Tax Liens Property Research

[Carla Carvalho]

Hello and thanks in advance for any insight!

I have been doing superficial research on Tax Liens for a while now, and I'm ready to take the plunge in 2015 with a small amount of "test" or "play" money...maybe $1000. I have some real estate investor experience, and I'm a licensed RE agent as a complement to my other career.

 I've read nearly all the posts on this website and am particularly grateful for the insightful and very analytical posts by seasoned investors. Reading about "web scraping software" and all those excel spreadsheets has definitely been fair warning: this is serious business. I get it. However, despite a basic understanding of the concept, I feel like I need a better road map on how and where to start the research in each county. I'm not as worried about figuring out how county's rules, more about analyzing each property individually; how to figure out where to go for important property data. 

Could anyone lay out a basic flow chart of how to analyze the property once a property is identified? i.e., tax assessor's office, drive-by, investigation of environmental concerns. What else are the key elements of analysis?

I am looking at Arizona, maybe eventually Florida...

Finally (and separately) Can anyone comment on experience on California's tax DEEDs? I live in California, so working locally makes sense, but I know this is a completely different process than tax liens. No one seems to write about tax deeds, so should I bother taking the time to learn/invest? 

Thanks much...looking forward to lots of research soon....

[Jerry K.]

@Carla Carvalho First - I love the phrase "superficial research" - what a juxtaposition that makes it memorable! I use those type of phrases all the time when I speak or write and it actually works well for comedians too. (I have a side gig ghost writing for comedians and speakers).

I felt I have been "called out" by your post based on what I talk about here on BP; use of spreadsheets (check), web scraping software (check), Arizona and Florida tax lien investing (check & check).

You ask a great question though - how to do the analysis on the properties.  Much too long of a subject for a forum post.  Honestly, your research is more driven by your strategy for buying liens and then state laws.

• Going for high interest rate return? Then look for residential properties with a mortgage that is current and this is the first year of liens.  If you can drive by, then look to see if it is still occupied.  Do the same for commercial units.  You want the owner to pay, so an occupied unit with a valid mortgage is your best bet.
• Going for future foreclosure? Many methods here. Vacant land or improved land? Look for no mortgage recorded, few other liens recorded (expect some city liens if the property is abandoned and the city has to mow the property), vacant building if an improved parcel.
• Being a licensed RE agent - get the local values. Make sure the property is worth more than the lien amount and foreclosure costs.

That's just a couple of strategies.  The places to research are the county recorder's office or website.  Note - other investors are talking about county websites that lag the actual county records in terms of liens filed and changes in deed.  I haven't seen that in my dealings yet, but you want to be aware it could exist.

The recorder's office should have all liens (includes mortgages and release of mortgages/liens), easements, and other legal documents that affect the deed.

If you have a good relationship with a title office, there are searches they can do that are less than a full title search that are less expensive than a full title search. You have to be comfortable with the legal terms and documents they give you.

Drive by's are always great.  Google street view is fine for seeing the area, but buildings burn, are defaced, torn down, etc. and the Google pictures can be 3-4 years old. I'm heading to Arizona in a couple of weeks to look at the areas in which I buy liens. I go about every 18 months.

The EPA website is great for a quick check on any EPA filed issues.  See my BP blog post on using that site.

This is a start. It is by no means a full due diligence list. The state and county laws will drive more research. (HOA liens, other tax liens, ownership notifications when foreclosing on a lien, etc)

Due diligence isn't talked about much because it can vary so much.  I'm sure others will add their thoughts and fill in the gaping holes I didn't mention here.