EQUIPMENT

Delinquent property Tax Sales

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real estate for sale

California

DEALS AT AUCTIONS AND GOV sale SITES

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Free information on how to get started in this wonderful business.  We do not offer seminars, lectures or books.  We just want to share our success with those willing to do their own research, investing and control their future.

Every state in the United States and  Canadian Provinces have a means of collecting property taxes.  Simply put, if you fail to pay property taxes, a lien is automatically imposed.  After a period of years, as determined by individual state and province statues, action is taken in the name of the state or county agency to collect the money owed for property taxes.  The rights of the property owner are detailed in the laws applicable to the the county, state or province where the property is located.

Tax Deed

In some states, after a period of years of unpaid taxes, the state or county becomes the property owner and then auctions off the property to the highest bidder and the new owner receives a tax deed.  The deed is subject to other liens or claims.  Sometimes issues of "color of tile" or "clouded deed" may have to be resolved by a Quiet Title Action in court to clear up all claims or issues.  We do our own Quiet Title work because of our experience, knowledge of state statutes and cost control of the investment.

Tax Certificate

Tax certificates, first and foremost, are an investment tool.  You DO NOT own the property when you purchase a Tax Certificate.  Tax Certificates are basically a loan from an investor to the property owner with the proceeds issued to the state to pay the delinquent taxes.  The interest rate is set by the various state laws and ranges from 6% to a base 24% and can increase up to 50% with interest and penalties.  If the property owner fails to re-pay the face amount of the Tax Certificate plus interest and other costs during the redemption period, the holder of the Tax Certificate can foreclose on the property and take possession when cleared by court action.  The redemption period can be as short as six months to as long as five years.  In very few instances will you become the owner without court action.

Those individuals who have sufficient experience and knowledge of the law often file their own lawsuits to convert their tax certificate into a property deed.  Plan on 1 to five years to finalize the lawsuit.  Unlike what Beck professes, this is not an immediate reward.  It would be interesting for him to tell how many of those $300 houses where actually passed on to the certificate holder.

What do we do now?

If you arrived at this  page,  you must be thinking outside the box  and have an interest on how to acquire land or homes well below wholesale.  What will be discussed here is how to purchase land or other properties where the owner has defaulted on taxes and the property is now in the hands of a municipal agency.  The ideal purchase would be to acquire the real estate prior to default.

State treasurers and county assessors want to generate income and sitting on defaulted tax properties provides a  0% return to the state or county treasury.  Depending on the laws of the state you live in or want to invest in, you have the opportunity to buy land at a Tax Sale or a Tax Certificate Sale.  The two are very different.  The times when properties were sold a rock bottom prices has changed and we have seen a drastic increase in the auction prices that at times exceed whay is available on the open market.

The information contained here is provided as a "goodwill service" to visitors of our Web site.  We just want to share our success story with those who want to participate in the American dream of owning a home, investment property or land upon which to build or land that will appreciate in value over time.  If you believe that you will become wealthy over night, it's best you look elsewhere.

If you use the information contained here and you are successful in acquiring property, all we ask is that you e-mail us and tell us your story so we can share and assist others.  Tells us about issues, problems or difficulties so that others can avoid the pitfalls.

There are numerous sites that charge for this valuable information.  Why pay for information when you can get everything you need to start investing at no cost, and you won't be asked to buy anything. 

You are probably asking yourself, why would anyone do this?   Because if you are inquiring about investing in Tax Deeds and Tax Certificates, you are in the 1/10th of 1% of the population that even knows about this opportunity.  Imagine a publicly announced tax sale for 350 properties and only 25 registered buyers show up.  This means there is an abundance of opportunity for all who are interested.

Given today's stock and bond market conditions, 6% to 10% seems like a good return, but what if you could get 20% to 50%?  Sound too good to be true?  In many cases, we have been able to get an 800% return.  Good bargains are available nationwide.  Fact is, in some areas of the country, there are not enough buyers or investors for all of the properties that are available.  Taxation authorities WANT TO SELL their inventory to generate a tax income.

INVESTMENT OPPORTUNITIES

Delinquent property Tax Deed Sales and Tax Certificates are probably the best investment a person can make in acquiring real estate (see the US and Canada listing).  People that do not know how the process works will tell that it is a big risk, it's all desert property, it's unusable land, it's contaminated, you can't build on it, you can't sell it, or any number of reasons why you shouldn't invest in Tax Delinquent  property.  Is it worth the risk and if so,  how do you get the facts about investing in tax defaulted property? 

STEP BY STEP

It's a learning process.  If you know how to do research, you are way ahead of the rest of the pack and could be well on your way to securing a future for yourself.  In order to be successful, you must be thorough, dedicated and above all, TENACIOUS.  If you give up easily or become discouraged because of road blocks, this is not for you.  When you are searching for an owner, you may find him or her on the very first try---others it may be weeks or even months of endless searching. 

There are pit falls.  You just have to know what they are and deal with them.  An informed person will be able to decide whether it's worth the effort or the risk or just let the opportunity go by.  Besides the obvious Tax Delinquency Lien, there can be IRS Liens, Utility Liens, Special Assessment District Improvement Liens, easements or other recorded and unrecorded instruments that may have a claim upon the property.  After knowing that there can be liens,  are you discouraged or too afraid to proceed?

If the answer is yes, hit the back button and go on to something else.  For those who have the self discipline, tenacity to investigate and willingness to risk very little money, let's move on to investing in the present and secure something for the future.  

Where do I start ???? First, you need to educate yourself.  Sorry there are no formal university classes.  Ok, so what can you do to get started?

1.         Start with your city/county treasurer and ask how they deal with delinquent property taxes and what happens to  properties that are in tax default.  There may be a listing or web site that will provide an inventory of the properties.

2.         Look up your state statues as they apply to the sale of tax delinquent property, and become VERY familiar with all applicable law.  After a while you become expert if you stay with it.

3.         Become familiar with the city/county Clerks Office, Treasure's Office and Assessor's Office.  You will have to be able to find recorded documents and plat maps to find property.  You will also have to be able to locate current owners and former owners.  The staff at city and county offices do not openly offer information--you have to ask and sometimes insist that they produce the documents you request.

Let's get started.  

There are three (3) different methods for bidding on buying Tax Liens and Tax Certificates.

1.    Live auction where you bid against other people and tax deeds are issued after the sale. Some states have no right of redemption and you get a tax deed  from the state.   A few states have the "right   of    redemption",  whereby the owner must pay a hefty interest rate and other fees to get the property back within a specified period of time which can be from a few months to a few years. 

2.    Tax Certificate "bid down" where the interest rate on the tax certificate starts at the maximum (as set by statute)  and bidders bid down the rate until it gets to  the lowest rate an investor is willing to accept (for example, bidding starts at 18% and sells at 10%)

3.    Some states have a set Certificate Rate and simply put out a list of defaulted properties and are sold on a first come basis to investors.

In all "Tax Certificate" sales, if the owner does not repay the certificate rate and other costs or redeem the property within the allotted time, some operation of law takes place such as a treasurer's deed is issued or the certificate holder must sue to obtain title to the property.  When you decide to invest, you must become thoroughly familiar with the legal aspects to tax defaulted property in your particular state of province.  Tax Deed sales and Tax Certificates are an investment secured by real estate.  

In New Mexico where we are based, Tax Deeds are issued for the delinquent property at the time of sale.  The actual TAX DEED is issued to the new owner in about 30 days.   There is no redemption period, however, the owner in default has two years to challenge the action of the state. 

When it comes time for the purchaser to sell, the property title can be transferred by Quit Claim Deed, Warranty Deed or Special Warranty Deed.  The last two will require you to obtain a court action to ensure that there are no claims by others upon the property.  Depending on how  knowledgeable a buyer is, they may require an escrow and title insurance.  Depending on what the new owner wants to do with the property, a Title Company may request that a "Quiet Title" be issued by a court before the sale can be completed.  More on this later.

YOUR TOOL KIT

Now that you want to get going, here's what you need in your tool kit

1.    Thorough knowledge of the statues in the state or province you are investing in

2.    Select a specific geographical area that you are familiar with

3.    Get to know property values in the area

4.     Make sure that owning the property is manageable for you and fits your life style

5.    Attend one or two sales before you buy.  Get acquainted with the process.

6.    Get to know the people at the county recorder's office, treasurer's office and property appraisal

7.    Most sales require payment in cash or cashiers check.  Be prepared to pay for your

SALE OR TRANSFER OF PROPERTY

Let's suppose that you purchased a property, have a Tax Deed in hand, know you have a bargain and can sell it quickly for a nice profit.  How do you sell your property when you only have a Tax Deed and there could be others who may have a claim on the property?  The easiest way is to get Quit Claim Deeds from the previous owners.  This is sometimes difficult because the previous owners are deceased, the heirs have no interest in the property and do not want to probate the estate.  Now what?  You need to file a Quiet Title action in a court of jurisdiction so that you can proceed to sell the property.   It takes at least 3 months if the law suit is not contested.   A call to your local attorney will reveal that they want anywhere from $400 to $1,500 or more plus costs for a simple case and up to $5,000 if they feel there could be other issues.  This is not what you expected is it?  You probably paid substantially less  for the property than what the attorney wants to clear the title.  What now??

File a Pro Se Quiet Title action.  This simply means that you act as your own attorney to clear up title to the property.  The courts are much more tolerant with pro se litigants provided that you follow the applicable court procedures for the court or district where the suit is being filed,  The link will show you what we have done to clear up our own properties.   Use the information only as a reference.  We are not attorneys and can not give legal advice and our example is provided only as an information source. 

Use of a paralegal can greatly reduce legal costs as well if you need help preparing the documents.  You must prepare the documents in the form that the local court requires and if have have questions or other issues, have the documents reviewed by a paralegal or attorney who is knowledgeable in this area of law.   New Mexico law permits multiple properties to be included in the suit if the property is within the same judicial district, therefore we grouped all our properties together for Sandoval County, Rio Rancho Estates, New Mexico.  The court filing fee was $122.00 and advertising in the local newspaper for the required notices was $226.00.  The judge, through the court clerk, questioned our first filing.  The question was, "Why are so many properties being filed on and why all at once?"  A simple amendment to the filing notice took care of the question.  Each property was listed individually describing the manner of acquisition and steps taken to locate the former owner(s) to give them notice of the suit.  None of the former owners contested our suit and the court affirmed.   The documents were recorded with the county clerk and a copy forwarded to the county treasurer to ensure that all references to the properties were in our name.  The Sandoval County Assessor quickly corrected their records, however the City of Rio Rancho is about 4 years behind on updating their information.

Now for the success story and more research information.  If you've gotten this far you must still be interested.  Be prepared to spend a few $$$$$$$ to purchase plat maps and printouts from the county assessor or county clerk.  Don't whine and complain about $5.00 per plan sheet or $0.25 to $1.00 per page for a print out----it's the cost of doing business.  When requesting documents, most people working behind the counters at the various agencies are young and inexperienced, and may not even know that certain documents or reports are available, so unless you have your facts about what they are supposed to produce, you may be turned away.  Don't give up.  Ask to speak with the supervisor or manager.

Other investment opportunities

The best deals are those that can be concluded before they ever hit the tax sale listing.  How do you get this type of information?  Each agency compiles data----lots of data and you need to know what to ask for.  One of the initial things you were requested to do was select a geographic area to work in.  Obtain plat maps for the area you will be working.  It could be vacant land or an area ready for re-development where there is a mix of older homes and new or remodeled homes.  If you can identify specific properties you can narrow the search quickly. 

We typically select an area that has had previous tax sales.  It tells us that there is little interest by owners or that the properties have been transferred to heirs of the original owner and now they have no interest in the property.  Most owners outside the state have never seen the property.  Once an area is selected, we determine the legal description and ask the county assessor for a "owner's listing report" for the selected area.  If the clerk tells you it can't be done or is not public information, ask to see a supervisor.  Depending on the area selected, the report can be a few pages or several hundred pages long.  Depending on the state or county procedures, at the end of each tax payment period, a tax delinquency report is generated of all tax payers that are in default.  This report will list all properties that have just late fees that are due, delinquent taxes for the current period as well as those that will be defaulted and will be sold as Tax certificates or Tax Deeds at the next auction.  Knowing how to interpret the data is like finding a gold mine because you can make offers to the defaulted owners before the state or county takes any action. 

Now the work begins.  Start by reviewing data  and limit the selection to a few selected areas on the plat map and then find the owners names in your print out.  Look for some key items such as out of state owners, multiple owners, heirs of, or trust of, etc.  The print out will have the last known address of the owner.  Before you make contact with anyone, you should be prepared to make an offer and willing to execute a contract or purchase quickly.  Our own experience has been varied.   We have purchased some properties for just the cost of processing documents to an outright gift of the property if we would pay the taxes and clear their good name.

Mining and Prospecting are terms we use when we are researching property.  It seems appropriate.  When you have become more acquainted with the data and plats, you will be able to extract other information that is vital to the decision making process and narrow the selection of which properties to pursue.   Let's suppose that you find a property of interest.  The owner is listed as living at XXXX address and state.  You make a phone call and the phone has been disconnected.  You want to confirm the information in the database, so you visit the county treasurer.  They confirm that the address is the same.  Now you must ask a vital question, "How current are the taxes?"  Let's suppose that the taxes are three (3) years in arrears and is now in default.  What do you do now?

More hard work.   Start by doing a reverse telephone search on the internet and a phone by address search.  Use several search engines.   If the person  has moved you may get lucky and have a new phone number.   If a phone is listed, call.  You may find that the person living at the location has some information as to the whereabouts of the property owner.  If the owner had a spouse, do the search for him or her.  Sometimes when a phone number is found for the given address and the name is different from the person you are looking for, call anyway.  You maybe able to gather information as the the whereabouts of the person you are looking for.  What if there is no phone listed?

On to more detective work.  Let's do a Social Security Death search.  We start with the person's name and search 2 years prior to the date that taxes were last paid.  Let's suppose that you find that the person is deceased.  You know the date of death and city where it was recorded.  Contact the area newspaper or local library for on obituary search.  Generally the notice will list other surviving family members.   Get a copy of the document for future reference.  Start the phone search again  for the known family members.  We have even contacted funeral parlors in the general area and asked them if they provided services within a specified time for the person being sought.   More mining and prospecting work to be done.

Once you have all the information and contacts for a property, your sales and negotiating skills are critical.  If you are not good at this sort of thing, let a trusted person handle this for you.  Here are a few things that you may encounter;

1.    The deceased person's estate has not been probated and the heirs do not intend to pay for the probate

2.    There are several children with an interest in the property and all have different  expectations

3.    An executor or trustee has been assigned and they don't know what to do

4.    Some heirs want to sell and others don't

5.    They don't want the property but don't know how to get rid of it

Depending on the circumstances, you may have to take several different approaches if you are still interested in the property.  The easiest way is to buy the property outright if possible.  You may wish to buy the interest of those willing to sell and then partition the property later (force a sale).  We have even probated property on behalf of family members in exchange for a deep discount in the sale price of the property.  We opened an escrow subject to the resolution of the probate.  Took three years in one case--spent $32,000 and now it's for sale at $760,000.00.  Not a bad mark-up.

The information above applies primarily to Tax Sales where a Tax Deed is issued.  Much can also be applied to states where Tax Certificates are used to collect taxes.  The research is the same and you can buy the property before it goes to the state or county.  Tax Certificates  is a good way to invest and achieve a VERY high annual rate of return.   Investing in this manner requires much more capital and you don't have ownership of the property until the redemption period has expired and litigation is concluded..

your reward

This is exciting and rewarding work, full of joy as well as disappointment.  We love success stories and hope that we can help you achieve your expectations and dreams of successful real estate ownership.  As for our investments, we have realized a minimum of a 100% return to as much as a 1,000% return.  One instance, we purchased a 1 acre parcel for $437.00 in July 2003 and sold it in October 2003 for $46,000.  We are still very active and still buying---not much at tax sales but directly from owners.  Less competition and we get a much better product and on our terms.  If we are unable to negotiate with the owner, we do attend and buy at auction if the property has high potential or adds to those we already own.

UPDATE June 14, 2005  --just sold 2 more lots, 1/2 acre each for $90,000, purchased in 2001 for $400 ea.  There are nuggets in that dirt.

UPDATE  June 18, 2005  --just sold 2 more lots, 1/2 acre each for $60,000, purchased in 2002 for $600 ea

UPDATE  June 20, 2005  --just sold 6 more lots, 1/2 acre each for $180,000, purchased in 2002 for $450 ea

Now the bad news, I have to replace some of the inventory...................