All Forum Posts by: Will Sifert

It's simple, because you have real investors here giving you honest feed back. Where as what you are coming across else where is mostly ads or posts by people who are trying to sell you software, programs, classes, etc...     I have made a lot of money from tax liens. I have also made a lot of mistakes and lost a good bit of money along the way. I have been doing this for over 15 years. There is a huge learning curve and it's complicated in general not mentioning that each state is completely different from the next. So you will get a lot of people saying " tax sales are great, make easy money, get started with $50 blah blah" and then the reality is they are naive, new or trying to sell you something. The investment strategy is great, now go master how it works in just one state!  They will leave that part out, they speak in total generalities....

Quote from @Elaine E.:

Same, this update is shortsighted and stabbing investors in the back. They should have grandfathered in liens sold before this change. My condolences to everyone who has paid the high premiums over the last couple of years who now have no way of making that money back. 

Me being one of them and I will no longer purchase tax liens in CO, I suspect many others will follow suit. In 2022 alone I spent about 65K in tax liens in CO with about 15K of that being premiums.  I have lost a lot on redemptions so far but still had a decent amount of active liens that will be coming up on 3 years. I am sure I would have ended up with a few of them, sold them and net a profit. Now, I have to initiate an auction and then bid against other people just to be able to keep those properties. Not going to happen, if no one bids fine I will get to keep it, but chances are they all going to get bid up. There are so many "investors" out there at auctions paying near market value it's crazy. There is no room left for profit and I am already in the hole. I have already spent a lot of money and eaten into profits paying the premiums, I am not going to spend more money bidding on this properties.

Quote from @Bill Schrimpf:

Quote from @Will Sifert:

Quote from @Shane Roberts:

Thanks for sharing, Will. I have several liens in Colorado currently. Will this be effective retroactively?

It is effective as of July 1, 2024 for any deeds that have not been assigned by that date. If you haven't filed for the deed already you going to have to follow the new law as it usually takes more than a couple months to get the deed after you apply for it. In my case I have several liens that will likely make 3 years at the end of this year, so this will affect all of them for me and everything else over the next couple years.

I've flown in to attend some in person sales in CO and for the most part I was ok with the premium bidding as I anticipated getting a decent amount of deeds at the end of the day. This destroys that logic and I will lose a lot of money.

 OH - that sucks!  Am I reading this right?  If a lien already exists, but hasn't aged, to where it can be converted, then it's worthless?

Not worthless, but you wont be issued a deed like in the past when the redemption period expired. Now it would have to go to auction and bid on by the public, high bidder wins. So you either simply initiate the auction and not bid, results in a redemption or hope no one else bids and only then would you get the deed. You could always bid and try to win it but that will cost you more money and who knows how high these will be bid up.  Before you just applied for the deed and if the owners didn't respond and pay it then you got the deed. Now it could cost you thousands of dollars to outbid someone else, eating most if not all of your profits.

This is all a result of Tyler vs Hennepin County that was ruled on by the supreme court last year. Colorado freaked out because of that case and felt that it needed to alter it's tax lien sale process. But there was really no reason for them to do so....   MN is a tax deed state. In that case a lady owed 15K in unpaid taxes, the state sold her condo at deed sale for 40K and kept the overage.  Some states do this, for example SC does this but allows the prior home owner to apply to receive the overage. The "issue" was that the county should not profit from seizing someone's property for property taxes. They can take it and sell it to get back what they are owned but they can't keep the "extra". 

Colorado is a tax LIEN state. It does not have the same issue. For starters, the County doesn't sell the property, it sells a tax lien. While the county makes money (premium bids) from the sale of the tax lien the county makes nothing off of the transfer of ownership (deed) of the property. Lastly, there is no "overage".  In the deed sale case there are two clear amounts, the amount the owner owed in taxes and the amount collected from the sale. With a tax lien, there is no "overage" collected.   Well except for the premium bid amount. Perhaps they should have given the premium bid money to the owners who lost their property when a deed was issued.   The way tax liens work, the certificate holder gets to exercise their right under law to take ownership of the property (get the deed) when the redemption period expires and the owner fails to respond/ repay once the deed process has been concluded.

The only thing the MN case should have affected was tax deed states and that the county could not keep the overage. What Colorado did was unnecessary and will cost them millions in less premium bids because of this new system. I know some of the smaller counties really relied on this money. 

Quote from @Bill Schrimpf:

@Will Sifert - Guess I was lucky to buy some liens last year without paying a premium, didn't even get down to zero!.  FL is super efficient, and not a bad model from the investor point of view.  What you describe sounds more like NJ.

I guess it depends on what type of view the investor has. As someone who invests in tax liens to acquire deeds and not for the interest, this sucks for me. My understanding of Florida is that it is similar for the most part, except you bid down interest rate. If the lien is not redeemed then it goes to auction where it is bid on by the general public. Generally speaking, I know there are a lot of fine details and higher interest rate you make while you wait for it to be sold at auction etc. 

Quote from @Shane Roberts:

Thanks for sharing, Will. I have several liens in Colorado currently. Will this be effective retroactively?

It is effective as of July 1, 2024 for any deeds that have not been assigned by that date. If you haven't filed for the deed already you going to have to follow the new law as it usually takes more than a couple months to get the deed after you apply for it. In my case I have several liens that will likely make 3 years at the end of this year, so this will affect all of them for me and everything else over the next couple years.

I've flown in to attend some in person sales in CO and for the most part I was ok with the premium bidding as I anticipated getting a decent amount of deeds at the end of the day. This destroys that logic and I will lose a lot of money.

As of July 1st, 2024 Colorado will be making a change from a traditional tax lien state to a system that is hybrid, more like Florida. I have glanced over some of the new law, from my initial interpretation the new system will:

- Premium bidding to win a tax lien, non refundable premium bid will remain the same.

- 3 year redemption period will remain the same.

- You no longer simply apply for a deed after 3 years and get it after the county attempts to find the owners. Now you would go through noticing requirements to schedule an auction. Property will be sold to the highest bidder at auction. Starting bid will include past taxes interest and county costs/ fees. * Your premium bid amount will not be included and not recovered. Any overbid amount at the auction will go to the property owner.

Here is the problem, almost all tax liens in Colorado were won by paying premium bids that were 10,20,30,50,100% or more of the lien amount, especially on vacant land and property that had a higher chance to redeem. Personally I have spent tens of thousands buying liens in Colorado over the last 3 years and have calculated the premium bidding as a cost that I would recover from actually getting a few deeds. I have lost thousands of dollars on premium bidding on liens that have been redeemed. I also have several deeds that have not redeemed and the profit I would make from selling those would more than pay for the cost to win those liens (premium bid amounts).  All of that has changed.... Now, instead of getting the deed and who knows what additional costs I will have to pay to initiate these auctions, I would have to bid against the public and pay more money to win the deed.

I hope Colorado realizes how  much this is going to cost them in tax sale revenue. Some of these cheaper vacant land properties get bid up 700-800% over the lien amount because there was a decent chance you could get the property .  I can't imagine anyone would premium bid more than 1 -2 % if any on these types of properties now.  Most years you only making 9% - 10% interest in Colorado.  Who is going to pay much of a premium when there is no chance to get the property?  If you are paying a premium to just win the lien to make interest, most redeem with in the first year so even on houses and properties that will redeem 99.9% of the time, who would pay more than a few % over for those because you are not going to make much in interest and if they redeem in the first couple months you will lose money on all of those.

For example, on a $100 lien I might have paid $50 premium on a vacant parcel of land that might be worth about 15-20K.   I knew if I bought enough of these I would get a few deeds.   Most redeem and at 9% interest I would lose anywhere from about $25 - $50 on each lien depending on how long it took to redeem. So now, after 3 years instead of paying about $400 to the county for a deed, I have to pay noticing costs and then go bid against other investors at an auction.  If I do not win or choose not to bid, I get back my $100 plus 27% interest (9% x 3 years).  So now instead of getting the deed, selling the property and helping to recover the losses from all of the redemptions, I end up still losing money on the liens that do not redeem. My only chance is that no one bids at the auction, if I wanted to bid at an auction I wouldn't have bought the lien and I would have gone to tax deed states... this sucks.

Thoughts..... 

Link to new law: 

https://leg.colorado.gov/sites/default/files/documents/2024A...

Quote from @Elaine E.:

PSA - Colorado Tax Lien investors, take note of this email from Mesa County. I expect other counties will follow suit. 

"We wanted to reach out to our active tax lien investors in Mesa County. There is a new law that is slated to be enacted on July 1, 2024 which will adjust the process to obtain a tax deed. The biggest change will be that tax deeds will not automatically be issued to the tax lien holder through the tax deed application process. A tax deed will be issued to the highest bidder at the public auction-which will take place approximately 4 months after the application for tax deed. (Our auctions will continue to be held online.) This 2nd auction provides an opportunity for the property to be sold for "market value" so that the owner does not lose their property for less than the market value. The opening bid will be the combined cost of the lien with the included Treasurer's fees and costs. Some have asked about whether they would get their premium returned, premium is not included in the opening bid. (This update will not apply if you have a tax deed application in process and it is deeded prior to July 1, 2024.)
Manufactured Homes are not currently included in this process. However, the legislature is working on a legal process that would address the certificate of ownership process for obtaining title for a manufactured home. We anticipate that there will be a moratorium on all Certificates of Ownership for manufactured homes until new legislation is passed/enacted. If we receive any applications for Certificate of Ownership, prior to the moratorium taking effect, the application fee has increased to $750.00.
Additionally, we have increased our tax deed application fee. This will reduce the need for our office to send out Statements of Expense. Tax Deed application fees for Real Estate (R accounts) will be $1500.00.
Please feel free to reach out with any questions. We will do our best to assist you with how we will implement this legislation in Mesa County.

Jackie Campbell Mesa County Treasurer and Public Trustee's Office"

Wow, Colorado say good bye to 90%+ of the money you have been taking from investors for premium bidding.  So they want us to make non refundable premium bids to win a lien that makes 9%+ interest. Many of which liens get redeemed in a couple months time and we lose money on all of those. The few that don't get redeemed, instead of getting the deed now you have to bid against other investors like a deed sale.  This is worst than Florida. Many people in CO were bidding 20,30,50,100% even as much as 700-800% on some cheap land liens just to win it because they felt like it would not redeem and they would get the property. All of that money wasted, you will not get the property or your premium bidding back. Personally, I will never bid again in CO, this system sucks terribly for investors. Pay a non refundable premium to win a lien that you have to bid against the public to get the deed LMAO... no thanks!

Quote from @Denise Evans:

Do you know anybody who has successfully completed a judicial foreclosure lawsuit for an Alabama tax lien, under the new tax sales system?  I'm trying to create a list of problems people have encountered along the way, so others can avoid those problems. Once I have enough input from BP community and others, I'll post my FEP/S (Frequently Encountered Problems & Solutions) list in this thread.  You can reply off-thread via PM if you prefer.  MY FEP/s list will not include any names.

Thanks in advance Denise. You are a great resource of knowledge for anyone looking to invest in tax liens in Alabama.   Anytime the state makes drastic changes it will mix things up and take several cases and appeals to get things sorted out. Good luck.

Quote from @Don Konipol:

Quote from @Bob Stevens:

Quote from @Kyle Baskin:

Interested in learning more about the space, considering getting into it myself.
What kind of software do you use to find tax liens / deeds / deals? How much of a headache is it to find these deals and execute, and what processes do you use to solve these headaches? How competitive are the auctions?
Any advice / knowledge here for a noob would be great. Thanks!

 I have done about 100 tax lien sales from auction. Why would you travel the path of MOST resistance with zero experience?  Before you buy you need to view the property, and in 99% of cases you cant get in so you need to know your numbers. How are you going to do this with no experience ? So many make RE investing much more difficult than it needs to be. All you need to do is connect with those doing deals and allow them to handle all for you. I live on the beach and do all my business in the Cleveland markets, all 100% hands off, 100s of deals.

All the best, 

It’s amazing to all of us who have spent years and years learning, gaining experience and expertise, accumulating capital, living through booms and busts, attending meetings, exchanging ideas with other investors, earning profits, trying to cut loses, and building our reputation and business, how these “actors”, positioning themselves as mentors, continually attack a rather specialized area of real property investing, and, by repeating a few simple (an often incorrect and or misleading ) statements, continue to convince people to spend $40k or more with them and that if they spend that money they will successfully be able to shortcut the years we spent in perfecting our craft.

Don, I  Agree 100% well said.