Tax sales ? Fraud or Real?

Discussion in 'Wall St. News' started by andrasnm, Mar 20, 2007.

  1. I saw this guy on the infomercial circuit selling his pipe dream of buying crappy houses for tax - he alleges that even as these houses could have a mortgage the tax authorities (county, city etc) can just take over and sell. I imagine that this is false cause 'mortgage companies and banks are stupid but they cannot be this stupid? Can they?
    Anyone knows the nitty-gritty truth behind tax sales?
     
  2. vjay

    vjay

    Do a Google on the guy's name. I think you'll find the answer there
     
  3. Here is the latest property I bought at a tax deed sale about 5 months ago. Its all of the property immediately to the right of the island, including the submerged land.
    (I subsequently purchased the island in an unrelated transaction). The light shaded area is the buildable area of the tax deed property, which comprises about 1.8 acres. The property is zoned multi-family and is assessed for around $250,000. I bought it for $30,000. I wouldn't take $500,000 for it.

    So, you can get a good deal at tax deed sales, at times. But, it has gotten harder. In my county, tax deed sale info is now available online. Obviously, this means more people know about them, thus, competition is stiffer.

    Firms now send out mailers offering "help" to people with delinquent taxes. So, some of the properties get redeemed before going to sale.

    Often times the properties that I see come up are distressed properties that need work, and/or are in less desirable areas. Every now and then, a quality property comes along, but those are the ones that bring out the bidders.

    Every state is different, but in Fl., the successful bidder takes the property free and clear of all liens, mortgages and encumbrances, except Federal, state and municipal liens.

    [​IMG]
     
  4. Exactly how were you able to buy a property for 1/10 th its value.

    Was there a hurricane the day of the sale, and you were the only one that blew in?

    ;-)
     
  5. Wareco,

    I take it this was bought site unseen, correct?

    Great deal Wareco. My trading friend did something similar in New Hampshire many years ago. Then he went to sell it and the found toxic chemicals in the ground. My question in Florida, do you inherit those liabilities potentially as well?

    I know this is a statistical outlier, just curious.
     
  6. Ha! No, if that were the case I would only have bid the $14,000 in back taxes that were owing. :p
    I was not the only bidder, and there was no collusion. I can only say that the guy I beat out was not a happy camper. He tried to wait until the last second to throw in another higher bid, but waited too long. Going once, going twice, Sold!

    Also, the property was covered with Brazilian pepper trees, and I do mean covered. ( I have now coined the term Bazillion pepper trees) I think the people that did inspect the property merely did a drive by, and were too lazy to park around the corner, and walk back and start making their way through the brush and trees to really see what was there. Me? I walked it twice.
     
  7. If you are talking about contamination, then yes. I believe the statutes are written such that you would be liable for clean up even if you didn't cause the contamination. Now you could go back up the chain of title and seek reimbursement from those people, but what is the chance of collecting? Just one more reason why I don't buy properties in my personal name.
     
  8. Taxes take precedence over a mortgage. Most of the time the mortgage companies will pay them, but every once in a while something slips by. More apt to be a situation where the taxes are not impounded.

    But like Wareco said, there's an active business in tax sales. Some states are better than others, and they all have different rules...some are tax certificate states, some are tax deed states. Competitive. You need cash. And importantly, you need to know the law.

    I know guys who have made alot of money at tax sales.

    OldTrader
     
  9. Can the old owner of the house pay you the taxes plus interest to get the property back? Does he have a certain amount of time to do this?

    I can't see how someone can be so stupid to lose a 200k house by not paying 1k in property taxes, especially if they have alot of equity in it. If they were totally broke, wouldn't they just take out a home equity loan to pay the taxes and then just sell the house?
     
  10. Yes. This is what happens MOST of the time. And the distressed owner has a significant time to do this.... varies by state, but could be 18-24 months.

    Years ago, the investor formerly got reimbursed the tax money + significantly high interest rates.

    In recent years, there has been bidding for the right to pay the tax... bidders offered to accept lower and lower interest rates with the lowest bid winning. Sometimes the rate got as low as 2%.

    Tax sales investing is usually not the "no brainer" it may appear on the surface.
     
    #10     Mar 21, 2007