are not computerized so it is a long and laborious task with a small window of time in which to operate ie. the list of delinquent properties comes out 30 days before the sale. Yes it can be done, but I would only recommend it as ‘in addition to’ other more reliable strategies, meaning there are easier and faster ways to make money in the REI arena.
Con’s - Posted by Bud Branstetter
Posted by Bud Branstetter on December 04, 1999 at 10:17:29:
Been there, done that. One of the problems is that the property can be in a war zone. If you are in a city like Dallas that thrives on demolition there may not be a house there when you can possession. So now you also have a lien against the property for demo. In the states that it takes several years to gain possession who is going to mow the yard or are you going to have several weed liens each year. Yes there are properties that can be acquired by tax liens. Many times it is a lead to find the owner and get title or an option in exchange for upkeep. In states like Texas where you have the right to possession and only 6 months right of redemption on non-homesteads you can do a little more. States like Oklahoma have a time period after the public sale that anyone can buy the lien. If you do your homework you can find houses that are not likely to be redeemed.
A hard money lender would not be likely to loan on these properties because the title is usually not perfect. They like nice clean titles.
You have hit on a very good idea…(long) - Posted by Ben
Posted by Ben on December 03, 1999 at 21:54:33:
I have been buying tax liens in large quantities for four years so I know exactly what you are talking about. What makes this a great strategy is that the vast majority of the people buying liens (myself included) are doing it to make the interest and NOT to own property. In fact, we go out of our way to avoid any property that does not look like it will get paid. If a property is vacant or abandoned the lien does not even GET SOLD at auction. Therefore there will literally be no competition for the kind of properties you are targeting, (i.e the board-ups, the burn-outs etc.) I have always wondered why someone didn’t think of this as a way to own distressed property at 10 cents on the dollar. You must familiarize yourself with your state’s laws so you know exactly what you are getting into. Here in NJ you must hold the lien for 2 years before you can foreclose which means you will have invested 3 years of taxes. If you cannot afford to keep up the subsequent payments, you will lose priority. It may take another year to foreclose. Your biggest problem in finding a lender would be lack of liquidity. Since the money could be tied up for years with no payments being made, few, if any, lenders would go for this. Good Luck!
Re: You have hit on a very good idea…(long) - Posted by J.P. Vaughan
Posted by J.P. Vaughan on December 04, 1999 at 09:02:17:
Ben,
John Beck thought of this a long time ago. “Real Estate
for Pennies on the Dollar.” This course was totally
updated this year.