The $1,000 Dollar Question
Lets say someone had a grand and had the option of going to a tax lien sale or tax deed sale.
Can you research the parcels before going to make sure you dont buy a swamp? And what one would a grand make a bigger return?[ Edited by JBCORP617 on Date 06/01/2004 ]
neither are appropriate investments for a guy who only had a grand to work with. Ten grand, if you didn't care if you lost it or made a lot of money on it might be better. Personally if i didn't have 50 to 100 grand to play with I'd stay away from either kind of deal-- the learning curve and the fixed costs are just too high.
Totally agree with commercialking!
The only two states really worth buying tax liens in for such small amounts are Arizona and Florida. The competition is fierce and unless you live in either State you'll have to fly there.
There are many other real estate investment opportunities out there where your 1K can grow safely.
But to answer your question, yes you HAVE to research the parcels if you want to make sure you buy something worth while. You don't have to run a fullfletched title search on every parcel, but depending on the state and county you're in, I highly recommend you do thorough research!
Good luck,
Francoise
What fixed costs are we talking about?
JBCORP617-----------------
I'd recommend going to deed sales, not lien sales.
I know of an older brick house in a small town in SW Oklahoma state that just sold for between $900 and $1000 on Monday.
That same day I got the high bid for two houses for a total of $1500. This treasurer waits to file the deed until 30 days after sale, creating a right to redemption, as I am not the owner until the tax resale deed is recorded. Sure hope the properties will not be redeemed. One is a 1965 brick house.
Good Investing****************Ron Starr***************
Quote:
On 2004-06-19 01:38, RonaldStarr wrote:
JBCORP617-----------------
I'd recommend going to deed sales, not lien sales.
I know of an older brick house in a small town in SW Oklahoma state that just sold for between $900 and $1000 on Monday.
That same day I got the high bid for two houses for a total of $1500. This treasurer waits to file the deed until 30 days after sale, creating a right to redemption, as I am not the owner until the tax resale deed is recorded. Sure hope the properties will not be redeemed. One is a 1965 brick house.
Good Investing****************Ron Starr***************
Hi Ron,
Did you attend part of the Resale in Oklahoma county ? Or did you just focus on smaller counties this time ?
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Abdenour--(MD)--------------------
Only other counties. The list of properties for Oklahoma County had virtually no houses, my target property.
They must have had a lot of people at the sale and a lot of bidding, as the treasury staff got back to the office only in midafternoon on Tuesday. Last year, with more properties on the original list, the sale was over by 10:00 on Tuesday.
Good Investing**********Ron Starr**********
To offer an alternative point of view:
1) $1,000 is below what I would suggest.
2) Generally I find that lower sums ($10K - 50K) work better at tax lien sales as you can normally acquire more tax certificates than deeds for these amounts of investment.
3) Due dilligence is critical with lower sums as you will not have as much property to generate profits to offset problems/losses.
4) Upfront costs for tax liens can include registration fees -- some counties charge and some do not. Property lists in electronic format can also cost. Travel costs (gas, airline tickets, rental cars, etc.) and your time to do the research should also be figured in. There will also be various mailing and filing costs. Assuming you are doing this to make money -- the IRS allows deductions for these business expenses.
5) I started out investing $13K at tax lien sales in Illinois. That was enough to make money if you are very careful. Be prepared to buy subsequent taxes on liens that do not redeem during the redemption period. Also figure you will be attending the sales yearly to make it work out (economies of scale) so plan accordingly. Most of your tax liens (if you did good research) will return your money plus interest within the first 6 to 9 months so you can roll that over to the next year on delinquent taxes for those that did not redeem and towards new tax liens. So I figure on roughly 20% - 50% additional capital each year for 3 years to build a reasonable size portfolio.
All that being said -- you still should decide what is your goal -- making money or acquiring property. Tax leins can be great for making money, tax deeds are obviously more focused on acquiring property
Be aware that acquiring property can require a significant investment to fix-up/clean/repair after you get the deed...
Quote:
On 2004-06-19 14:49, RonaldStarr wrote:
Abdenour--(MD)--------------------
Only other counties. The list of properties for Oklahoma County had virtually no houses, my target property.
They must have had a lot of people at the sale and a lot of bidding, as the treasury staff got back to the office only in midafternoon on Tuesday. Last year, with more properties on the original list, the sale was over by 10:00 on Tuesday.
Good Investing**********Ron Starr**********
I bet the number of houses available at resale will increase a little in June 2005 and a lot in June 2006, since it's no longer possible to buy liens over the counter.
It's interesting that there is a 1 to 30 days redemption period after the deed sale. If you can acquire an ugly house (boarded up type) with delinquent taxes from the owner, you can first wait and see what the treasurer can sell it for, and, if you think it sold too low, redeem it and farm it some other way.
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Quote:
On 2004-06-01 16:51, JBCORP617 wrote:
Lets say someone had a grand and had the option of going to a tax lien sale or tax deed sale.
Can you research the parcels before going to make sure you dont buy a swamp? And what one would a grand make a bigger return?
<font size=-1>[ Edited by JBCORP617 on Date 06/01/2004 ]</font>
Hi J.B.,
One of the competetive advantages you have over most investors is, being from Minnesota, you can go to North Dakota in December and not freeze to death. I believe that's when they hold there tax lien sale. You may even be able to drive around to actually look at the houses.
I have never been to that sale, but I bet it has less competition than most others. The only way you would make money is if the lien isn't redeemed. The interest you would otherwise get (9% or 12%) wouldn't compensate you for the cost of the snowmobile trip.
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Abdenour-----------------
Yes, I made the same observation to the seminar attendees last week.
I like that idea of getting a property deed and seeing what the treasurer sells the property for, then redeeming if it is too low. However, most improved properties will be off the resale track because of people buying the tax liens.
Good Investing************Ron Starr************
Earlier it was mentioned that "there are many other RE investments where $1K can grow safely." Can anyone explain what those would be? I am new to investing and want to start out with low risk investments.
Thanks- I'd appreciate suggestions.
The Tax Sales held in Los Angeles County a few months ago. There were several lots sold for under $1,000. Most of them unbuildable unless you own some skyhooks. (total verticle) looks like the graph of recent increases in single family houses. But I saw three of them that were buildable, way out in the desert, but they were in a numbered subdivision and on a street of record.
The bidder payed less then $1,000 and he is going to build on the lot. Just what he is going to use for water and electricity I know not. But my guess on the value of the lot is about $2,000 this with $200 down payment owner takes back a note secured by a Deed of Trust and the note written a monthly payment of $20 and interest rate at 10% and a due date on the note in five years.
I know Chump Change, but still a profit. Oh yes I got full subordination so I can borrow the money to build the house which will have a storage facility for its water which is delivered once a month and the funny little Diesel engine that makes electricity and of course the septic system. Solar panels are a help.
The only neighbors are a family of coyotes and they are off key.Ah well the solitude is wonderful.
Lucius
Quote:
On 2004-06-20 14:53, Kmaya wrote:
Earlier it was mentioned that "there are many other RE investments where $1K can grow safely." Can anyone explain what those would be? I am new to investing and want to start out with low risk investments.
Thanks- I'd appreciate suggestions.
My suggestion would be to take your $1k and use it on a deposit on a RE transaction where you can sell the contract. Awhile back, I put a $1K deposit on a property and sold my contract the next day for $45K plus my deposit. The buyer gave me $11K up front and a $35K mortgage on the property for 3 months and then paid it off.