California Tax Sales: Are You Going To Do The Deed?

California has always been known for Hollywood, its congested freeway system, its beaches, and its mild weather among other things. What many people don’t know is that the Golden State plays host to one of the most popular auctions in the world annually. Any guesses as to what all the fuss is about? It might not be what you think, but no secret to you if you read the title. It’s the Los Angeles County Tax Sale Auction.

You know…it kind of makes sense. Geographically it’s one of the larger counties in the country, and it boasts the largest population of any county as well. Because of this and other important factors there are a HUGE amount of tax deeds to choose from. The size of the auction list is the size of a small phone book most of the time, and will contain in the tens of thousands of tax deeds. Fifty, sixty or even seventy thousand wouldn’t be an outrageous number. The town I live in has only 25 thousand roughly. Why am I telling you this? Simply, because you need to know, like I said before, there are a huge amount of tax deeds to choose from, and that more tax deeds means more opportunity for making money. After all, we didn’t start doing tax sales just for the fun of it. With that being said, let’s get into some of L.A County’s tax sale details.

L.A. county generally holds their tax sale/tax deed (which ever you prefer) auction twice a year: usually in the summer and in the fall. So if you missed the one you can always attend the other, and with the large amount of deeds that would be fine because you’ll still have plenty to choose from. Registration is required to attend the auction, at least 2 weeks before and usually no more than 4 weeks from the start date. A required deposit is also very common, and will vary depending on the county.

California uses a ‘Premium Bid’ method for their bidding process, which simply means the highest bidder will receive the tax deed. They also use a couple other types of methods that aren’t as popular, that are used depending on the situation. One of the methods even allows you to contact the property owner prior to the auction. This is to your advantage because you have a lot better shot at the properties you want without the possibility of them going to auction and someone else winning the property.

One last important fact about California Tax Sales is that after you are the winning bidder on a certain property, CA. gives the original property owner the opportunity to make sure that this is indeed the right property being sold. I say original because you are now the new owner. So to explain, let’s say the county happens to make a mistake or you do, in your research, and the wrong name is put with the property or something like that. The property owner can do their own research and if they find there has been a mistake made then they can get their property back. Not to fear though, because you as the investor will still receive a 6% return on your money. If you are diligent in you research as well, this shouldn’t ever be an issue. I always preach due diligence on your part as an investor and here is a prime reason why. In fact, I can’t ever think of a time this has happened when the investor has done their due diligence and researched the property completely. One thing I would recommend to you is that you look into a course that teaches you how to invest in tax liens and tax deeds. There are many out there so do your research. I have reviewed several over the years and have found some good ones and some not so god ones. One that I have been impressed with more recently has been No Risk Investor. It is thorough in its content and easy to understand. The customer support people I found to be very good too: polite and knowledgeable.

As usual, thanks for reading my article. I hope you take the time to comment and let us know how we can improve. Maybe a specific topic to cover or that the articles could improve in some way or that we are just fine and have no reason to change in any way. Ha-ha! I’m sure it won’t be the last one, but let us know when we are doing well also. Until next time, happy tax sale hunting.

Redeemable Deeds and How They Differ

You may have heard about the tax deeds or the tax liens but have you ever heard about the redeemable deeds?

This is an investing strategy that yields a high return if not a property to keep.  The redeemable deeds are something that has lots of potential.  First you will pay for the deed by being the highest bidder at the tax auction.  This could be a very reasonable price depending on the competition.  Then you will wait out what is called the redemption period.  This is a time frame where the property owner is allowed to pay the price that you paid for the redeemable deed back and a percentage of interest to you.   The percentages of interest are usually 20-25% or even higher.  Some can be a little less and for this reason it is a good idea to make sure you know what the minimum interest rate you are willing to accept will be.

Texas is a redeemable deed state and has only a 6-month redemption period with a 25% interest rate. This makes Texas a very popular state to invest in. One of the advantages to investing in redeemable deed states is that you have to participate in the auction in person. I say advantage because many will not be able or willing to travel, making less of a crowd bidding on the same properties that you are bidding on. If you happen to live in a redeemable deed state and are able to attend the tax auction then you will be able to get some good deals on houses or lots. At that point, there is so much you can do once you are the winning bidder; you can rent out the home or live in it or have the existing tenants pay you the rent while you are in the redemption period time frame. This give you a chance to collect more money while you are waiting the redemption period out. If the property owner does not redeem on their property within the allotted time then you will become the new property owner. You will be able to add the money that you may have collected in the meantime to the total amount that you might gain after reselling the newly acquired home! This is a great way to gain even greater income in today’s economy.

One of the safest investments today is in tax liens, tax deeds, and redeemable deeds. The Government backs them and you don’t have to deal with the property owner. You only have to deal with the county that you are working in. What a great way to gain income and a start towards financial freedom. How would you like to own 10 homes right now and be looking towards 10 more? This is one way to get them. It can take a little time but it is well worth it. Redeemable deeds have paid off over and over for investors wherever they are. Why not join them?

How the Tax Auction Works

tax auctionHow the tax auction works for you and gaining money can be a hand in hand thing.  At first you will want to consider the area that you are interested in for the tax auction.  You have about half of the United States to choose from when selecting.  Once you have decided where you want to work then you will need to gather as much information as possible on as many properties that you would be willing to participate in the tax auction with.  Once you have selected a state to work in you will need to find the county that works best for you.  Since you will be attending the auction the area should be an area that you’re comfortable with.  You will also need to pre register with the county.  Many counties will require that you register at least ten days before the auction and will also require a deposit.   This deposit will go towards your purchase and generally will be a percentage of what you want to purchase.  Some counties, like Miami Dade County will require a 5K deposit for their tax deed auction.  You will want to do as much research as possible when purchasing a tax deed from a tax auction.  Since you are ending up with the property, providing you are the highest bidder, your research is very important.   Even going as far as having a title search done on each property would be a good idea.  You can, however, get information that you need by going to the recorder’s office of that county and researching all the liens placed against the properties of interest.   Once you know what you are working with you will be able to establish a set price that you would be able to meet and be happy with when purchasing the home.  One of the rules of thumb that I go by is never bid more than half of the assessed value of a home.  So, if the home were assessed at 50K you would not want to go over 25K at the tax auction with your bid.  This will allow you enough wiggle room to include a real estate agent if needed and still make enough for your all of your efforts at a resale.

That is the reason why you select more than one house to choose from when participating in a tax auction.  If someone else is set on owning one of the homes that you want and he or she outbids you then you will be able to move on to the next home of interest that you have selected to purchase. Tax auction prices will start out at a minimum bid price which includes the back taxes, generally from 5 years of delinquency, any fees, penalties and interests that might accrue over this time.  Once the bidding begins the houses will go to the highest bidder making this then a premium bidding process.  There are some really good deals out there when participating in a tax auction.  One gentleman just bought a house in Texas for 6,500 dollars at the auction.  Sweet deal.  In Cleveland Ohio I noticed a few houses that sold for less than 4K.  They were older homes but not bad at all as far as their condition. These were purchased at a tax auction where tax deeds are sold.  Why not invest in the tax auction and gain some tax deeds.

Live in a Tax Deed State? You Can Still Invest in Tax Liens

tax lien or tax deed property

I frequently get asked this question: “I really want to start investing in tax liens, but I live in a deed state. Should I try to look into investing in tax liens in another state, or try to invest in tax deeds in my own state.” In this article I’ll give you what I recommend for investors who want to invest in tax liens, but find that in their state they only sell tax deeds. It’s not a one-size fits all answer, it really depends on what your goals are and on the state you live in.

You really have two options, either find a way to invest profitably in your state, or look at some of the online tax lien sales, or do both. First, find out what goes on in the state you live in. Are there a lot of deed sales? How often are there tax sales auctions? How many properties are available and how competitive is your market? You will actually have to go to some tax sales auctions and see what they are like.

Some states just don’t have that much available, if that’s the case, you may want to try the online tax lien sales. Other states may be very competitive and properties may get bid  very close to market value. If that is the case there is still a way that you may be able to profit from tax deed sales in your state. Some counties even give the excess proceeds – that’s the amount that’s bid in excess of the minimum bid amount, back to the owner of the property.

So here’s how the excess proceeds strategy works in a nutshell. Instead of waiting for the tax sale you contact the owner of the property before the sale to see if they are going to let their property go for back taxes. If they have already decided to walk away from the property, perhaps they would be willing to give you a quitclaim deed to their property in return for a small fee. You would record the deed with the county clerk a few weeks before the tax sale. Let the property go in the tax sale and after it is sold you apply for the excess proceeds.

This strategy only works in a few deed states that give the excess proceeds back to the owner of the property , remember not all deed states do this. So before you try this strategy make sure you check with the county tax collector or county treasurer and make sure that the owner of record of the tax delinquent property can actually apply for the excess proceeds from the sale. Also you do have to check for any other liens that exist on the property, since you are buying the property from the owner and not purchasing the deed at the tax sale, you will be held responsible for any other liens that are on the property.

County Tax Sales: You and Investment Strategies

How much fun did you have when you were a child and you were attending the county fair or the local parade?  It was good times I can remember.  Well now you can make some more good memories at the county with the county tax sales.  The excitement might be the same but the focus will be a little bit different.   What would you say if someone you knew told you about the house they just purchased for a very reasonable price.  You might ask him, “How did you get it at such a great price?”

He might look smug and then let you in on a little secret.  “County tax sales”, he answers.  What about the county tax sales, and where do you find out about them?

What type of investment strategies would constitute county tax sales?  First off let me explain how county tax sales work.  You live in a county that has a great population.  There may be several or thousands of people that have not been able to come up with their taxes this year.  What happens now is the county will sell their taxes to an interested investor and guess what, you the interested investor will now have a chance to make that money back plus an interest rate (which by the way puts banks to shame).   The next types of investment strategies that I want to mention are the county tax sales that allow you to purchase the property outright.  This can be an excellent way to get your ice cream with the nuts and a cherry on top, oh and maybe even a little bit of whipping cream.  Just think if you are the highest bidder in the auction and you get a home for less than half of the assessed value what a good deal that is.  Lots of wiggle room and a good way to build up a portfolio or just a good way to buy low, and sell low and keep making your way to a financially free and secure future.  County tax sales: you and these types of investment strategies are a great way to get ahead in the economy of todays times!  There are many resources available in today’s online marketing that can help you to get the basics and get started.  Once you have the knowledge all you need is a little money and a little time.

Tax Deeds: How They Work

Tax deeds, tax sale, property auctionSome of the states may choose not to sell tax liens,instead they sell tax deeds and become what are called a deed state or a redeemable deed state.  For this article we will talk about tax deeds and the states that deal with them.  The counties within these states will foreclose on the property if the owner of the property does not pay their back taxes, interest, and penalties within a period of 3-5 years.  It will be 5 years if it is a home and it will be 3 years if it is agricultural land or undeveloped land.  The counties will then sell their parcels at a tax deed auction or a tax sale.  The opening bid price will include the amount of the back taxes, interest and any penalties that may have incurred on the tax deeds.

 

The County will create the starting bid price by taking the back taxes and interest and depending on the assessed value the county may choose to add an extra amount on top of the back tax amount.  This extra amount would then go to the county or the state depending on the laws of the county.  An investor will bid a higher amount of money on that same amount.  This would be considered premium bidding.  Another type of bidding for tax deeds is bidding down on the percentage of ownership.  The bidding may start at a 99% portion of ownership of the property and then decrease according to the actions of the bidders.  The bidder who is willing to accept the lease percentage of property ownership will end up with the deed and become the winning bidder.  This then becomes a form of partnership between the winning bidder and the property owner.  One must buy the other out in order to successfully foreclose.  The winning bidder in this type of bidding will have the right to foreclose forcing the owner to buy out the winning bidder or vice versa.