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Updated over 9 years ago,
Quit claiming a property then buying it at Tax Scavenger Sale
Alright let me know how crazy this sounds and if it’s a workable situation….I found a homeowner that is trying to do whatever it takes to get out of these two houses.
Facts:
-Both properties are probably worth 25k and are coming up for a tax scavenger sale in December.
-I’ve researched both properties on the recorder of deeds.
-Over the past 6 years he filed and messed up 2 Chapter 13 bankruptcy’s with filing the taxes in the BK (I didn’t know you could do that, but you can). The last one is now over and the taxes will finally come to sale in a scavenger sale.
Property 1:
This guy owns at least 6 years around 20k of property taxes. Has a seller carryback loan on the place for 6k that he made 3 payments. The last one on 2006. Breach of contract in Illinois only allows you to take recourse up to 10 years from the breach.
Chase bank released the loan in May. (They didn’t want to foreclose on him)
The place will take a month to get fixed up 4k in rehab costs and rented for 1000 per month.
Property 2:
Owes around 60k for it and owes about 20k in property taxes. The bank voluntarily dismissed the foreclosure a few years ago. Sounds crazy but around here the banks dismiss the foreclosure case or release the loan, then stop paying property taxes so they don’t have to foreclosure and repossess the property. This place is pretty much rental ready at 1,000 per month.
Hers what I want to do…. Have the owner quit claim the house to me, right now. So I can get in there and get the place ready to be rented by the end of the month. The taxes will be coming up for a scavenger sale in December, I will buy them at whatever cost. Well up to 25k. If I don’t purchase them, I will at least collect rents for probably a year.
This situation sounds crazy but any suggestions will help….
- Chris Seveney
Craig,
I would probably be paying the own $500 for both, not bad. I know I have a risk of losing the bid. If I do lose the bid, I would have to at least break even with the rents that were collected.
Chris,
The scavenger sales (meaning ALL back taxes on the property, besides 2014) starts bidding at $250. The taxes probably cost more than the house. I didn't pay to get a final tax bill, I just saw all the years he missed paying. The house current value is probably 25k, it once sold for 100k. The prices in the hood or most of the South Chicago suburbs didn't bounce back yet, I don't know if they ever will or not but the rents still are pretty good :) . Ok, that kind of makes sense to that a homeowner can't bid on the property taxes.
I would make sure to pull title and make sure there are no other liens that could affect you.
Why not have him deed the house to you and then pay the taxes off with the rent money? A lot of states will allow you to pay off the oldest ones first and push out the date for the tax sale. You may also be able to work out a payment plan with the county.
The thing I always ask myself in these situations is why, if the house needs so little to get rent ready and rents for so much, is the current owner not doing that.....
i edward. the deal sounds ok, but i would put the properties in a business name when doing the quit claim deal. that way you, the individual, can go to auction and bid on them. with the banks writing off their liens, thats a good thing. they no longer have a claim to the properties, but go to the county court house and get a copy of the release of lien. just because the bank wrote off the lien, does not mean that they will not be a problem in the future. get a copy. make your deal with the owner and go to the auction and see just how cheap you can get the places for. good luck to you