Sorting Your List

Sorting lists may not be that easy. In fact, it is recommended to sort your list the best way possible and you do it based on your own criteria. You get information so you can eliminate some properties on your list so it would be more focused on the best ones. In fact, the very first thing you need to do that is part of due diligence is to minimize the list to just contain properties that actually have what you have in mind.

Now, you may ask, how do you eliminate properties? To begin, you must already have an investment plan. If you have decided that you plan on taking a residential for a single family, start sorting your list by using land use code. Remove properties that do not have what you really want. Now, copy the remaining properties that are priorities and paste them in another spreadsheet.

Follow the steps below:

1.)    Sort properties in minimum bid order based on tax amounts the jurisdiction has published.

2.)    Examine the list and check to see if there are properties that don’t fit.

3.)    Divide the minimum bid by total assessed value as this will provide you the percentage of market value. The number will be around 1.5% to 6.0% market value.

4.)    Remember, actual ratio may not be as significant as determining properties that do vary from the average.

5.)    The properties on the list can be deals that are worth it or not.

Next, search for properties that are out of line where the assessment for upgrades or improvements is smaller than your land assessment.

Lastly, remove properties that are way out of your budget. Did you know that it is actually better to purchase 20 $500 liens rather than just 1 $10,000 lien.

The Importance of Subsequent Taxes

Subsequent taxes are due on or after the tax sales are held. But did you know the importance subsequent taxes or more known as “subs” have on you being the tax holder?

There is actually no legal power where you are able to go to a deed and get its real estate if the subsequent taxes are not yet fully paid. But really, what would be the consequence of not being able to pay off the subsequent taxes when they are in due?

Well, there is quite a number of jurisdictions wherein your neglect to pay off the subs can put you at risk as a tax lien holder especially if the property has not yet been redeemed. Take the state of Arizona for example, failure to pay off your subs can surely hurt your position and a new tax lien will then be sold and its buyer will then have the right to redeem which will eventually remove your opportunity to get the property if the lien won’t be redeemed. This is just one of the most common cases.

Now, there are also situations where the preceding owner has the right to purchase the sub lien which will then give you the chance to trade up the return. Let’s take an example: If you buy a tax lien in NJ at a 6% yield and you have the prior lien at the next year, it is then okay to purchase the new lien at 18% by custom. This system works at several states where bidding is for the ownership percentage.

Things to Consider When Investing in Tax Deeds (Part II)

what are the things to consider in investing?

Determine A Method To Use

Make up your mind on how much time you can give for investing in tax deeds and your travel ability. These factors are significant when deciding a method to utilize to find properties to invest in. You can also attend several auctions just to observe so you can familiarize with the process and the rules.

To find out where the auction will be held and what time, call the county treasurer. You can also ask to know if there are properties that were not sold at the last auction and are available over-the-counter.

Do Evaluation

Assess the risks involved and know the fair market value. But do remember that the county appraiser can be a little too optimistic that it won’t matter for them if there are environmental or legal issues with the property title, after all, it’s a foreclosure property. A better idea is get an independent appraiser as it will save you money and stress.

If the property has legal issues, get a real estate attorney who is familiar with the local laws.

Specify your Search

Get a list of properties that are right and that fit you. You don’t have a lot of time to do extensive research on all of the properties you may be interested in so at least, utilize your time to concentrate on the best properties. The more time you dedicate to do due diligence, you will be able to understand the property’s market value better.

Attending the Auction

In your first time to attend the auction to buy properties, it is recommended to stand at the sideline and observe. The first part of the auction is where the most competitive bidding take place. Assess first what is happening before bidding.

Now if you are not able to get the property the first time, don’t take it too hard. Also, don’t panic that you are going to bid on any property even if you haven’t done homework just so you can purchase something.

Things to Consider When Investing in Tax Deeds

Planning to invest in Tax Deeds? Here are just a couple of things you’ll have to consider:

Things to consider in investing

Your Objectives
You will need to find out your main financial goals even if you’re just starting out in tax deed investment. These objectives will make a significant impact on things such as – the property types you intend to buy, the areas you opt to invest, the techniques you apply when buying properties, and the work and time you will have to give. Are you purchasing tax deeds to possess and hold properties or just to sell and make profit from it? If your goal is to hold properties, you will have to consider that this will definitely need more capital. On the other hand, if you’re buying a property in order to sell it, this will need more time as you will usually have to go through remodelling.

Choosing the Area
Deciding where to invest is also deemed important when you are to buy tax deeds. You will have to take into consideration the unsuitable areas, city plans, development trends, potential growth, and get familiar with the local real estate values. You will also need to consider if it is rather best to invest in the state you are living. Remember, it is not easy to become an instant expert in all the states or counties you want to invest as rules and regulations vary. There are also counties where some of the areas are more investment-worthy than others. Usually, counties where there is less population tend to have less competition for tax deeds that are of quality.

The Property Type
Next is to choose the property type. You can opt for single family homes, multi-family residences, commercial properties, raw lands, industrial properties, developed lots, and agricultural land. The least risk for investment are usually developed lots and residential properties and they make the best choice for starting investors. Raw land may be vacant for a long time but may still do not have roads, sewer, or even water while commercial and industrial areas tend to require higher front capital yet have more environmental issues.

When Redemption Period Has Expired

Expired Redemption Period

What do you do when redemption period has expired? If the lien has not been redeemed, you as a lien buyer will have to do one of the following in the list below, depending on the jurisdiction.

* In some jurisdictions, you need to apply for a tax deed and give evidence that you have advised all the parties of interest.

* In others, the application for tax deed includes a number of other prerequisites that you must accomplish as part of the process. Again, it is your obligation to know the requirements.

* Other jurisdictions need that you foreclose on the property based on the tax lien. Where the foreclosure is needed, you must always have knowledgeable counsel for this process.

The process of perfecting your ownership interest based on the tax lien will depend by state and it is extremely important that it is done wisely and properly. Remember that the courts can be reluctant to just give off one’s property to someone else and they will tend look for reasons to prevent doing so.

Redemption Period for Tax Liens

tax lien states

All tax lien states except Kentucky have a declared redemption period in the statutes. This redemption period is the time provided to the landowner, or, in some cases, any “interested party” to redeem the property by paying the tax lien, which will include the owed taxes, penalties, costs, and interests.

The redemption period for tax liens variegate in duration by legal power but the shortest would be six months, which is Maryland, and the longest is four years which is for Wyoming.

Usually, the delinquent property owner will redeem the lien before the redemption period expires. Also, the tax lien buyer may have nothing that he needs to do in cases where the lien is redeemed. However, investors may need to give back the tax lien certificate to the taxing jurisdiction and carry out a quit claim deed.

Different states have different prerequisites which you must know and follow. Some jurisdictions will advise you when a lien redeems while others may not because it all depends on the legal requirements or the taxing jurisdiction’s policies. It is your full obligation as a lien buyer to know what is happening.