Stategy for Tax Lien Bidding / Investing?

[Tricia O'Brien]

I want to buy tax liens with the hope of eventually owning some of these properties, but I'd like  advice on how to evaluate the risk of high repair costs between 5-6 promising properties.  I've researched liens for sale at an upcoming tax auction in Indiana and the laws for that county.  I plan to have someone in that county take photos of the outside of the  houses and neighborhoods I'm pursuing.  I don't want to over bid and / or end up with junk. My questions are:

1) Since I can't inspect the inside, how can I make a guess as to the repair costs of, for example, a 3/1 SFR, 900 sq ft, built in 1955 compared to a 3/2 SFR, 2500 sq ft built in 1890? If they both look well maintained/restored on the outside do you usually assume the inside is well maintained too?

2) After you inspect them and determine occupancy, do you prefer to bid more aggressively on the vacant ones or the occupied ones ?

I know some investors care only about the interest rate and redemption period on tax liens, but I like to bid on just those liens where I would want to own the property. Any replies would be appreciated!

[John Underwood]

I would bid higher on occupied properties because you know these are habitable. The vacant ones could be missing copper pipes, electrical wiring and the HVAC by the time you get the deed. The exception to this is if the vacant houses are in a very nice are or the house has a good FMV. Look at the roof line, does it have HVAC, is it brick or vinyl siding, does it appear to have newer windows. If it has a for sale or for rent sign in yard? I like to see such a sign because the owner considers the house to be in good enough shape to try and sell or rent the house.

One occupied houses I give it high marks if I see a US flag. They people have some pride in their house to fly one. Also is it owner occupied or does the tax bill go to another location such as out of state?

Does everyone else on the street maintain their property? You can use Google Street view to look at some of this. Just realize that the pictures may be years old. I use this to eliminate properties not to be the deciding factor in bidding on a property. No substitution for driving by property to look at condition and see if anyone is currently living there. Sounds like you have someone doing this for you which is fine.

Also flood plains can be an issue in the future with insurance.

If you have it narrowed down to a few houses look at the Register of Deeds site for mortgages, leins, deeds of distribution etc.

If you don't win the bid at auction try and contact the owner and see if they are pLanning to redeem property or not. If they don't want or can't afford to keep the place offer to pay them for their time to sign the property over to you. First make sure their are no title issues or large mortgages that you would have to deal with. These you should try and get at auction so that the tax deed can clear out most issues.