Can I effectively invest in tax liens in Utah

Question

I have read one book on tax liens and different info online. It seems as if the Florida, Texas and New Jersey Markets are good; however being in a state where only tax auction sales are available, I am wondering can you effectively and safely invest in tax liens out of state? If I do invest out of state, what realistic returns are available? Thanks for any input. Brian

William Hochstedler · Answer

Utah doesn't sell tax liens.  The tax sales are conducted after the fourth year of delinquency.  Here's the Utah County's Tax Sale site.  It is very rare that a property with improvements makes it this far.  For example, in my county (Cache) it has never happened.  When I went to the sale in Weber County last year, there were about 30 parcels auctioned-- no houses, 5-6 buildable lots, and a lot of junk no one wanted.  All of the buildable lots were bid up to about 50% of FMV.

Also, it will be hard to borrow on these because title insurance companies won't insure on them for a period of years owing to the fact that they don't trust the delivery of notices to all possible parties.  A quiet title action can clear this up.

Here's another thread where Utah was discussed and has some helpful information.

Bryce Bender · Answer

Thanks @William Hochstedler, that is useful information. I'd be interested in lots in Box Elder/Weber county that hadn't been developed on but are in decent (subdivided) areas. However, it sounds like those types of lots never make it to the auction. I think it is worth taking a peak at in early to mid-April but probably not something to count on or focus too much energy on in the mean time.

Jeffrey S. Breglio · Answer

There's not a lot of call here in UT for tax liens/deeds.

I've had clients buy tax deeds before the 4 year mark (not sure how they got it). But Bill is right. When we closed it, we had to insure around the prior owners (the ones that lost the property) because they can come back for 4 years to challenge, and even another few years after that if there was some error in the procedure of the sale of the tax deed. This was also a lot, not a home. By clients still purchased it (like for $4K) but they are going to wait a few years before putting any money into it so they know that when they sell, it can be insured with clean title.

I have a few clients that buy out of state tax lien deeds, etc. with success. They are very educated in the topic.

My general recommendation is always this: Be a very educated and sophisticated investor before ever buying something out of your state (or terribly far away from you)!!!

Nearly every "bad" deal that comes across my desk is a client who got into a deal out of state! Seriously!!

Hope that helps,

Jeff

John Underwood · Answer

Brian,

If you are asking about internet based auctions then it would seem you would have alot more competition and I would only invest in high end properties and not invest more than the land is worth since you aren't physically looking at the properties to limit your risk.

The better option is travel to a nearby state that is conducive for tax lien investing and do finish your due diligence by driving by the properties you are interested in.

If you aren't careful you could invest potentially invest 15k or so in a property that looked good then it turns out to be worthless.

If you had a family member or very close friend you could trust in a good tax lien investing state then you could get them to drive by the properties and you do the internet based research remotely. You could then either show up just for the auction or get the family member or close friend to attend the auction for you.

I have seen people at my auction with many bidder cards and they were obviously bidding on the behalf of several other people who where not actually at the auction.

What ever you do minimize your risk or one loss could tank your tax lien investing.

If you did get some deeds to properties it would be nice if the properties where within driving distance or at least nearby a family member that could help you with the property.

John

William Hochstedler · Answer

@Bryce Bender

I've attended auctions in Box Elder and Weber Counties.  I even bid on some things in Weber but they got bid up so quickly it wasn't interesting.   One year, someone bid on a house that was only a house on Google Earth.  It had burnt down earlier that year.  These auctions happen in May.  So marketing to the owners may be interesting.  Trying to vet properties doesn't make much sense until a couple of weeks before the sales.  Counties work hard to make sure people don't lose their property.

In Weber County there are typically a few dozen parcels that mostly revert to the county.  They also notify neighbors who may want adjacent parcels that are smaller than the minimum lot size.  Interested neighbors on gap lots get priority.  A couple of other parcels I saw go were the space in a cloverleaf interchange and some dedicated green space that a developer managed to isolate to a dedicated parcel.  Just stopped paying taxes on it and now doesn't have the maintenance burden.

It's all pretty good sport!

Bryce Bender · Answer

I'm also interested in the prospect of buying tax liens and appreciate the great tips given by @William Hochstedler in both this thread and the one he linked. Will, did you or anyone else in this thread ever end up attending an auction, let alone purchasing anything? I see that due to the pandemic many counties canceled their 2020 auctions. Likely making a larger supply in the 2021 year.

Thanks!

Brian Christensen · Answer

Nice to hear your replies. I have no interest in tax sales here for the reasons described. I may look in Texas, but yes I need boots on the ground there and it has favorable terms for tax liens. I am mostly interested in interest rates with properties most likely to  have the taxes paid. From what I've read it is a great way to go if you know what you are doing. I mostly wanted to know if anyone was doing it.

Tanner Morrill · Answer

I heard of a house in Copperton getting snapped up for ~$30-40k recently with a tax lien. Tax notice was on the door.

Brian Christensen · Answer

Thanks, for the replies. John, can I ask what typical returns you get (without actually getting real property)?

Travis Fisher · Answer

How would you go about investing in a tax deed state?  Are there hard money lenders that will work with auction properties from tax deed auctions?

Can I effectively invest in tax liens in Utah

Most Popular Reply