Approaching property owner about tax lien

[Benjamin Misner]

Does anyone have any experience in investing in properties with tax liens? I have found a vacant house with a tax lien on it and am looking to contact the owner to see if he is interested in selling. Does anyone have any advice regarding best methods of contacting the owner, to see if they are interested in selling? 

Thanks!

[Tim Bender]

First, do your own title search. NEVER, and I repeat NEVER depend on county tax records as evidence of ownership. I own a curative title company and we do title searches all across the country and these records are wrong about 30% of the time. Also, before you buy, make sure you have a grasp of all the liens that may come with the property that are not necessarily recorded. Depending on the jurisdiction, liens and ownership interests can be held on a property and not recorded in different formats such as in courts, by cities, taxing athorities such as federal and state entitites. Know how to research those out. Also make sure you've checked through Pacer to make sure they don't have a bankruptcy pending, those can discharge tax liens on real estate. If the owner is behind on property taxes, usually there are other liens out there. That being said, if there are liens on the property, learn how to strip those liens and utilize those liens in your negotiation in price. I usually try to buy properties with liens in place, such as judgments, tax liens from the IRS, medicare etc. I utilize the liens to reduce the purchase price and then after closing, strip the liens, usually for nothing or for a fraction of what was owed.  

As far as approaching the owner, there are several ways to do it. I always start with a conversation on the phone. If they are not interested in selling the property, I'll offer them a loan to pay the back tax. The method I offer them is a QC deed over to my holding company, then a lease option back to them to repay the loan at a normal interest rate. In my experience, about 80% of them default on the lease option and I still end up owning the property for the back tax amount. If they are not interested in the loan or selling, I make a note of the property with my notes on it on a tickler calendar and recontact them about 30 prior to the end of the expiration period to pay the tax. Usually they are more favorable to a loan when their time is starting to run out.