What I've Learned About Tax Sales
Hi, I'm new to the site. Very interesting. Thought I would share what I have learned in last three yrs. attending tax sales in Missouri. Don't even think of buying this way unless you do your homework on each property you look at. I found a commercial site for $31,000.00 in back taxes. County did not bother, or did not know the property was listed as a hazardous site. Could cost unbelievable amount to clean up according to my real estate atty. Look on net and find a course on how to do title searches. I bought a book on the subject, and it has paid for itself the first time used. I found a piece of vacant commercial property. Less than $900.00 owed on taxes. Further research found that the City was about to start heavily developing the area. But found out that no sewer line was close to property. City said It would cost me $5000.00 for every 300 ft. of easement for sewer line on front of the property. , and I would be expected to pay it as soon as line went through. The property has 950 ft. of frontage. I can go on and on about things I have learned.
Luckily, I learned them before I bought tax property. Some good deals out there, but DO YOUR HOMEWORK!!! Rick
Rick, the "Indicator"--(MO)----------------
I liked your post. You mention one thing I tend to miss telling people, the costs of putting in utilites or, as here, to pay for new ones going in. A similar situation existed at my father's house some years back. Several thousand dollars to pay for sewer line.
Do you have some success stories to share too? I love reading those.
Good Investing***********Ron Starr*************
Rick thanks for posting that information. I am "brand" new to this type of investing and would like to know where you started gathering information about how this (tac lien investing) process works. I am tired of reading all the articles and "brocuhres" on the internet of people trying to sell me stuff. They tell me exactly what I want to hear, but who knows if it's any good. Any advice is appreciated. Thanks Jack
Hi Ron,
My first year at a tax sale, I was lucky. Not yet educated as to what could happen, I bought 2 adjoining lots, each 120 ft. x 60 ft. One I got for $100.00, and the other for $200.00. They were on third publication. (Third time offered at a tax sale.) I took title in 90 days. Both were zoned commercial, but in a bad part of town. I had planned on building a small office for myself. I was a little worried about an office because of the area, but decided to go ahead. Neighbor on East side runs a lawn care company. Approached me about buying it. I priced it at $3,600.00 for both, and he bought it immediately. Seems he was out of room for parking equipment. Cheap for commercial property around here. But I was very pleased. Last year was my third year for a sale. BUT, for some reason, about 8-9 guys showed up with apparently unlimited funds. Places I could have bought in the past for a few hundred, were now being bought for several thousand. I was out-bid on everything I bid on. Preparing for our next sale this August. Hope to do better. Thank you SIR
for replying. Rick
Hi Johnd13,
First, call county court house and ask when sale is. Then get a list of properties. (usually published in an area newspaper). Next, I go to the property maps in the court house. View the property. Many, are ditches, landlocked etc. Most you can tell by viewing map. If it looks good on map, Next, go to record dept. in court house. Pull up the property, and see if any liens, judgements, etc, are on the place. I then look at Grantor books to make sure no liens are present there either. When you pull up records, you will usually see book and page numbers listed that pertain to the property. If everything still looks good, I drive out and view the place. If it looks lived in, chances are it will be redeemed before the grace period is up. Here, if taxes have not been paid for two years, it is put on sale. Redemption period is 1 yr. After 3rd. yr, it is second publication. And still a one yr. redemption period. After 4th. yr. it is a 90 day redemption. After 5th. yr. you get county deed on the spot. Hope I haven't confused you more.
Not as bad as it sounds once you get into it. Rick
Rick, the "Indicator"--(MO)----------------
Thanks for the information.
I think you are a sensible person and will go far. I too do my records research before going to look at properties.
I have a hint for you: There are other counties in which to buy bargains beside the one in which you reside.
I have often left tax sales "skunked." Happened to me just a couple of weeks ago. However, persistence pays off. I have bought several houses at tax sales and tax resales.
Another hint: talking to the tax collector or treasurer's office staff about particular properties. "Have you heard from these owners or a lender? Anybody talked about redeeming?" Returned notification letters equal high probability of not being redeemed. Also, checking for dead owners can pay off. About one third of tax sales properties are owned by deceased persons, from my experience. They don't often redeem. Apparently the postal service from the afterworld is not very reliable.
Good Investing*********Ron Starr***********
Good Morning Ron,
I believe I could learn alot from you. Hope you do not mind if I ask a few questions when they come up. My first desire for property is for a place to move my company to. I have a small manufacturing company that I have run from my converted garage for 6 yrs. We are out of room. I plan on doing real estate also. I met a man last year at a sale, and he seems to be truthful. He told me he bought a piece of landlocked property in a 6 yr. old housing addition. The property was surrounded by the back yards of 19 houses. It had been offered for 6 yrs. with no bids. On fourth publication or more, you can start bids at $5.00. Says he bought the property for $5.00, and received county deed onc the spot. He then contacted all surrounding, adjoining property owners, and offered them what was directly behind them. Thus increasing their back yards an average of 90 ft. wide and 50 ft. deep. All for $2000.00 ea. Says he had 16 takers. Buyers had to cover any expenses of transactions. The property was abandoned by the original builder of the addition. Says he has done this 3 times now. Sound legitimately possible???
Thanks in advance for your answer SIR!
Rick
Rick, the "Indicator"--(MO)----------------
Thanks for the story.
Sure, that sound feasible. I have seen plat maps with areas that are not subdivided for the lots. Sometimes they are steep hills behind the homes, for instance.
I remember a fellow buying a property at a San Mateo Co., CA, tax sale some years back. The parcel was something like three or four acres, on a slope overlooking the San Francisco Bay and the East Bay area. Nice view. However, the lot was between the back yards of several houses on two streets which ran along the hillside.
His purchase would be an ideal candidate for what your informant did.
There are a lot of ways to make money with properties bought at tax sales, if you know some of the many ways to use real estate. One tax sales investor I knew used to regualarly ask me "Did you see something in this sale that would be good for a billboard?" He had one lot with a good income from a billboard and he wanted more.
I heard about an investor about 30 years ago buying the lots up on the tops of hills. Most were isolated in the countryside. He made a fortune when owners of microwave relay towers were needing spaces for their towers.
As I teach my students at the San Francisco Learning Annex class on Tax Sales, the adjoining property owners are the people to approach first when you want to resell a property.
Good Investing**************Ron Starr***********
Hi Ron,
As I stated in an earlier post, I might have more questions if you do not mind.
Well here is one. What is the difference,
if any, between buying a tax lien, vs buying property on back taxes? I'm confused.
Also, another story for you. I had personal experience in this one, so I know it happened. Looked in a neighboring county 2 yrs. ago, but not much sounded good. One was a grain elevator co. on 6 acres. Newer office building,(wood frame) 4 medium size grain bins, and a shop. I knew they would pay taxes before sale, or redeem before deadline. Neither happened. New owner hired an experienced man, and is now operating the grain co. Seems original owner died, and family let the manager run the place. No one paid taxes etc. Family did not appear to be upset when it sold. Do not know if it is making money, but I sure wish I had pursued it myself. I learned that sometimes even the really good ones can be bought. (buyer paid $13,000.00
for the winning bid.) Rick
Quote:
Look on net and find a course on how to do title searches. I bought a book on the subject, and it has paid for itself the
Rick.
Can you tell me the name of the book that you bought that taught you how to do title searches? I have been looking for such information. Is doing your own research JUST AS GOOD as paying a title company (or other company) to have the title researched? Thanks in advance.
Hi amyindallas,
I got my book from:
Title Search,
1949 Forest Vista Ct.
Dacula Ga. 30019
(770) 831-0916
e-mail: **Please See My Profile**
Seemed a little pricey at the time, but I have learned alot. I felt it was well worth the price. I believe it was $199.00 or there abouts. I researched my own property first, following the book, since I knew most of my properties history. Mine was simple. However the next one I chose, had numerous federal liens, back taxes, and had been sold 5 times in 10 yrs. All liens were released at one time or another. It was a tough one to do. I have done 5 now, and each one gets easier. Looks overwhelming at first, but stick it out. Once you learn how the county does things, it becomes easier. Good luck. How about keeping me posted on your progress? I would love to hear about your progress, and any problems you encounter. I'll do the same if you like. Goes for anyone else that loves to talk (or e-mail) as much as I do. I will be attending our next sale on Aug. 23rd. Already picking out ones to research. I got the list early. Usually not available until July 15th. Rick
amyindallas,
Forgot to answer one of your questions, so heres another post. I feel like, after I have done 10 or so title searches, I should be able to do as well as a regular title search co. If I get stumped on one, then I'll pay to have one done. I paid for one just before I bought the course, and I asked them to print EVERYTHING they found. Not just a "yes it is a clear title". I then took their report to court house and tried to match their results. I found everything they found. I'm sure it took me longer, but each one gets easier. I go a couple steps further just for fun. If the property is listed as owned by a developement co. I look on-line to see if their corp. is in good standing. Those that are forfeited, usually do not redeem tax sale property they own. I also check to see if it is listed on hazardous site list out of curiosity. One I found was. (commercial site). Rick
Hi,
I am new in tax sale investing. I have a question on redemption. Once current owner redempt the property, do we get the money back and all the fee we pay?
Anthony.
Hi attis,
You might direct your question to a pro like Ronald Starr. I can tell you how they do it in Missouri. Here, you get back everything you paid, taxes, fees, etc. And, you get 10% interest on the tax you paid. Not the total you paid. Example. If taxes were $200.00, and bidding ran you up to $1000.00. You get the $200.00 plus 10% interest on the $200.00. But, not on the other $800.00. Up until this year, you got 10% on all of it. But this changed this year. Now you only get 10% on the tax. An interesting fact I might mention. Every year, we see properties that come up that sold at a tax sale a few years before. Once the buyer found out they bought a ditch, or a landlocked tiny piece of ground, they let it go back on taxes, and never take title. I am amazed at the number of people that buy property sight unseen, and with no research whatsoever. If i can't see it, or have someone see it for me, I personally would not bid on it. Here in Missouri, if you buy it and it has a lien on it, you may inherit the lien also. 3 years ago, a lady showed up at a sale, and bought 15 properties sight unseen. She was bidding on everything that came up that no one else bid on. She ended up with 15 pieces of worthless ground. Every piece is up for taxes again this year. I am new to this also, but I am learning fast. Good luck. You can do well at this, if, as I said in an earlier post, DO YOUR HOMEWORK. I like to ask questions here. These guys know their stuff. Rick
Thanks, Rick for your comment. I was going to be that lady who bought properties without doing much research.
There is a tax sale in coming weeks in Southern California. I narrow down my list to make sure they are not land lock or a few feet wide property by looking at platmap. is there anything else a platmap can tell me? with the list I have, I can take it to a title insurance company and order a title research on those properties. Does the company has to be local in that county or it can be anywhere?
Anthony.
Hi attis,
I would use a local company. I'm not sure how someone not local would look it up, since most has to be done at court house in co. where property is located. I'm sure people do it all the time, but not sure how. I looked at a map at 78 acres, then an overhead photo. Property looked great. Drove by and found it to be a small mountain. You couldn't get up that sucker with a mountain goat. Passed it up. Not in condition to climb a mountain for a long time now. Beautiful spot though. Sometimes you cannot tell if it is a ditch, etc. from map. Rick
Hi, I too am new to tax lien investing and have a question. If a property comes up for auction and person A buys the lien and then next year the property again comes up for auction and person B buys the lien then when the redemption period passes who has the rights to the property.
Hi flbuc,
All states have their way of doing things. In Missouri, you are given a collectors deed after redemption period. You have 2 yrs to apply for the deed. If not done in 2 yrs, the first sale is considered void, and the property is again put up for sale.
If a deed was received, then that person has the right to that property. If the deed was never applied for, and the property sells again, then it is like the first sale never happened. I am by far no expert. I can only relay what I have learned at these sales. Rick
Hi Rick, I'm just down the road a bit in St. Louis and I just found out about the local tax sales around here and I'm going to be getting the list soon. I plan on attending to find out what is going on but if I can get prepared enough beforehand I may go looking to buy. I have found this thread very helpful as you keep using MO as an example for other users. Did you learn everything simply by attending the sales or is there somewhere you have found this information? (I just posted a topic on this and then found this thread) The state was no help at all and referred me to the counties and the counties haven't been much help at all either.
Thanks for what you have taught me so far!
Bob
I'm going back over your posts and I have a question. You were talking about the redemption periods:
<<Here, if taxes have not been paid for two years, it is put on sale. Redemption period is 1 yr. After 3rd. yr, it is second publication. And still a one yr. redemption period. After 4th. yr. it is a 90 day redemption. After 5th. yr. you get county deed on the spot>>
So taxes aren't paid for 2 years and it goes up for sale, if I buy it at that first sale what happens? Is it put on sale again the next year for additional taxes or something? Is it best to hold out for the 4 or 5 year properties?
Thanks
Bob
Hi bobberth,
Try this: www.moga.state.mo.us
It is Missouris tax sale laws. Check statute Chapter 140. I believe St. Louis does things a little different, as far as when / how often sales are held. If you buy the property at a sale, YOU are responsible for taxes the following year. Usually not that much. No it is not sold again the next year, because you pay the tax to keep it current. I will not wait for sale at 4/5 offering. If it is worth having, it will be gone by then. I plan on buying at second offering this yeat.(if I'm not out bid on everything). What I have learned, I learned by attending a few sales, reading the Mo. statutes, talking to a few real estate sales people, and from the book I mention in an earlier post. I looked a a property yesterday that is coming up this sale. County map was poor quality. Streets not marked in the neighborhood where property was. County shows a street on map that does not exist. Turns out it was a proposed street. If I had not found this out, I would have bid on a piece that appeared to be right one. Turns out to be a patch of woods that is landlocked unless they someday put the street in. I started out with 2 small properties. Afraid to risk much money until I was sure I knew what I was doing. Hope this helps. Keep in mind, I'm no expert. These are just my experiences. Hope you do well. Rick
Hi bobberth,
An easier way to see the statute is type
"RSMO chapter 140"
as the search term. I use AltaVista, and it's the first couple matches that come up. Rick
Rick,
I also live in the kansas city area. I have not been to a tax lien auction and would be interested in going to the one in August. I am new to the process, but am a great student. Where should I start with my research?
Do you mainly stay in Jackson, Clay, and Platte counties?
Beth
Hi bhayden7,
First, get a copy of the local newspaper that prints the tax sale list. Clay and Platte just came out. You can get a copy at the courthouse. Find a property that looks interesting. DO ALOT OF RESEARCH, (any mortgages, liens, asessments, easements, judgements, etc.) If the research looks clean, drive by property and check it out. Still looks good? Attend the sale, and bid. I only bid on 2nd. 3rd. publications. (taxes have not been paid for 3-4 yrs.) Remember, even if you win a bid, the current owner has a right to redeem of 1 yr, or 90 day depending on 2-3 publication. It is all explained along with the tax sale list. I have already picked out a few to bid on. The last thing I do is to look at an aerial picture of the property. They are available at the courthouse also. A drive by can be confusing. May be a small strip between two houses, not the house you might think it is. Let me know if you have more questions. I'll try to help if I can. Rick
Hi,
I live in California. Is there anyway I can buy MO tax lien online? or do I have to be there in person to buy the lien?
thanks.
Hi rcy,
type "rsmo chapter 140" in your search term. You should get the rules, etc. about Mo. tax sales. There is a part in there about out of state bidders. I believe you must be present, or a Mo. resident present to represent you. Rick
How do you have someone represent you at the sale, and are there people that offer to do this?
Hi johnbriscoe,
I believe it has to be a Missouri resident, and someone that will be held responsible if an out of state owner decides not to pay future taxes. You can see exact details by using altavista, and the search term "rsmo chapter 140." It explains the rules best. Thanks, Rick
Hi mxmom,
I have not dealt with a state that does the tax certificate type deal. However, I have been to sales where big companies pretty much bought everything. I would not get too discouraged. You may be dissapointed at first, but the more you learn, and the more creative you get, the better your chances are. Example. I met a man a few weeks ago that has attended Mo. sales for 4 yrs. and was always outbid. Last year he found a property that he had viewed, that was 38ft. X 310ft. Too narrow for anyone to want. Property is about 2 miles from a popular fishing lake. He got o.k. from county, put an 8ft. fence up, and stores boats for $40.00 a month. He just gives a key to each boat owner, and they come and go as they wish. Each has to sign a waiver about theft, etc. and agree to lock gate when leaving. He paid $61.00 to buy property, and taxes are $12.00 a year. Insurance he says is minimal. He now stores 21 boats. Very creative guy. Go to the sale expecting the worst, but maybe leave very pleased. I plan to buy a property this next sale for less than $10.00. It has been offered 5 times with no takers. Out in the sticks on a two lane chip and seal rd. 50ft. X 400ft. With a little brush cutting, it will make a great place to take my camper on weekends. Nearby farmer says I can fish in his 3 ponds. AT $16.00 a year in taxes, I figure it is worth it. Hope you do well. What ya got to loose??? Rick
Joplin person here.
I have a somewhat clear idea of the process, but what I'm curious about is how do you determine if there are other outstanding liens on the property. I read the DO YOUR RESEARCH thing. That is all fine and good, but how the heck do you do that part of it? Is that in the property listings from the county? Our county sale is coming up in a couple weeks and I'm getting a late start on my research. Anything that can be done to help on this? At first I'm only wanting to look in my home county.
Also, lets say a person still has a $10,000 mortgage on a property. What happens on that if it is sold by the state?
Pokes
Hi Pokes,
When you get a parcel number that is listed in local newspaper, you can go to county and look up that person. Then, look under their name for a property that matches the one in the paper. Might say something like "Havenwood Hills track A Lot #1". Now you want to find everything that has to do with that property. A little more to it than that, but that will get you started. You'll get the idea quickly. According to our county, a lien is not dropped because of the sale. IF the lien holder is notified by county of sale, and they do not show for sale, or to pay taxes before sale, THEN the lien might be dropped. Best check with a lawyer for exact details. When you find references to the parcel you want, each reference will have a page and book number on it. Find that book and page and READ IT. If you write down each reference, like liens, deeds, easements, etc, you can then cross them with each other. Example: One might say it has a lien dated 06-10-83. Now find one that says that lien was satisfied, or released. Do this with each entry for that person and property. If you find one that has no release, or is not satisfied, it is probably still an active lien. I would recommend paying for a title search for first one or two, but have them list EVERYTHING they find, satisfied or not. Page numbers, www.etc.Then go to county yourself, and do a search yourself on the same property. You should be able to match what the title co. found. If you cannot match it, you are not ready. At least this was my experience early on. Unlike some of the guys on here, I have not found property with a house, etc. for a few humdred dollars. It use to happen here, but no longer. Now it is more like $25, or $30 thousand. And this is for a house worth maybe $40, or $50 thousand at the most. If I pay that much for a place, I make sure the title search was done right. Rick
Thanks for the answer on that. I just got my county listing (my wife went and got the very last one they had and they say they aren't printing in more). I see an absolute ton of listings.
ok. I want to put a part of a listing here to make sure I get it and also to see if there is any way I can do some of the research without having to go to the county courthouse.
Section: 00 Township: 00 Range: 00 Acres:0.00
SO JOP L CO 1ST LOT 63
2001: 286.45
2002 254.72
2003 210.04
pub fee: 20
total $791.21
So am I to assume (bad word I know) that since there is no section, township, acres, etc that this simply hasn't been surveyed recently and they simply don't know the size of the property?
Also, since there are 3 years listed would this count as year 3 (what I think) or year 4? Obviously that makes a difference on whether there is a one year or 90 day waiting period.
Is there any way online to determine where the property is? Any program that will plot out the surveyors marks?
Also, in going from collector's deed to title, is that better handled via a tax attorney? I've only got about 500 more questions that I'm sure your answers will shake free.
Pokes
Hi Pokes,
What you show is considered a second listing. 1 yr. wait. 3 yrs. owed, second listing. 4yrs. owed, is third listing. Some counties have alot of info. available on-line. Some do not. Call and ask co. collector. I have been able to sell all I have bought with just a collectors deed. A real estate atty. can tell you how to get a title. As far as the way it is listed, I am at a loss. If you look at deed at court house, it will most likely show the entire description. Make sure the description "closes". Example. N. 100ft. E. 100ft. S. 100ft. W. 100 ft. to point of beginning. If it says something like N.100ft. E.100ft. S. 100ft.. and does not go to point of beginning, it could be a problem. Also, check to see if it has any city taxes due. I saw a guy buy a piece last year for about $900.00 in co. taxes. He did not check for city taxes. It had over $3000.00 in city taxes because of a sewer line assessment the city tacked on. I keep hoping some of the pros. on this site will jump in here to help you also. Guys?. Keep asking, and I'll keep trying to answer. Rick
OK, today I went to the court house for about an hour and got the actual address listings for some of the properties that I'm interested in. I was told that the book isn't up to date, but will give a fair representation. I'm off to view several of them in person tonight. If I like what I see, I'll use a local title company to trace down the things like liens, etc.
I have a good feeling about at least two of the properties as I cross referenced them with the obits and found that the reason they haven't paid taxes is because they are dead. Looks promising.
Any other good advice?
Based on what you've told me, after I do a title search (which I found can be done in time for the auction) and verify the city tax thing, I should be A-OK to move forward.... On the properties that I thinking about getting, I'll probably contact a real estate agent friend of mine and see if he can give me a ball park on value of the property. Then it all comes down to money I guess. I'm hoping I don't have to get into any bidding war for those that I want.
You've been a great help.
Thank you so very much.
Pokes
Hi Pokes,
Yes, bidding can get pretty hairy sometimes. I set a price and stick with it. Very easy to get caught up in the fury and spend more than you anticipated. Not sure if you are aware of the recent changes in Mo. law on tax sales. Use to be, on a first offering, you had to wait 2 yrs. to get collectors deed, and redemption wait was 2 yrs. Now, it is 1 yr. Also, you use to get 10% on all your bid money. Now you only get 10% of the actual tax. Are you close to Capplinger Mills Mo.??? Very familiar with that town.
Did alot of fishing there years ago. Wouldn't mind finding a place near there. Rick
Hi Pokes,
Interesting discussion. Just a quick heads up; just because the owners died doesn't mean there's only clear sailing ahead. Heirs can make a fuss too, especially if they find out afterwards some stranger bought the folks' place. They may not even be aware they still had/have an interest. Or they may not care at all.
For them (or others) you can extinguish redemption interest faster by offering to pay for a quit claim deed so they give up their interest (I tell them the bank won't be able to give me a mortgage until the title is clear, which is true). The flip side is that in order to do so, you have to effectively put them on notice--in case they don't know or remember--that they still have a chance to pay the taxes and get the property back, should they so choose.
As far as I know I'm no where near that town. Joplin is extreme SW corner. I'm about 2.5 to 3 hours south of KC.
As far as purchasing land that a dead person owned, if the state sells a tax lien on it, other than paying taxes, exactly what can the family do? I'm just curious.
Hi Pokes,
You best check with an atty. about rights of family. I know there is something about right of survivor, but never had to deal with it yet. I do believe you have a better chance with buying property of a deceased person, than if that person was still living. Rick