All Forum Posts by: Will Sifert

Do you plan on buying tax liens in Colorado ? 

 If you are looking for tax liens specifically and not tax deed sales, then you narrowed it down to about 20 or so states.  Personally I don't see the need or value of trying to find one site our source that lists all of the tax lien sales by state/county. Is there a particular area / state you would like to buy in?  If not, what is your investment strategy ? (make interest or try to acquire property).   How much money do you have to invest?  Can you travel to attend in person tax sales or only online?    Based on how you answer a couple simple questions you could narrow down the states that would be more beneficial for you to invest in.   For example, Montana, Wyoming and South Carolina are all in person tax sales. If that is too far away for you to attend, no need for you to have access to when their tax sales are held, scratch them off your list.  Once you narrow it down the the states that meet your investment strategy and goals, you research them individually. 

 I agree 100% 

 The moment you buy the tax lien and pay the premium that is profit for county. They keep it no matter what happens. So they are perfectly fine with not issuing deeds as long as people keep paying them premiums. It really wouldn’t be enough money to make it worth an owner going through a process to get it.   In most cases you talking about a couple hundred dollars. But for the county if they selling hundreds of tax liens that adds up to a nice windfall for them. 

I could literally write a book of risks and what to look out for. I made this post because people often ask "How do I get started".    It is by no means an all inclusive list of everything needed for tax lien investing, there is so much more to learn, some of which is going to be learned from trial error and just doing it.  My list above is a good place for them to get started. Many of the same people end up paying for some worthless class because they have no direction, hopefully this helps them and saves them money. If they can do everything I listed above they are off to a good start. 

Every tax lien you buy you should be prepared to pay the subsequent taxes. That amount could be more or less than what you paid at the tax sale. There are many variables that are different from state to state, the person investing should learn how it works for the state they are investing in.

The same when it comes to bidding and how the auction process works. They need to know how it works in their state. It could be bid down %  of ownership or bid down the interest rate, or premium bidding, or random, or several different versions of those. 

Exactly, selling a tax lien is not a legal issue and selling the property is not an issue. It's that they think it shouldn't be sold for more than the amount owed in taxes.  In a tax lien state there is no "overage". The investor buys the tax lien, pays the taxes and any on going expenses, then when the redemption period expires he pays for the deed and it's theirs. If the property is worth 20K and the owner only owed 5K, there lies the problem (according to CO and others....)

What Colorado and other states have no problem doing is making money off the investors. SEVERAL tax sale properties will be sold at a premium that is 100's of dollars over the cost of the taxes due. The county keeps 100% of this money 100% of the time.  Of course they have no problem taking our (investor) money, but now they have a problem with us making money.   How many tax liens do we lose money on because we bid THEIR premium and it was redeemed right away so we lost a lot!  So we finally get a deed and stand to make a profit from it, but no.... that's not right?   In what planet do they think this system would work?  So we pay premiums, lose money on most redemptions, finally get one that can go to deed and can't get the deed because the property is worth more than the taxes owed? WTF ?

The counties sure are making a fortune off of property tax sales. I blame the online auctions for making it so easy for people from all of the world to bid, many of which don't understand what they are doing. Some counties are worse than others but yes, the bidding is crazy high.  I participated in one today (Clear Creek Co.) Where some of the smaller tax liens sold for 866% over face value. A $72.54 tax lien sold for $701.00!!!      99% of these will be redeemed. That is a lot of money that will be lost in the hopes of getting one of these properties.    And some of these the owner just purchased!   Come on guys, if someone just bought the land in 2022 for $199,000  do you really think they going to forget about it and let it go?  But someone paid 153% over face value, that type of property will redeem 99.999% of the time.  Makes no sense. In the past I figured out who a few of these crazy bidders were and asked them a few questions and it was apparent they did not have a clue on how it works.  Sad for them and for the rest of us. 

Don't pay $$$'s on some generic national class. If you follow the following information you will be 1000x better off and still have all of that money left to spend on actually buying tax liens. This is not get rich quick, you need to put the time in if you want to be successful and it will take years to get really good at it.

It’s not hard, but it’s not easy. If you understand that, than you are off to a good start.

1. Research:

A. Read the state statutes

B. Search for information about your state on Facebook groups, Bigger Pockets tax lien forums etc.

C. Online auction sites will have information as well about your state.

D. Search county websites for information, some provide lots of helpful info.

E. Try to find classes or books that are STATE specific. Not a national class but someone with experience in your state and the material is just on your state.

2. Consult:

A. Try to find someone experienced to learn from, usually hard to do.

B. Find an attorney that handles property tax sale cases and pay for a consultation. Have a list of questions for them.

** You should understand all of the laws of your state, every step in the tax sale process. You also need to understand how the auction / bidding process works. You need to understand all of the costs involved as well.

3. Understand your area:

A. You need to know what the property is worth. Find a website that shows sold listings or work with an agent to provide them for you.

B. Know what the pitfalls, red flags, etc. What to avoid in this area. It’s different depending on where you are located. It could be flood zones or wetlands in one place, topography/slope, not located near utilities, etc etc. Also know what liens are common in that area that will not be removed, grass liens, snow removal liens, water liens etc.

4. Buying Tax Liens:

A. Bid / spend what you can afford.

B. Reinvest 100% if at all possible. Treat it like it’s a 401K and you can’t take any of the money.

C. Be Patient and keep doing it every year. Don’t skip a year, don’t quit.

D. Don’t over pay. This will vary depending on the type of bidding. I see a LOT of stupid bidding. Unfortunately a lot of uneducated people waste their money every year. If it’s not a good deal or the bidding gets too high pass on it.

E. Have enough money to pay the subsequent tax bills.

There is a ton more but if you master the above, you will know more than about 90% of your competition. The rest will come from experience.