Georgia Tax Sale Question

[Aaron Millis]

Hi everyone. So I live near Georgia and am interested in investing in Tax Sales in GA counties. I know basically how everything works but I had an idea/question and I would appreciate the feedback.

So I know in GA once a property goes to tax sales for delinquent prop taxes that the owner must pay the winner whatever their bid was plus 20% within the year. So if someone's property was worth $100,000 and they only owed a couple hundred dollars in taxes, and it went to auction, it's possible and I imagine likely that someone is going to bid tens of thousands of dollars. Because why wouldn't they? They could get a great deal on a property or a great return on a nice chunk of money.

Assuming everything that I just said is accurate, my idea is to reach out to these people who owe money on taxes and are soon to have their property sent to auction, and find a way to construct a deal with them where I put a lien on their property-  pay their property taxes but still demand a certain interest rate or return back- and also make the time similar to Ga law or possibly shorter where if they don't pay me back the amount I can seize their property.

So an example is someone has a $100,000 property- owes $1,000 in delinquent taxes- Its going to auction soon- I step in and say I will pay their taxes but I want $5,000 with a year from now or I get the property.

So the idea is to make a good return on my investment while saving people from the bigger dogs just around the corner.

If this is possible how would I legally construct it? Who would I need to talk to?

I hope I worded this well enough for people to understand and thanks for any feedback.

[Roy Oliphant]

@Aaron Millis

Roman already mentioned the usury issue.  Another possible pitfall is Dodd/Frank and the potential for being classified as a mortgage lender (you are intending to loan against the property).  Are you a licensed mortgage originator?

In Texas, making loans for the purpose of paying property taxes is specifically regulated.  It takes about $1MM in assets to get a license for this.  Georgia is probably different but you need to investigate.

@Kiet N.

Of course "most investors" have a specific strategy.  Some invest specifically looking for the good returns and generally low risk of redemptions.  Others focus on the higher risk, harder work and greater potential returns by looking for properties that probably will not redeem.  We understand the longer investment horizon and more difficult process of lien to deed investing. 

So long as you understand the strategy, you can make money either way.