Tax Lien Investing

[Joseph Hernandez]

Hi everyone!

i've come across some vacant/boarded up properties that i've been attempting to flip. During my research some of them are defaulted taxes facing auction or haven't been paid yet. I'm assuming i could pay the taxes online even against the owners wishes and either take over the house that way over time or at least earn a return on my money if they redeem. What factors are at play here? Any insight or experience is appreciated.

[Rick H.]

Not so fast…
As is often the case in BP, a poster with a state-specific matter gets uniformed responses from those in other states who are applying their limited knowledge. 

California is a tax deed state and does not sell the county tax assessment liens. Each of the (58) counties holds one or more auction each year for back taxes defaulted for five (5) plus years. This is no secret.

The tax sale list(s) can and are used as a hit list for some investors and “finders” who understand that acquiring property PRIOR to auction can be a great way to find super-bargains. However, there’s much to learn in order to perfect your title ownership if you don’t purchase at auction (I never do) and the record owner is unavailable, or deceased. 

Don’t think for one moment these “abandoned” properties are easy to acquire, either. You’d best start by getting a deep education on studying California real estate title research so that you know how to abstract the record ownership, deeds, liens and history since their acquisition (by purchase) or the prior owner(s), if current owner inherited or spousal distributions. 

Some of these properties, you will discover, are actually vested (held) in a trust. Occasionally, all parties are deceased or trustee fails to act.
You’ll see in my older posts (when I was more active on BP) how I organize these opportunities using the PETITO method:

Property, Equity, Title, Interests, Threats & Obstacles, and the Opportunity (is the juice worth the squeeze?).

This is my 45th year as a real estate investor and I have specialized in working inherited property with title and other issues for well over (30) of those years. I’m fortunate because well-over 99% of my transactions are from attorney referrals as I don’t have the patience anymore to deal with people unwilling to “go deep” and invest in their RE education. 99.9% on BP will not. And it’s that 0.1% that DO get serious who make the money.