Help On Tax Lien Opportunities!
I am looking at a couple of tax lien oppoportunities, and would really appreciate it if sb. could offer some advice if I should move forward on them.
They both are in moderate-income housing areas of a very good neighborhood and an excellent school district. The eastimated fair market value would be btwen 100-150K for each one of them. But both need serious fixups-including new roofs, new gutter, seiling leakage, paint, hard wood floor refinishing, land scape, etc..
House 1 is owned by a nurse, who got this house from a deceased couple and let it vacant for three years. A handyman lives in the house now to fix it up for the waiver of his rent of $750/mon. He estimated that he would stay in the house for half a year or so to get it ready for rentals before he moves down to FL. House 2 is still owner-occupied but has had a huge plastic cover on the roof for 3 months, which looks like a run-down.
The starting bids would be around 2-3K with 20% interest in the first year. The redemption period is one year. After the period, tax lien holder has the right to foreclosure.
House 1 probably would redeem the tax lien by the end of the one-year period with her rental income after it is fixed, while House 2 owner could have hard time to redeem it because they could not even replace the roof during the holiday season. I have seen the roof from outside, it cannot be fixed any more.
I am new in real estate investment and do not know that much about fixing up those items. Should I only take the opportunities with better redemption possibilities, or consider also the ones with potential of foreclosure and major fixups?
Again, thank you in advance for any advise or experience sharing.
Mark
If you are planning to rehab how are you going to inspect the property?
You said the estimated fair market value would be between 100-150K for each one of them
A $50,000 spread is a little much!
You said But both need serious fixups-including new roofs, new gutter, seiling leakage, paint, hard wood floor refinishing, land scape, etc..
How do you know this, did you do an interior inspection?
I would suggest a review of the Official Code of Georgia, Annotated (OCGA). OCGA Title 48 - Revenue and Taxation, Chapter 3 - Tax Executions, and Chapter 4 - Tax Sales, contain important information that you must be aware of.
The owner, creditor, or any other person with interest in the property must pay the purchaser of the tax deed the amount paid for the property at the tax sale, plus a 20% premium of that amount for the first year or portion of year, and 10% each year or portion of year thereafter, which has elapsed since the date of sale, plus costs.
The purchaser of the tax deed cannot take actual possession of the property during this time. The tax deed purchaser is not authorized to receive rents or make improvements to any structure on the property or grade any lot prior to this time.
After 12 months from the date of the tax sale, the purchaser at the tax sale should terminate or foreclose on the owner's right to redeem the property. This is done by causing a notice, or notices of the foreclosure, to be served to the owner of record, the occupant, if any, and to all interest holders that appear on the public record. SUCH NOTICE CANNOT BE SERVED UNTIL AFTER THE END OF THE 12-MONTH PERIOD. The purchaser must write an original notice in accordance with a form shown herein and provide a copy for each person to be served. The purchaser is to deliver these, together with a list of persons to be served, to the sheriff of the county in which the land is located. The purchaser must deliver the information no less than 45 days before the date set in the notice for termination of the right of redemption.
I would suggest first reading:
http://www.thecreativeinvestor.com/modules.php?name=News&file=article&articleid=547
http://www.thecreativeinvestor.com/modules.php?name=News&file=article&articleid=314
http://www.thecreativeinvestor.com/modules.php?name=News&file=article&articleid=211
http://www.thecreativeinvestor.com/modules.php?name=News&file=article&articleid=79
This is a great form of investing for interest return on your investment, but actually acquiring real estate will not be that easy.
You will want to be familiar with how to do a title search.
How to foreclosure when it comes time to take the property.
And all the in's and out's of state and federal laws on this subject as well.
[addsig]
Thank you very much for the info and links, John.
I did get a chance to look inside of one of the houses for what would be needed to fix it up.
I am doing further research, and planning to go to an auction pretty soon.
Thanks again.
Mark
Here is my observation from a tax dead auction yesterday.
There was over 20 properties before Christmas, over 10 four days before the auction, and only one in the auction.
The starting price of this property was around $1,300, but the final bid was about 100 times higher than that, which was about 60% of Assessed Value of the property.
Is this normal? What is the point to pay much? Any comments?
Mark :-?