Tax Lien Foreclosure Beginning, P Street NW Washington D.C

[Nick Vafa]

Investment Info:

Single-family residence other investment in Washington.

Purchase price: $29,965
Cash invested: $92,965

At the annual District of Columbia tax sale, I picked up two liens this summer. The tax lien itself was $29,965, which was equivalent to a year and a half of unpaid property taxes. Since the property was vacant for a portion of this time, the tax rate was multiplied by a factor of 10 ( as per DC vacant property tax regulation ) which explains the cost of the tax lien.

Since competition is always fierce in DC, I bid an additional surplus of $63,000 on the lien to win the final bid. All in, this tax lien cost me $92,965 to purchase. After doing my research, I had identified this property as a strong foreclosure candidate, which is why I felt comfortable with the cost of the surplus bid. I came in under budget, as I had set aside $100,000 budget for this specific lien.

As always, there are three possible outcomes.
1. I will receive the appropriate fraction of the annual 18% interest on tax liens in District of Columbia for the period I hold the lien and get my surplus bid back.
2. The owner redeems the property once I have begun foreclosure. I still receive the appropriate interest, and receive reimbursement by the property owner for all litigation fees accumulated thus far. I also get my surplus bid back.
3. I go through the entire foreclosure process and receive the deed to the property. Once DC takes out appropriate fees, I receive my surplus bid back and secure the property.

While the redemption period in DC is up until the foreclosure is issued, after 4 months, the tax lien holder can begin the foreclosure proceedings by taking the necessary steps such as having the post tax sale notice posted and waiting 45 days. As of last week, I have begun the foreclosure proceedings with the lawyer. Most likely, the entire foreclosure process will take close to a year.

Stay tuned for updates and feel free to ask questions ! I am also beginning foreclosure on the other lien I purchased, I will post the details soon.