All Forum Posts by: Jerry K.

Be prepared to do a LOT of reading statutes for tax lien investing. I stumbled into it in the late 1980's because it was "passive" investing. When I found I had to learn and understand statutes for the state, the county and sometimes the city - I began to joke that I was becoming a paralegal in regards to tax liens. There is a lot to learn and each state/county and sometimes city differ. And the rules keep changing, but you have to be looking for the rule changes - they don't necessarily inform you until the auction. Tax lien funds sound interesting, but you really need to see how it is being managed and how they distribute income and property sale proceeds if they end up with any through foreclosure. Many have high management fees. Tax lien investing is not as passive as it sounds.

@Joey Chan There is an investor here on Biggerpockets, Frank Rolfe, that made his first fortune in the billboard business. He sold all his billboards to one of the big billboard companies after a few decades and now invests in mobile home parks. I have some of Frank's materials from his billboard business days. He is a partner in a website called Outdoor Billboard University. You can see what they offer today in terms of teaching how to get a billboard permit and lease it out. Good luck!

As an update to this thread. Most of the other counties in Arizona now allow multiple people to hold tax liens on a parcel. It used to be if you didn't pay the subsequent year taxes, then they put your older lien in with the next year lien and sold it to a new investor. When the new investor won, their price included your lien plus interest. So you would get paid with interest and now the new investor had your lien too. I know several lien investors who used AZ tax liens as sort of a one year CD. They would pay the taxes and if the owner did not pay off, they would not pay the sub-taxes and the county would sell their lien and the new lien too. That way the original investor was paid off after a year.

@Cynthia Bistrain. I have had some luck with AZ OTC liens. You have to do a LOT of research to find a good one. I wrote a blog post on OTC AZ liens to help show how hard it is. I picked three random OTC liens. You can read it here: OTC tax liens. Junk or Needle in a Haystack

@Malayna Johnson As Ned mentioned I invest in Arizona liens. I just moved to AZ from the Chicago suburbs a few months ago. Illinois financial problems drove me out after living there basically my entire life.

I invest in AZ liens because;

They were online

They paid as much as 16%

I could gather all kind of auction data and look at what others bid on

I could see what my competition bid each time (can't see that in an open outcry auction)

I could group the results by property type in a spreadsheet to determine what types get the best rates and least number of bids

I don't try to get the underlying property. I just want a high interest rate. I do occasionally bid on something for the underlying property, but that is usually because in researching I found the owner may have abandoned it.

Also, I was traveling to AZ every 18-24 months so that I could see the areas I was investing in. I didn't want to be totally blind. Like @Bruce Lynn mentioned, don't rely solely on Google or Bing Map pictures.

Interesting thread. I used to live just a couple of hours away from Iowa and my oldest son lives there now. I lived southwest of Chicago and would travel I-80 into Iowa often. I started in tax liens in IL in the late 1980's. I didn't like the auction system in IL at that time so I stopped investing in tax liens for a while. Then after a trip to Arizona, I started investing in AZ liens. Many counties are online auctions. I just wanted the interest rate, and their top rate is 16%. You bid down in 1% increments and the lowest rate wins. You put in your bid and can change it up until they close the batch of liens, but you don't know what the other people may have bid, and don't know what you won until the batch closes. They cancel your bid if you don't have enough money so there is no penalty for running out of money. You do have to give a total amount you will bid up front in the entire auction, and you have to have 10% deposited via ACH. You get that back if you don't win any liens.

For my type of investing, I prefer online auctions, but only because I can work them to my advantage. I completely understand why in-person auctions are much better for other investors. (Unless you bid in the counties surrounding Chicago - sheesh - I didn't have enough money to "pay" my way into being seen to get a lien on a half-way decent parcel. But we outsiders sure were seen if we bid on a piece of crap!)

I started bidding in AZ in 2010 and from the beginning kept the data on the sales. When it's online, the pre-market list and the results are available within minutes of the batch of liens closing. I add some extra data to my lists (type of parcel, bids made by each bidder on each parcel) and I have a decade worth of data I can use to make my bids on parcels the next year. I know what each type of property got for average interest rates. I also look at Florida sales too. Much different rules there. All states have different rules between liens and deed sales. If you're interested in how I do things, I have some BP blog posts here; BP blog - Lien Online Me

I had visited AZ every 18 months or so to get to know the areas for bidding. I finally made the permanent move to AZ this past August. (Way to go Illinois, you drove another native out of state)

I really enjoy reading about people investing in other areas, and Iowa with their percentage of ownership bid, was an interesting twist to this type of investing. Best of luck in your investing!

@Benjamin Misner --as creepy as it may sound, before you call - research the owners. If the county has records online, find out if other liens are on the property. This points to motivation. Does the tax bill go to the same address as the property you are looking at? No? Then look up the address the tax bill is going to. I once found a lien on a property that was a second home for the owner. I looked up his original address in a different state and he had outstanding RE tax lien on that property too. I wasn't interested in buying, but I knew the lien had a slightly better chance of falling to foreclosure on the second home. He eventually sold both homes before the foreclosure period but I also earned a good amount of interest as a consolation prize.

Google the name of the owner, Google the name of the spouse (if their is one). Look for divorce records. Recent divorce or death? Might point toward motivation. Check Facebook, LinkedIn; owner working? Retired? Looking for work? You got it, possible motivation. You reveal nothing of your research to them - that would definitely creep them out. But the more reasons you find for them to be motivated, the better you know if you should develop a contact schedule if they are not open to selling at the beginning. The longer they go and nothing changes lien-wise, the more they may become motivated. The better relationship you have with them, the better chance they will eventually go with you for a deal. Good luck!

@Dennis K. That is a good strategy for vacant parcels. If you're sure you can sell them, that's great. One of my blog posts has a video of parcels from an area in northern AZ in a town called Rimrock. It goes through little booms and busts for real estate. It is on the rise again because Phoenix has been booming for the last couple of years. This summer had a record number of days of temps over 110 degrees. People near Phoenix look to go north to the higher elevations and lower temps. Those vacant parcels I bought liens on were selling in the $20k-$40k area before 2007. They dropped to $4k in 2010-2012. 2020 sales have ranged from $7.5k to $17k. I have a handful left but my attorney said no foreclosures being accepted during Covid.

Regarding your table above. I read it that the actual year of taxes for 2014 and 2015 are Paid in full - nothing is owed despite it showing an interest amount. That amount was paid.

The taxes for year 2016 and on are not paid and nobody bought the liens, so the state/county own them. Since 2016 is the earliest unpaid year, that would have been for sale in February 2018. Three years later would be February 2021 for that 2016 lien to be eligible to foreclose. The three years is not based on the year of the taxes - it is based on the year the lien was created/sold for that year. The 2016 taxes would have been sold in February 2018. That is the date you start the 3 year redemption period.

@Dennis K. You really are jumping in to tax lien investing aren't you? Glad to have you on board. @Ned Carey is a great resource for tax lien investors. You probably have seen many of the other people who frequently post on the subject as well. Tax lien investing is very state and county specific. That includes Arizona. Hope my posts helped you in some manner.

After living in Illinois and investing in Arizona liens, I finally made the move to Arizona at the beginning of August. I still work my full time job, but at least I got out of Illinois with a profit on my home, and left the ever rising state taxes and fees behind.

You should talk with a lawyer about #1 - Foreign owner. I'm sure it's been dealt with before.

#2 - If I'm understanding you correctly, There is a tax lien on a parcel for the 2018 taxes. Those are due in 2019 and if not paid, then they are auctioned in 2020. So the 2018 tax lien will be dated in February or March 2020. The three year redemption period starts on the date of the tax lien sale. So a foreclosure on the 2018 taxes, because the lien is first sold in 2020, would not be able to be foreclosed on until 2023.

If you pay the 2019 taxes (before a lien auction), you are letting the owner off the hook for that year of taxes. The county doesn't care who pays the taxes, if you pay them, then the parcel is not delinquent for that tax year. You in effect, paid the taxes for the owner and he is under no obligation to pay you back. There is no lien that was created for 2019 taxes yet.

If you bought the 2018 tax lien (assuming nobody bought it in the 2020 auction), then you would have the first chance to pay the 2019 taxes - before the 2021 auction - if the owner does not pay. The county contacts the previous lien owners to see if they want to pay the next year of taxes and get that lien too. That way you would own the actual lien on the second year of taxes - and because it is a lien, the owner would have to pay you plus interest to redeem the lien. Paying before a lien is created gets you nothing and you let the owner off the hook for that year. Make sense?

@Alan Matthyssen Maricopa switched from Grant Street to Real Auction last year https://maricopa.arizonataxsale.com/index.cfm?folder=home is the website. Pima county is still an "in-person" auction. They do not use an online auction site. This link Pima County tax lien sale instructions has the details.

Here are some blog posts I've posted over the years on Arizona online tax lien auctions. I took off from last year's auctions since I finally made the move from Illinois to Arizona last month.