Tax Lien Question
Hi ppl,
My county office told me that the Tax Certificate Advertising List will be available on May 1st and the sale will be beginning around May 26. So, does that mean I have just about 20 days to drive around and do all the neccessary research? or am I looking at it in a wrong way?
Please advise
Thx
Jay
20 - 30 days is fairly typical in my experience.
You need to try to filter the list down to the types of properties you are most interested in. That is the only way I've been able to do enough research ahead of the auction.
Be aware that the list of available properties will "shrink" before the auction as people will pay off their tax bills during that 20 day period.
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The short fuse time period you have to research the list is one of issues you just have to deal with. Typically you will have the list about 3 weeks before the sale.
If you are focusing on tax liens then you would be well advised to look at the following filtering criteria. In my courses I always tell people to narrow according to price first.
Then take a look at the type of property secured by the lien. If you are looking only for commercial properties then narrow ones that are likely not commercial. If you want residential then do the same. If you want lots, etc. then do the same.
Your next step is the look at the loan to value. You want to be a certain 'cushion' range to take care of any unforeseen expenses just in case you get title.
Now look at the value of the land versus the value of the structure on the land. Again, there is a range that works best.
Next, start looking for your due diligence items. These are federal tax liens, state tax liens, etc. I just posted and article on this list but it can vary. Generally you want to avoid liens that have any liens that will survive foreclosure (and that are large), are secured by property owned by someone in bankruptcy, have environmental issues, are held by the FDIC (or were held by the now defunct RTC), etc.
These due diligence items will be a checklist that you get from you attorney or coursebook. I like to use the same list and go through the research in a step-by-step process.
You should then go look at the property and ask some simple questions.
Is this a long list? Yes, but it can be done quickly if you get educated on this material. There is no way to do this safely without applying this list.
One of the reasons that unsold liens are very attractive is that they all the investor more time to research and typically will not put you in the auction frenzy situation as you combat against other bidders.
This is the truth about tax lien investing: You have to be able to do research and you must look at the property. Find an quality attorney or course that goes through the state tax code. Talk to supervisors at the tax collection office only after you have done research yourself.
best of luck!
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Just some additional info:
.
1) I never use the filtering list & sequence anyone else provides. I build my own based on input/suggestions you get from your sources and your needs.
If you use the exact same list someone else provides you are likely to compete with someone else using the same list.
These list are "generic" and likely do not reflect your particular interest/investment profile/or unique desires. Start with them, and change by modifiying the sequence and adding/deleting items to fit your needs.
2) Among some of the criteria include location, lot type, building type and whatever else fit your critiera (there are 100's of items -- from lot size to build sq ft to tax district to ...). I don't believe in paying for a critiera list -- some people do (and some make a living out of providing one -- just be aware of what you are getting, be especially careful for "extra services"
3) Map out your routes for each visit to maximize coverage and minimize time.
Good luck and happy hunting...
jtaxlien----------------
I agree with much of the responses to your question.
I laugh when you indicate that there are over three weeks to do the research. Because so many of the items will be redeemed before the auction, I suggest you not do anything until 6 or 7 days before the auction.
Then study the county records for these properties first, to target the properties of interest to you. Decide what kinds of properties you will buy liens on and eliminate the other ones. Look at the assessment roll and the assessor's parcel or plat maps to see if the properties are of interest to you. Check for mortgages or deeds of trust, if that is of interest to you.
Either have a plat map for each property, or a written map or description of the property, so you can tell where it is when you see it. For instance, I have a note similar to this: "N. side [of the street] 153' E of Elm st. 50X125 [feet in dimension]" written on my sheet for that property. I always know that the first dimension is along the street and the second is depth. If the sizes are odd, I put all dimensions down such as 49.5 X 124 X 51.25 X124.8 Where the first number is along the street and the other sides are clockwise around the lot. If necessary, I draw an outline of the rough shape of the property.
Only after that go out to look at the properties. But, before going out check the sales office to be sure which properties are still on the list. I also ask if they have heard from some of the property owners or lenders saying they are going to come in and pay up. Those I put in little or no effort until the last minute.
I mark the property locations in color on a copy of the local street map and move from one to the other in an efficient pattern.
Typically I can look at about 20-35 properties in one day if they are in one county.
Good Investing************Ronald Starr**********
All of us have our preferences and in the end you must choose what works best for you. When you start out however you would be well advised to start with a systematic approach.
I think it is very important to stick within your price range first. As you develop in your career as an investor you will learn more about what other filtering criteria you may wish to include. Regardless of what you do I strongly suggest that you narrow according to price first. There is no reason to excessive amounts of liens because you are 'attracted' to the area, the square footage or the structure itself.
I like to use price as my first criteria because it allows you to make a logical decision first. You also must know what your loan to value on the lien/property will be. This is again a very important factor.
You should try to keep your processes as uniform as possible. In my work as an attorney when I search titles I don't perform a different research process for each property. Rather I start with a basic research structure and follow it. As I become aware of other issues or perhaps favorable or unfavorable title entries I may adjust my research.
I make a living practicing law and many of the people who come to my office are those that made mistakes investing because they did not follow a systematic research method.
So my advice to you is to use a systematic method of research. It could be your own or someone's suggested approach just make sure you know the risks and cover them in the methodology.
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