Raw Land Opportunity to be bought through tax lien.

[Clay Ickes]

There are two lots in a popular area in Colorado that were taken by the city for non-payment of taxes. I believe after the owner died, but haven't been able to confirm that. For 80k I can buy the tax lien. At that point, the person has 90 days to 'redeem' it (meaning buy it back from me), but I believe from my online research the owner passed away in 2018 with no heirs. Once no one redeems it, in a further 4-5 months clean title is transferred. Comparable nearby properties are selling for 300-500K.  I have a potential partner who has done this kind of thing before and will be doing all the leg work for a 50/50 split of profits made after the initial loan amount is paid back. 

I'm wondering if anyone has any insight into this kind of deal, knowledge about land sales, buying liens, and other relevant info. Any pieces of input or advice about how to navigate this would be very welcome!

[Bruce Lynn]

Lots of things to check on in CO sales....does it have utilities?  Will it ever have utilities?  Is it buildable?  Does the county allow septic and what are the requirements...and what will that cost? 

Is there access?...Where is that access....is it year round access?   Is it buildable?  Ask the builders in the area what their considerations would be?

Have you seen it?.....See everything you buy....100% no exceptions.

Any houses in the area?

Typically you cannot buy these kinds of properties with loans....so not sure where that part came into play...unless your partner is loaning you the money.  If they're loaning you the money, why don't they buy it?  Why do they need you?   What value are you bringing to them?

Have you been to the tax lien sale before?  What is bidding like?  Do you think you will be the only bidder or will be there be 100s of bidders.  Last month I was in a super small county in Texas and the courtroom was packed..standing room only.....plenty of the usual suspects there bidding...but plenty of others too.   One property I wanted had minimum bid of $10,000 and went for over $100,000. That's cash only, day of sale.   The guy who won, actually had it under contract for less, but thought he could pick it up at tax sale for less....but that proved wrong...had to pay more than his current contract.

What kind of title does CO give you.  How does your title company handle that?  How long will they need before you can resell with title insurance?   

Also will you need to resale with cash or financing.  Go find your lenders now for your potential buyer and see what kinds of requirements they have and if they would lend on the piece of property.   If they won't lend for whatever reason, then you know you will need cash buyer in the end for your exit.

I always advise people to never buy at their first tax sale....maybe first 2 or 3....go watch...see how the bidding works...see who is buying...what are they paying....talk to them....ask them about their exit strategy....ask them why they bid that amount...ask them what they think it is worth.  Ask them how often they buy at the sale?...and a million other questions you think they will answer for you.

Tax sales are all fun and games until it isn't. Plenty of people buying at the tax sales with no clue....don't let that be you.  It is not an easy get rich quick scheme in most parts of the country.  I see plenty of people buy what will be real headaches.  Happens at every sale I expect.   There are deals, but not always easy.

Best wishes and good luck.....