Tax Lien Investing – Doing Your Tax Sale Research at the County Level

Executive Summary About Tax Lien Investing – Doing Your Tax Sale Research at the County Level By Russel Hall

County Sales Tax Rates

In tax lien certificate investing, there are many different strategies an investor can take. Are you only going to research and invest in local counties,or will you invest in multiple areas and states? Do you plan on traveling to tax sales, or are you looking for counties and municipalities that offer first-run or struck property tax lien certificates online or by mail? Once you answer the questions above, you’ll have a better idea of the states and counties you’ll want to invest in. Once you target your states and counties, you’ll want to address the following questions:

In most states, property taxes are due once or twice a year. Unpaid property taxes become delinquent a few months later. Once property taxes are delinquent, the property is subject to a tax lien. It is important to know the “delinquent” dates for your state for at least two reasons: first, a tax lien sale usually follows shortly after the delinquent date; second, counties will compile a list of delinquent properties and make these available to the public. Some of these lists are offered for free online. Other counties require investors to submit a written request and charge a small fee for the list. Still other counties only submit their list to a local newspaper for publication three or four weeks before the tax lien sale.

When are the sale(s)? Most counties hold only one tax lien sale per year and they occur about the same date every year. Some larger counties will hold sales more often. Most tax lien sales require that the investor attends in person. Several Florida and Arizona counties offer online tax sales, including Maricopa County in the Phoenix area.

Is assignment purchase (over-the-counter) OTC sales available? In many counties across the U.S., tax lien certificates that don’t sell at the initial or subsequent tax sales become available for assignment or over-the-counter purchase.

Can you buy OTC liens online? Many counties offer investors the opportunity to buy OTC liens online.

Can you buy OTC liens with credit? The redemption period starts the day that the tax lien is first up for sale. From this date, the current property owner has a certain amount of time to redeem the tax lien before the property becomes vulnerable to the foreclosure process.

Does the current owner of the tax lien certificate have first rights to subsequent property taxes? In most states and counties, the current tax lien certificate holder has first rights to all subsequent property taxes until the property owner redeems the tax lien certificate.

Does the county want/need to be actively involved in foreclosure process? In most counties, the tax lien certificate holder is responsible for starting the foreclosure process after the redemption period expires, but there are exceptions.

In summary, first you need to decide your target state(s) and counties. Just input the county, state and “property tax”. More often than not, you will be pointed to either the County Treasurer, County Assessor, or Tax Collector section of the county Web site.

Buying Tax Lien Certificates Without Leaving Your Home

Perhaps you live in a tax deed state, or, for whatever reason, you just can’t make it to any tax lien sales. No worries, you can still be a tax lien investor from the comfort of your own home. This is made possible through over-the-counter sales or assignment purchases. Most states have a system in place to sell the tax lien certificates that are left over after the annual tax sale.

This is a great opportunity for you to invest your money all over the country without ever having to travel to the actual location in which you are investing.

With over-the-counter tax lien certificates, you are getting the best of both worlds: the bidding competition is eliminated so you will get the maximum interest rate, and you are buying these liens at the lowest possible price. In fact, in some cases, you may get a tax lien certificate for less than the minimum bid price that it was offered at the auction.

In order to get started, you will need to know each county’s process for selling properties in their inventory after the tax sale, and how to get a list of these properties. Many counties require that you send an “Assignment Purchase” form letter or another type of application form letting the county know who you are and what information you are looking for.

Some county Web sites will list the county’s post tax sales process, and some states even allow you to download current property inventory lists for free. The cost of assignment purchase lists in other counties can vary anywhere from $2 to about $25.

Calling a county directly for information is not always the best strategy. Buying tax liens over the counter gives you a tremendous opportunity to reduce, or even eliminate the redemption period.

In many situations, the properties have been in county inventory for a lengthy amount of time and are approaching, or even past the redemption period. This means that you will be able to foreclose on the property immediately or much sooner than if you had purchased the lien at an auction.

• you buy the tax lien certificate at the lowest possible price, sometimes even lower than the original minimum bid;
• you get the highest possible interest rate;
• you don’t have to wait for an auction to start investing your money;
• you can invest when it is convenient for you, or when you have the capital available;
• you can spend as much time as you need to research the properties you are interested in, and won’t feel rushed because a sale is coming up.

Finally, something else to keep in mind — just because a property didn’t sell at the tax lien auction, it doesn’t mean that the properties on the assignment purchase lists are not worth looking at.

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