Tax Lien Competition
I live in Phoenix AZ. I'm interested in buying tax liens in AZ . My goal is high interest return, not foreclosures.
In AZ, the interest rate is bid down at the aution. Thru research I discovered these stats about the Maricopa County Auction (held in Phoenix):
Sale yr 2004, avg interest of deeds sold was approx 6%
Sale yr 2003, avg interest of deeds sold was approx 8%
Sale yr 2002, avg interest of deeds sold was approx 11%
This seems to indicate there is more and more competition. For those of you that are involved with tax lien investing, have you noticed an increase in competition over the past couple of years? If so what are your thoughts about the opportunities that exist now?
My plan now it to attend the auctions in the smaller counties , which involve the additional costs of travel, but I'm guessing there will be less competition. An thouhts about this plan?
The trend always goes up when the real estate goobers mass advertise getting rich in tax lien and tax certificate investing. You are also dealing with the fall out of stock investors who now have become tax lien and tax certificate investors. You will see the ranks thin out as the stock market stabilizes.
A site that I use often is www.bid4assets.com
For me this form of investing has been great. Not a lot of real estate deals but great interest return overall.
[addsig]
Try visiting the tax assessor's office. the auction never covers all of the properties that have delinquent taxes. There are several properties that were on the list, but due to time constraints never were auctioned. You may be able to purchase the leins for these properties without the competitive atmosphere of the auction. (I'm thinking for the full 16% that the interest rate starts at)
Good luck, and keep us posted.
Jeff
I think the days of a safe 16% return are history. Joel Moskovitz, the author of the 10 year old book called "The 16% Solution", should publish a second edition called "The 8% Solution".
One way to make money these days is to go after the property, not the interest rate return. But that's like searching for a needle in a haystack: it's possible to find them, but they require a lot of work. I am about to acquire my first property in Oklahoma City with that method. A single family house. Assessed at over $68,800, even though I doubt it's worth anything more than $35,000 (I would certainly sell it to anybody who hands me a $35,000 check). Not a bad return for a $3,000 investment.
[addsig]
MiracleTech--AZ-------------------
Yes, the competition is worse than in the past.
There are dozens of different ways to make money with tax sales and tax sale properties. Buying liens at the tax sales in AZ may not be one of the best ways anymore.
I think going to the lower-population counties makes sense.
Another approach is to use the lists to solicit owners to sell to you, by sending them postcards or letters.
Good Investing************Ron Starr***********
Thank you all for your helpful responses.
For my first auction, I'm gonna try the Navaho Cty AZ auction held in Holbrook AZ on 2/8/05. Navaho Cty has a pop of just over 100K. If I can get 14 - 16% I'll buy, otherwise I'll pass. No matter what happens at least I'll get my feet wet.
I'll let you all know how it turns out
I've invested in tax sales in Maricopa Co (Phoenix) for many years. Each of the last few years it just seem to get worse. Its harder and harder to get a decent return (10% or more). There always seems to be big (out of state commerical) buyers who will pay 5, 6 , 7% or less in the blink of an eye for any decent property. Anything and everything of value sells. Only the junk (easemnets, unbuildable etc.) goes unsold. I also do some of the smaller County's but they too get bid down on the better properties. Remote Counties have miles of open space that development may never catch up to. Buyer beware.
I just finished bidding online with the Mohave County AZ tax lien sale. The best way to describe it is "feeding frenzy".
I was outbid on everything I initially wanted (and I was looking at stuff under $150 for the most part) and in every case the winning bid was ZERO percent! I saw one bid on a $95K tax lien where the property value was $45k, and another on a $5K+ lien where the property value was $900 (dollars, not thousand).
When you start seeing bidders named "vulture" and "orca" (I am NOT making this up) something is really screwy. Just wait until the FL online sales hit in May and June--it could really get out of control then.
I did end up with a couple of certs (one at 11 and the other at 9) on some low-end mobile homes with acreage. I think one is a homestead as the tax bill mailing address and the property address are the same.