All Forum Posts by: Roy Oliphant

Hello Mohammad,

Tax Sale investing can be rewarding but you are right to want to investigate the potential pitfalls first. The Bigger Pockets community is a great place for information.  However, you need to ask a more specific question as any focused investing has many basics and nuances that cannot be answered in a post.

I have worked with Arnie at TxTaxSales(.)com for several years. He is the most knowledgeable person I have found regarding tax sales in Texas.  There is a lot of information on his site and he has an investor support program that may be of interest.

Good luck in you journey.

The owner should be required to redeem before selling however the only enforcement of this is usally title insurance or law suit.  You mention a certificate so I assume you only have a tax lien position?  If you have a tax deed, you should ensure it is recorded so that a title seach will reveal it.

I assume you want to put in more than 36 units?  Also did you mean each lot is 65x125?  Zoning rules will be VERY important to your effort.  Find a local real estate attorney (hopefully one with city council and county ties) .  I think redeveloping old lots for off-site built structures is going to be a thing. Good luck and keep us informed.

@Joe Splitrock  The world certainly does need more affordable housing.  Off-site built structures will be an important part of that as they are more efficient to build and thus more affordable.  Its not about how its constructed but about how its maintained.

You will need to do some significant research on this. Local zoning, deed restrictions and.or HOA agreements may impact usage. Generally, unbuilt common areas are unbuilt for a reason.

Let us know what you find.

It really depends on the jurisdiction and how they handle it.  For example, some states have a multi-year redemption period.  If your premium goes below 0, there may be a chance that the second year will provide some return and you could calculate that over the two years for an actual rate.  

BTW: even if you are only bidding for interest, you need to plan an exit strategy that includes what happens if the property does not get redeemed.  For example, I would not generally take a lien on a old chemical storage site.  It might not get redeemed and then you could wind up on the title and responsible for an EPA mandated clean up.  ALWAYS know what you are bidding on and what your strategies are.

Hi @Chris B.

It really depends on the state and the goals of the investor.  You mentioned this was a Lien auction so I assume a number of the bidders were looking for decent returns. As @Account Closed mentioned, an overbid might be because these investors are willing to accept less than the maximum interest.  Another strategy is to bid on liens that are less likely to be redeemed which MAY result in the investor having a path to owning the property.  In that case, the bid may not even consider the interest and only be focused on the property value.  

This depends on the state and I am not sure about Indiana.  In Texas, the owner has the right to redeem but to redeem they have to pay the taxes plus any overbid plus the penalty on both.  The owner also has a right to claim the overbid if there are no lien holders that get to it first.  Thus, in the case of redemption, the tax sale buyer gets all the money they paid including the overbid and the penalty or interest.  This is not the case in every state.  You must get to know the laws for the specific state where you want to bid.

The answer is somewhat state specific as the rules are driven by state law.  Generally, if the lien is from a governmental unit, it will not be released by tax sale.  Thus liens from IRS, water and sewer, demolition, mowing, etc,. will survive the tax sale. 

HOA liens may or may not depending on the state. You need to research the state where you intend to invest and determine the local rules.

BTW... some of the liens that survive may be negotiated.  That is not true in all locations even for the same type of lien.  Again you need to understand the rules for the jurisdiction where you want to invest.

Most will probably find someway to repair through FEMA loans and other government and NGO assistance, lots of hard work, personal expense and cutting corners on the repairs. There will be a significant number that go to investors because the owner will not have the means to repair. The ones that are total losses will probably show up on the tax sale in a few years with city liens for demolition and clearing.

Some of these folks have been thru 3 floods in 4 years.  Those house should not be rebuilt or require significant elevation changes before permits are allowed.  But since the city issues the permits and the feds pay the flood bills, we will have to see if those restrictions are actually put in place. If they are, it may make them too expensive for investors.

Very nice post and great information.  Congrats on a successful foray.