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Establishing Contact with a Homeowner Prior to a Deed-Grab


Establishing Contact with a Homeowner Prior to a Deed-GrabĀ 

When you write feeler letters to homeowners in property tax delinquency, you need to be able to anticipate the kind of calls you will receive. The way you handle these first phone calls from homeowners can determine the outcome of your deed-grab deals.

Some callers tend to be suspicious about how someone who is not an employee of the county could possess information about their tax sale. Others tend to be uneasy about how you located them at a new address. Usually, mentioning that you get all your information out of Internet searches and the public record is enough to assuage all fears. You simply need to tell them that you are a real estate investor who is in the business of picking up unwanted properties and helping homeowners make a little money.

It’s always a good idea to start out by educating your callers in the tax sale process, and then showing them how you have something to offer them that the default process doesn’t. Here’s a more detailed look at how to prepare yourself for most types of callers.

Owners who want some information to begin

If a homeowner first learns about his home making it to a tax sale through an email or postcard that you send out, he’ll call you himself. It’s usually a good idea to start out by explaining to the caller that he owes massive back taxes on his property, and that the county has a lien that it will shortly sell to a third-party investor.

This explanation helps in several ways. To begin, it gives you a chance to make the third-party investor look like the villain of the whole deal. By contrast, you get to emerge looking the part of the friendly professional trying to help. In many cases, setting up a contrast will result in the homeowner doing everything in his power to make sure that the villainous investor doesn’t get his home. He will want you to have it, instead.

You can also try to learn about how the homeowner came to fall so far behind on his taxes. The information you collect can tell you about his chances of being able to get money together to pay what’s due.

Owners who just want to let the property go

With some owners, it’s clear that they simply don’t have the money needed to redeem their home. These are the owners that you’re looking for. They have no choice but to give up their property. Once they accept this, your job will be to sound surprised, and to wonder out loud if you might get the property instead of the investor, to see if there is anything that you can do with it. You can tell the owner that third-party investors just take the property and walk. There’s nothing the owner gets out of it.

If he were to give it to you, though, you’d be able to pay him a couple hundred for signing the paperwork. It’s important to make sure that you mention that the money is for their time signing paperwork. If you make it sound like it’s for the property, they’ll feel insulted.

The owner who wishes to stay onĀ 

Some homeowners will ask you if you’re willing to buy the property yourself, hang on to it for a few years until they come up with some money, and then sell it back to them. This isn’t likely to be a profitable arrangement. It is even illegal in several states. You need to explain to the owner how you aren’t set up to finance homes. You can, instead, ask them to consider how if they don’t come up with the money, they might let you take over the deed.

Get all the information you can

Every homeowner that you call, you need to be sure to get a few pieces of information. You need their contact number, information about the general state that the property is in, about any judgments, liens or mortgages that the property may be subject to and about whether there are multiple owners to deal with.

There’s much more that you need to keep in mind when you speak to homeowners for the first time. The ideas here, though, should be a good start.

Property Tax Sale – Free Lists Online

Property Tax Sale / Delinquent Property Files Often Found Online – Free!

Property tax sale lists used to be a bit of a pain to get a hold of – you either had to make a public records request and wait for that to be fulfilled, or purchase a property tax sale list from a vendor online.

But now that more and more counties are “going online”, you can often find and download these lists for free.

Why the County’s Property Tax Sale Lists Are Better

Not only are the lists that you can get right from the county usually free, but they have a number of other advantages:

1. The lists are often updated very often, even daily, to reflect properties that have dropped off the list.
2. The lists contain not only property tax sale records, but even properties that are slightly to moderately delinquent but not on a property tax sale list yet.
3. They are in electronic format – easy sorting and filtering using your computer instead of dealing with a paper property tax sale list.

How to Locate Property Tax Sale and Delinquent Lists Online

You’ll have the best luck in the midsized to large counties, as smaller counties don’t seem to have the budget to have good online resources.

All you need to do is start Googling! Use words like “delinquent tax file”, “download delinquent list”, “delinquent property file”, “delinquent tax roll download”, and other terms like that.

Let’s see what happens when we do a search for a property tax sale / delinquent list using the term “download delinquent list”:

Property tax sale search on Google

Results for a propety tax sale / delinquent list search on Google

It looks like each of the first few listings has its own property tax sale list or even complete delinquent roll file for download. Let’s look at the first one:

Property tax sale listing online for a tax lien sale

An online list for a tax lien sale

Now, this list is from the last tax lien sale. So that’s an OK start. But look a bit further down in the results – Milwaukee has posted its entire delinquent file online! Over 25,000 records for you to download, each representing a delinquent parcel on its way to a property tax sale soon.

The list contains everything you’ll need to begin marketing to tax-delinquent owners BEFORE the actual property tax sale list even becomes officially available.

Tax Sale Homes

Tax Sale Property Where Government Pays Itself Rent?

Tax Sale Property Where Government Pays Itself

Tax Sale Property Collects From, and Then Pays the Government Rent!

I hope the writers of “The Onion” (sarcastic newspaper) have taken note of this one in their tax sale property column. They have my permission to reprint this post in its entirety.

I have a feeling they won’t have to change a word to publish it along with their other fake articles (though everything I will say here is true). That’s how unreal this story is.

I bought a tax sale property from tax lien investor recently, and it had an upstanding Section 8 tenant currently residing in the property.

The tenant was receiving $475 per month in rental payment assistance from Section 8 – the federal government.

This tax sale property had been obtained from a second-chance leftover sale – here’s how you can get some good deals there.

Shortly after obtaining the property, my attorney got a call from the former owner of the property. He wished to buy it back for little more than I had paid (I declined).

My attorney learned that the former owner had not been receiving rental payments from Section 8 for some time. Here’s why:

Instead of sending the payment to the owner, Section 8 had begun sending the $475 rental payment to the IRS to help satisfy the owner’s IRS tax lien, which we later discovered was well into the five-figures.

A couple federal agencies (HUD and the IRS) finally communicating with each other, helping each other out, right?

This made me nervous, as the IRS could still redeem the tax sale property even though the redemption period for the property had passed.

Any time the IRS has an income tax lien against a former owner of property lost at tax sale, they get an additional 120 days to redeem the tax sale property. They never do, and this was no exception.

Like any other creditor, they get notice of tax sale proceedings.

Surely, they would redeem the property at a cost of roughly $2000 to continue their payment stream from HUD of $475 per month, right? No brainer?

Nah. Asleep at the wheel as always, the IRS let their opportunity to continue their $5000+ per year payment stream slip by.

It was then I realized, it was really for the best that this tax sale property went through the system.


Let’s trace the flow of a single dollar as it made the circuit through the governmental bodies involved in this scenario before this became a tax sale property.

1. Honest wage-earner gets taxed: A hard-working American works 1 hour and gets taxed on his income. $1.00 is taken in by the government.

2. The dollar is routed to HUD, who administers the Section 8 program. I would conservatively estimate the loss here at 10%. Remaining: 90 cents.

3. HUD routes the funds to the East Chicago Housing Authority. These local housing authorities are notoriously inefficient and wasteful. Lost: 40 cents. Remaining: 50 cents

4. East Chicago Housing Authority routes the rental payment back to the IRS, WHERE IT ORIGINALLY CAME FROM!!!!! I’m sure there’s an additional expense of 10%+ to do this.

Bottom line, the IRS paid itself, and 50% or more of the money taken in vanishes in goverment expense and waste.

This is a case where a house becoming a tax sale property was truly a good thing for all.

Get tax sale property before the sale and eliminate bidding – get my report, “Underground Tax Sale Strategies”, below.

Government Tax Foreclosures

Government Tax Foreclosures Can Be Rough!

Government Tax Foreclosures Do Not Equal Guaranteed Profit!

Government Tax Foreclosures: A Sure Moneymaker?

Contacting owners of government tax foreclosures before a tax sale deadline? Checking out properties you’re going to bid on at an upcoming tax sale (not usually recommended)?

It’s really important to weed out those pesky worthless properties. It’s amazing how many areas today have pockets with housing stock much of which shows up as government tax foreclosures, and is literally not worth the amount of taxes owed against it.

A good way to tell that you’re working an area like this is when you see government obtaining tax foreclosures and attempting to rehab them. If there were any true market, and opportunity for you to profit, there would be competition at the sales.

In the name of fighting blight, local governments will often sink vast sums into these properties at a huge loss (they call it a ‘subsidy’).

You can see how Saginaw, MI, is about to waste $17.4 million in federal funds in part by buying government tax foreclosure properties that free market individuals did not see fit to purchase. The full story is at

Since you don’t have the unlimited resources of the government, and actually must make a profit, you need to actually obtain properties that are in demand by the marketplace! All for less than the marketplace is willing to pay.

The best way to profit from government tax foreclosures is to get lists of the properties nearing foreclosure from the county. Then, contact the owners of those properties while the property can still be redeemed.

A quick way to determine if low-end properties in a particular area are worth more than the taxes owed, is to type the zip code for the area into before you get started. See what the bottom 10-20 properties on the market are selling for.

If they’re selling for less than $10,000-$15,000, with many in the $5000 range, the area will likely not be very good for quick resale profits. You can, however, often identify properties in these areas that are rentable or may be sold to a fixer buyer on contract.

Try to find zip codes where the properties start at $10,000-$15,000 at the very low end, and quickly reach $20,000-$30,000 on the first page of These areas area ideal for quick-turn profits of $5,000-$10,000.

Government tax foreclosures are not a free lunch – but can make you good money if you approach them correctly.

Learn how to profit from government tax foreclosures without bidding or waiting, in my free report, “Underground Tax Sale Strategies”, available below.

Tax Lien Sale

Indiana Commissioners Sales – Part 4

Indiana Commissioners Sales – An Advanced Method

You know what to look for, where to find it, and how to make a safe investment at Indiana Commissioners sales. The only problem? Scaling things up! You might want to participate in several sales, but traveling all over Indiana just isn’t part of your game plan. Here’s a way to get around that.

The Portfolio Approach

The portfolio approach is pretty simple – but it’s not for the faint of heart. Why? You’re likely to lose your investment on most of the liens you buy at Indiana Commissioners Sales with this method. But the winners will more than make up for the losers.

You’re going to do the best you can to eliminate obvious losers from your list, then you’re going to set a relatively low maximum that you’re willing to bid for properties on the list – say $1,000. Better yet, participate in several sales and set your limit even lower.

Once Indiana Commissioners sales begin online, buy all the liens you can for less than your limit. Don’t forget to keep some money in reserve for potential legal costs.

Now What?

Now that you’ve successfully won several liens, NOW do a little more in-depth research. Send someone over to the property to see if it’s indeed occupied. If not, have them take some photos for you through the windows.

Using this method, half or more of the tax liens you’ve won may not have a desirable property behind them. Spend only 44 cents more on each lien – send the owner notice yourself, in hopes that they might redeem.

Otherwise you will do nothing further with these liens – you don’t want to throw more good money after bad.

Important: Though you’ll look at the liens you won in greater depth, you should not enter the properties or disturb the occupants at this point. However, after the redemption period ends, and a lien hasn’t redeemed, I visit the property immediately and attempt to make contact with the tenants. If I’m somehow 100% sure the property is vacant, I try to get inside to take a look (warning: this may not by strictly legal). If I don’t like what I see, I’ll probably skip the expense of even getting the deed.

Here’s the upside: if you bought at least 5-10 cheap liens after screening them to the best of your ability, you’re likely to have at least one home run – if not several.

These are properties that you might have bid several thousand for if necessary, having done more in-depth research.

In other words, the winners will have cost you so much less, and be worth so much more than you paid, that they easily make up for the losers.

Other Advanced Strategies to Consider with Indiana Commissioners Sales

-Learn how to do the tax sale noticing yourself for these low-dollar liens
-See if you can sell the liens you don’t want – advertise to the registered bidders list from the sale
-If you keep the home for rental, don’t spend money on a quiet title

Again, these are advanced strategies that you should look into later after you get a feel for things.

Return on Investment – Indiana Commissioners Sales

Return on investment for funds you invest at Indiana Commissioners sales can be breathtaking – even unbelievable.

Here are some examples from our recent past:

Indiana Commissioners Sale Property for About $1000

We picked up this house for $1057 - and after a few thousand in repairs it has been a money pump.

Paid $3260 for an occupied house that was already rented section 8 for $450. Got our money back in less than 8 months and have collected an additional $5000+ with no end in sight

Paid $3188 for an occupied house and quickly found a renter for $450. Got our money back in less than 8 months and have collected an additional $5000+

Paid $3093 for an occupied house that was already rented section 8 for $425. Collected $5950 from Section 8, then got a new tenant that pays $695 per month.

Paid $1057 for a house that needed about $3k in work and has been renting for $595 for almost 2 years.

Until recently, the dirty little secret about rentals in Indiana was that the property tax bills were outrageous and made it challenging to profit even from properties that were free and clear (see this post from last year).

However, a new amendment to Indiana’s constitution now sets maximum tax rates at 2% of assessed value, which is supposed to be aligned with real market value. And market values are REALLY low.

Translation – taxes are now dirt cheap, even for landlords!

Why Get Involved in Indiana Commissioners Sales Right Now

The planets have aligned, and it’s now a great opportunity to invest in Indiana Commissioners sales using the method I outlined. Here’s why.

Past Reassessment Problems Have Created TONS of Discounted Liens

For almost a decade, Indiana counties have been in turmoil as we switched to a market valuation model for assessing taxes. The confusion resulted in many counties skipping one or more tax sales, which allowed high taxes to accumulate on many “borderline” properties.

Therefore, when a tax sale was eventually held, many, many properties went unsold due to years of piled up taxes. Expect to see them on the Indiana Commissioners sales list this spring – the buildup of taxes has caused the list to swell, a good thing for us as buyers. However, we will still pay the discounted bids offered by the commissioners.

Nearly every county is on the same “tax sale cycle” now also – so the commissioners sales should be a lot more predictable.

Taxes Are Now Low and Predictable

As mentioned earlier, a recent Indiana constitutional amendment capped rental property taxes at 2% of value. With values extremely low at this point, tax bills are going to be tiny on these properties for the near future. If and when they do increase, it will be due to an increase in the value of the properties – a great thing for you.

In my county, where taxes are notoriously high, my rentals are now down to around $1000 per year each – somewhat reasonable (though their assessed value is still several TIMES market value). In some counties I have no doubt there are $100-$200 tax bills for these properties.

Number and Quality of Renters Increasing

As more and more people lose their homes, they will need to rent. Increases in average rents have already been seen nationwide. And if you play your cards right, you might even have a renter ready to pay you when you obtain your property – the current occupant.

Also, Indiana is set to gain jobs and population due to its low taxes and lack of debt. This lack of debt will enable Indiana to retain its low taxes instead of having to raise taxes like other states.

The Deals are Crazy!

You can buy a house for as little as $1000 and with a little minor repair, have a solid rental that you own free and clear. Or you can pay a few thousand for a house, and go down to the Section 8 office to have them start immediately sending rental checks to you. Now that’s cool.

Everyone needs somewhere to live – and this is a great chance to “get in at the bottom”, risk very little, and earn great cash flow almost immediately. With a little luck, you’ll even see nice increases in your properties’ values and saleability as time goes by.

Check out some Indiana Commissioners sales online this spring, and start building your free and clear portfolio for peanuts!

Indiana Commissioners Sales – Part 3b

Indiana Commissioners Tax Sales

Indiana Commissioners Sales Strategies (Continued)

What should we buy at Indiana Commissioners sales, and where do we find it? We answered that in Indiana Commissioners sales Part 3 – be sure to take a look at that if you haven’t seen it yet.

We’re looking for single family homes in at least fair condition, that are currently occupied. We don’t care too much about the neighborhood as long as the subject property itself meets our standards. There are dozens of cities in Indiana where these properties are plentiful on the Indiana Commissioners sale list each year.

Now how do we minimize risks, and what do we actually have to DO to make our investment safe? That’s what today’s installment will cover.

Due Diligence

In most cases you’re going to want to come to town for at least a day or two to investigate the properties on the Indiana Commissioners sales list. However, there are a few strategies that greatly reduce (or can even eliminate) this need.

1. Online Investigation – While you cannot really confirm that a property is “good” from home, you definitely can confirm that a property is “bad” and eliminate it from your list.

In fact, 90-95% of the properties on a typical Indiana Commissioners sales list should not be purchased. This is because they have no practical use, are in terrible condition, or are otherwise worthless.

Unless you have a well thought-out strategy involving land, eliminate it right at the beginning – especially in the areas we’re looking for houses. A notable exception is land with a billboard, cell tower, or other similar improvement – but these can be hard to detect and confirm.

Don't buy an  indiana commissioners sale property like this

No need to do any more research on a property like this - move on.

Try to find a county website that has assessed values, square footages, and/or actual pictures of the properties. You should be able to eliminate a lot of properties that are obviously unsuitable. Look for houses that are too small (less than 750 square feet), assessed for very little, or such bad condition you can see it in the photograph.

2. Send Postcards – You can reduce the size of your “short list” further by sending an inexpensive postcard to each property left on your Indiana Commissioners sales list before coming to town.

You can either put a “we buy houses” message on the postcard (see my post, “Tax Lien Auctions: How to Get 500% More Properties”) or you can even send a blank postcard.

All you’re trying to do is see if the postcard comes back undeliverable, and if so, you should consider eliminating that property from consideration.

The Postcard Technique
Notice that our strategy is completely opposite from regular tax lien sales when we work Indiana Commissioners sales. We want OCCUPIED properties with the commissioners sale because it makes property condition more likely to be good, which is our main unknown. We are not so concerned with the chances of the property redeeming, because the owner would probably have to pay more than the property’s value at this point to redeem.

Contrast this with regular tax lien sales, where there are plenty of good properties but almost 100% of them redeem. There our biggest issue is that the redemption rate is so high, and the property condition is less a problem. So there, we look for VACANT properties because that increases the chance the owner won’t get notices about the tax sale and won’t redeem.

Indiana Commissioner sale home

We purchased the lien on this home for $3093 - and immediately had Section 8 start sending us the checks once we acquired it.

One last thing to check for the remaining properties, is that the actual parcel number listed in the Indiana Commissioners sale list contains the house you want to acquire. See if the county has GIS online, and if so, check each parcel number to make sure the house actually sits on the parcel. Don’t buy any liens on parcels that only contain part of a house.

At this point, it makes sense to take the 1-2% of parcels remaining and a GPS unit, and go drive by each property. Remember, you’re looking for occupied properties in an nice of shape as possible.

An Advanced Strategy For Indiana Commissioners Sales – The “Portfolio Approach”

There is another way to approach these sales, especially if you live out of state. You will still perform the preliminary step of eliminating land and other obviously unsuitable properties. You should even send postcards as mentioned above so you can get down to a good “hot list”.

However you will not necessarily have to spend a lot of time examining properties in person or traveling around if you want to participate in several online sales. We’ll cover that in the final installment of Indiana Commissioners sales – Part 4. We’ll also discuss why RIGHT NOW is the perfect time to get involved in Indiana Commissioners sales.

Recent Tax Sale News

Indiana Commissioners Sales – Part 3a

Indiana Commissioners Sales

Indiana Commissioners Sales Strategies

We covered the big upsides of Indiana Commissioners sales in Part 1 – and then looked at the downsides that we’ll need to manage in Indiana Commissioners Sales Part 2.

Now, it’s time to get into the nitty-gritty specifics – strategies you can actually use when investing at Indiana Commissioners Sales. I’m actually going to have to split this one in half – too much good stuff to leave out.

Property Characteristics

In my experience, there is one, and only one, specific type of property you should target at Indiana Commissioners sales.

You should look for single family houses that are occupied and in fair condition or better.

Occasionally you will run across a vacant house that is obviously in great shape. In this rare case, you may want to make an exception to the rule. For instance, once I bought a lien on a vacant property that was listed with a Realtor. I went online to view the interior pictures and it turned out the inside was just as nice as the outside.

Indiana Commissioners Sale Property

I confirmed this vacant house was as nice inside as it was outside, before buying.

Also notice in the property description that I didn’t say “in a good neighborhood”. Good neighborhoods are obviously a bonus and you can sometimes acquire properties that have everything going for them. But if the property is occupied and in good condition, I’ve found the neighborhood is never a reason not to buy. You’ll see why later.

What Cities Have Properties Like This That You Can Find at Indiana Commissioners Sales?

Many cities, and indeed entire counties, will not have properties in the Indiana Commissioners sale that meet the above criteria. You’ll simply have to invest in another county if this is the case.

There are a lot of “rust belt” towns in Indiana that are full of these properties, however. And surprisingly, there are decent renters for these properties if you charge a low rent (which you can afford to do because you will have ‘stolen’ the property!). Here are some that come to mind (not a complete list by any means):

    Evansville (Vanderburgh)
    Muncie (Delaware)
    Marion (Grant)
    Gary/East Chicago (Lake)
    Fort Wayne (Allen)
    Indianapolis (Marion)
    Kokomo (Howard)
    Anderson (Madison)
    Richmond (Wayne)

In case you haven’t heard, Indiana also is one of the few financially healthy states in the country right now. I believe this will attract a lot more business and jobs to the state over the next few years because other states will have to continually raise taxes to survive. Indiana just had a $1.7 billion dollar SURPLUS for the year.

Appreciation really is not an important part of our strategy here. But it sure is nice to have property that can really only go up in value since it’s near bottom now – along with conditions that would allow these towns to make a comeback.

Avoid Certain Occupied Properties at Indiana Commissioners Sales

You’ll also find occupied properties in totally nasty condition. I used to think that condition didn’t matter if the property was occupied, as the occupant would surely pay me something to stay. I was wrong.

I found that most of these occupants are looking for an excuse to get out of their filthy conditions, and asking them for even $100-$200 monthly rent was enough to motivate them to take action (move). Soon you’re stuck with the kind of property you were trying to avoid owning in the first place.

Don’t Get Sucked Into Buying Questionable Properties at Indiana Commissioners Sales (Without an Advanced Strategy)

As you look at properties, it is tempting to buy liens on property in bad condition because the minimum bid is so low – as little as $150 to buy the lien. You may figure that you could sell the property for at least a couple thousand as long as it is still standing.

With the real estate market bad right now, there is almost no demand for this kind of property in an urban area. This is because even properties in rentable condition are worth nearly nothing on the resale market. Therefore it’s impossible to come out ahead by fixing a decrepit property.

Eventually, you’d likely succeed in reselling the property for a few thousand to someone in the neighborhood with some lofty dreams. However, that sale price may not even cover your legal fees and closing costs. Junk properties in these areas are really just a waste of time and very stressful to own and try to sell.

Your goal should be to acquire properties that are already occupied with a renter – or close to being rentable – and to step in to collect the rent as soon as you get your deed. If you don’t want to be a landlord, you could also resell the properties for a small profit, but compared with the rent you can collect, I think it’s foolish to sell rented properties you get from Indiana Commissioners sales.

Why Rentable Properties Can be Purchased for Almost Nothing at Indiana Commissioners Sales

We’ve covered many reasons why decent rentable properties can be purchased for as little as $1000 in certain cities at Indiana Commissioners Sales:

No institutional competition
-Bad resale market
High minimum bids are now slashed
-County wants to get property on tax rolls
Real or perceived bad neighborhoods

Now you know exactly what you’re looking for and where to find it in Indiana. In the second part of Indiana commissioners sales Part 3, we’ll go over additional critical strategies to make your Indiana Commissioners sales successful.

Indiana Commissioners Sales – Part 2

Indiana Commissioners Tax Sales

Indiana Commissioners Sales – Traps and Downsides

In Part One of this series on Indiana Commissioners sales, we went over the benefits of participating.

In a nutshell, the benefits were:

1. Shorter redemption time (120 days vs 1 year)
2. Reduced minimum bid
3. Much less competition
4. Much greater chance of acquiring property
5. Sales often held online

These unique features take away most of the most negative aspects of the regular sale. The shorter redemption time and lack of competition are the two biggest advantages.

Indiana Commissioners Sale Downsides

Liens purchased at Indiana Commissioners sales still share many characteristics of “regular” tax liens. Here are some issues that you’ll have to deal with when investing, that are common to any tax lien investing:

1. Due Diligence As with any tax lien investment, it remains important that you perform due diligence on the liens offered. Mainly, this consists of assessing whether the underlying property is profitable, and making sure that the lien offered is against the same property you believe it is.

For example, a lien on the list may show an address of 3388 Elm St, and you may notice a nice house at 3388 Elm St. However, when you look at an aerial map or GIS of the property, you may discover that the actual parcel being offered is a worthless side lot or garage next to the property.

2. Post-Redemption Period Wait Times – Once the redemption period ends, you know you’ll obtain the underlying property if you have not been paid off. However, some counties “move at their own speed” when it comes to actually issuing your deed. This can add months and months to the overall wait time before you get the property, easily exceeding the redemption period itself in some cases.

It’s probably a good idea to look at past Indiana Commissioners sales in each county, and noting the date of sale and date most of the deeds were issued. This will give you an idea of the wait time you might expect.

3. Unknown Interior Condition of Properties – As with all lien sales, the owner of the property is not going to welcome you inside to assess the property condition prior to the sale. You’ll have to do your best to assess overall condition from the outside.

Here’s what I’ve noticed – if a property is well-kept outside, it’s somewhat more likely (though far from guaranteed) to be OK on the inside. However, if the property is very dumpy on the outside, it’s almost certainly dumpy (or worse) on the inside.

We have ways of dealing with this, as you’ll see in Part 3.

4. Unmarketable Title – When you get a tax deed in Indiana, you cannot give a buyer title insurance on the property until you perform a “quiet title action”. This is a legal process that basically confirms the tax sale’s validity and costs $500 – $1000 and takes several months.

Most buyers will not buy without title insurance and therefore will not buy without quiet title.

Let’s look at “negatives” particular to Indiana Commissioners sales:

1. Lower Quality Properties – This is the main drawback. Most of the very best properties are sold in the first treasurer’s sale. The houses that are left at Indiana Commissioners sales are often from the “rougher side of town”. However, they can make great rentals, as you’ll see in Part 3.

There will be many, many worthless properties on the Indiana Commissioners sale list that you wouldn’t even want for free.

2. Due Diligence – You will have to do a lot more due diligence per suitable property you identify – because you’ll be sorting through a lot of bad ones.

3. Legal Expenses – As with all tax lien purchases, you must get a title report and quickly give the owner and lienholders notice that you’ve acquired a tax lien against the property. Here you have to do it lightning quick, as soon as you buy the lien. The notice must be received well before the redemption deadline, and with only 120 days, that pushes the deadline for notice to the beginning.

Also, because you’ll be often buying these liens for hundreds of dollars, or only a couple thousand, your legal noticing expenses can EXCEED your investment in the liens! Be sure not to use your entire bankroll to buy the liens because you’ll often need just as much to pay your attorney to do the noticing. Be sure to figure in $800 or so in reserve cash for the legal fees, and add that amount to the amount of the lien when determining whether to buy it or not.

Bottom Line

You’ll be experiencing wait times after the redemption period of your liens that are largely beyond your control, and you’ll still have to perform due diligence on the entire list. You’ll also be ending up with mostly lower-end properties (don’t let this scare you, be sure to check out Parts 3 and 4). And, you need to budget a legal fee budget that may equal your lien purchasing budget.

These issues are not insurmountable, however. In Indiana Commissioners Sales Part 3 we’ll talk about proven strategies to make profitable investments at Indiana Commissioners sales.

Indiana Commissioners Sales – Part 1

Indiana Commissioners Sales information

Indiana Commissioners Sales About to Kick Off Again

Indiana Commissioners Sales will be kicking off in earnest right after the new year. What’s a commissioner’s sale?

It’s a tax lien sale with special rules, where liens that weren’t purchased at the last sale are offered. More details here and in future installments.

I’ve decided to do a 4-part series to give you everything you need to know to profit at Indiana Commissioners sales. Even if you don’t plan to come to Indiana to invest, pay attention because a lot of the principles here apply to most “second chance leftover” sales.

First, let’s talk about several reasons why Indiana Commissioners sales present a rare opportunity to actually buy at a public auction and still come out ahead if your goal is to acquire properties.

Inherent Reasons Indiana Commissioners Sales Are a Rare Opportunity to Acquire Property

I stay away from most tax lien sales because there is bidding competition and also a long wait period before I can acquire any properties. Plus, by the time the waiting period is up, my experience is that all worthwhile properties will have redeemed. Only the “needle in the haystack” liens remain unredeemed and lead to a windfall property acquisition.

However, Indiana Commissioners sales are different – and you CAN get a good deal on tax sale property (at a public auction) and in a reasonable time. Here’s why:

1. Reduced Minimum Bid – Indiana Commissioners sales are held to liquidate liens that did not sell at the regular tax lien sale.

Presumably, these properties were not worth even the amount of taxes owed in the eyes of investors at the original sale. Or, without seeing the property condition, the investors were not willing to take a chance that they would end up owning the property, even though it appeared to be a good property from the outside.

Since the lien did not sell at the original “treasurer’s sale” for even the minimum bid, the commissioners slash the minimum bid on the liens offered. This is simply to get the lien sold and to try to get the properties back on the tax rolls. Sometimes the new, lower minimum bid is as little as 10% of the original amount or $25.

Now, properties that were unprofitable before, become profitable. Or properties that weren’t taking a risk on, worth taking the risk! Plus you can buy more liens with the same amount of money, increasing your chances of getting some properties.

2. Owner Must Pay Full Redemption – Since the property didn’t sell at the first sale, even MORE taxes have likely piled up since then.

While you as a tax lien investor are offered an attractive, discounted minimum bid to get involved, the owner must pay the FULL amount owed plus penalties to redeem their property. With many installments now late, and fees piling up, it can be very difficult for them to redeem.

The result: Indiana Commissioners sales have a MUCH LOWER redemption rate than regular tax sales. Meaning, you have a much better chance of getting the underlying property for just the amount you spent on the lien.

3. Little or No Institutional Competition – Many large companies roll into town and bid on liens at the regular “treasurer’s sale” – and this pushes prices of Indiana tax liens to the limit of profitability.

These buyers largely do not attend Indiana Commissioner’s sales. This is because the institutional buyers usually DO NOT WANT properties and they know that a large percentage of liens “become” deeds when purchased at the Indiana Commissioner’s sale.

These buyers want to borrow money at 1-2%, earn 10% interest when their tax liens pay off, and move on. And they want to invest millions in one shot, which they can’t do at Indiana Commissioner’s sales because the value of the liens is much, much smaller than those offered at the regular treasurer’s sale.

4. Short Redemption Period – Perhaps best of all, Indiana Commissioners sale properties only have a 120 day redemption period. This is obviously a much more reasonable time to wait than the 1 year given to the owner in the regular sale.

Now you know the outcome of your investment sooner, and get your hands on any properties you acquire in a shorter time. Plus there is less chance that the property condition will significantly worsen during the redemption period, or that the real estate market will change drastically. These can be major problems with long-term lien investments of 1 year or more.

For those liens you buy that redeem nevertheless, you still get a full 10% return on the minimum bid over only 4 months if the lien does redeem. If I’m not going to get a property, at least 30% APR return helps ease the dissapointment.

5. Online Auctions – One more minor benefit is that many of these auctions are held online over a period of a couple weeks. So, you don’t have to travel to the auction but you still really need to come to the area to do due diligence on the liens you’re considering.

So there are the benefits of Indiana Commissioners sales, and why I occasionally break my “no tax lien auctions” rule and invest in them.

Nothing in this world is without downsides and traps, however – and we’ll talk about the dirty side of Indiana Commissioners sales in Part 2 of this series.

Nationwide Tax Sale Directory

Coming Soon!

Michigan Tax Deed Sale Affects 3000 Owners

Michigan tax deed sale foreclosure with equity

Michigan Tax Deed Sale Foreclosure with Equity!

Unjust Michigan tax deed sale system and others like it continue to rip off property owners

It probably doesn’t come as a big surprise to you that there was a big Flint, Michigan tax deed sale this year. It didn’t surprise me in the least. After all, Flint may be one of the hardest-hit towns in today’s economy, and real estate values and sales are reflecting that unfortunate reality.

But what really knocked my socks off was a partial listing of the EXTREMELY VALUABLE properties that went through this particular Michigan tax deed sale. These properties were worth anywhere from $400,000 to over $2 Million dollars according to a recent article about the tax deed sale on – and I thought the title (“Gems Among the Junk: Genesee County gets Seven Properties Worth More than $400,000 Each”) was most fitting! Already, a number of lessons can be taken from this event:

– Extremely valuable properties can and do go ALL THE WAY to tax deed – resulting in a total loss by the owner.

– Millions of dollars worth of property can be up for grabs before the sale – and not just “war zone” properties – even with a Michigan tax deed sale.

– Any one of US could have had a tremendous, life-changing opportunity if we could have gotten involved with even one of the properties that ended up in the county’s hands.

– And – if you don’t happen to know much about the Michigan tax deed sale system – the government will keep all the spoils if you don’t get in front of that owner to solve their tax problem!

Counties Reap Undeserved “Michigan Tax Deed Sale Spoils”

You may have read some of my previous articles, like “Tax Deed Sales Create an Unexpected Profit Source”, where we talk about the owner being eligible to collect substantial amounts of money in the event they lose a valuable property. In most states, if a property with a 6- or 7-figure value went up on the auction block, it would bid well in excess of the taxes owed.

This would then create a surplus. A surplus is the amount the county collected above and beyond what they were owed, after auctioning the property at the tax deed sale. So while the owner of a property like the one you see above would probably lose the property forever, it would be likely that as a “consolation prize” there would be a large surplus that the owner could collect to make the whole situation more just.

Don’t get me wrong, though I feel badly for anyone who loses a property to tax deed, I agree that at some point strict action must be taken and this can include loss of ones’ property after an extended time. So I’m not against the whole tax sale system per se – in fact it’s what gives us so many opportunities to make a great living even when the real estate market is down. The surplus being available to the owner is a sort of “check and balance” to help make the situation a little more just for the owner losing a property to a tax deed.

We even create another profitable business connecting people with their long-lost surplus funds for a contingent finder fee (see some of the hundreds of checks our trainees have obtained at our Hooked on Overages Site!)

How About Some Checks and Balances in the Michigan Tax Deed Sale, and Others Like It?

What I DON’T agree with is government deciding that at some point the taxpayer’s property became THEIRS. 100% theirs. Despite the fact that the taxpayer likely owes only 5-10% of the property’s value in taxes, states such as Minnesota, Wisconsin, Michigan, and Oregon want more. In fact, they want it all. So they foreclose the property completely, and they make sure to do it well ahead of the tax deed sale. Now, because of a relatively low tax bill that was owed, they’ve become 100% owner and wiped the owner out.

But, as usual in most tax deed states, they let the bidding go wild several months later at the tax deed sale. And the county loves it – because THEY now own the property, and as such THEY get all the surplus funds from the sale! And the owner is truly left blowing in the wind with NOTHING.

I wanted to write about this today not to complain about government – in my opinion that will get you nowhere. Rather, I want you to see the HUGE opportunities that exist in these “backward” states to snag tax sale property BEFORE the county can get their hands on it. Remember – by the time a tax deed list comes out, there is only one owner and they don’t sell except at auctions! Take a little time and delve into the FORECLOSURE process that the county performs prior to the sale and you will find a wealth of properties that nobody but you has access to.

Finally, make sure the owners realize that the final date to redeem their property may come and go with as little as a notice in the mail – no big auctions or evictions when that day passes. The big Michigan tax deed sale windfall will be savored by Uncle Sam (or rather his local counterparts) several months down the road!

Tax Sale Property – By the Boatload

Tax Sale Property An Epidemic

When properties are taxed at outrageous rates, they can become worthless (even as a tax sale property) in a hurry!

Tax Sale Property - A Result of Chronic Property Tax Burden

When it becomes too much to bear -- most just walk away - and a tax sale soon follows.


n a previous article, “Second Chance Tax Sales“, I briefly mentioned the irony of ANY property not selling at a county tax sale.

Any given property, you would think, should be taxed at some relatively small percentage of its actual market value each year. Voters in California pioneered the idea that homes should only be taxed at 1% of their value all the way back in 1978.

And Indiana recently passed a state constitutional amendment limited taxes on homestead properties to 1% of value or 2% for rentals. See the results for more information – it received over 78% approval by voters. Tax sale property should have been greatly reduced.

The Debate: What is an appropriate yearly tax burden to guarantee only a small percentage of value is owed at any tax sale: 1%? 5%? 10%?

Even if it were appropriate to tax a property at 10% of its value every year (preposterous in my opinion, by the way, and 10 times the rate of some areas), properties would have no more than 30-40% of their value accrued in taxes by the time a tax sale would be held.

In most states, much less would accrue before sale (most get the property to a sale before 3-4 years of delinquency piles up).

Even in today’s terrible market, investors line up to pay 30-40% of current market value for tax sale property sale. By definition, it’s “free money”.

Sure, some tax sale property is truly worthless, and yet might have to be assessed for SOMETHING. And so the county should eventually acquire those properties.

But many very useful properties are taxed the entire amount of their value in the span of just a few years are not worth what owed at the first tax sale held.

With over-taxation rampant, especially in low-income areas, this brings up a an interesting question:

Is it really possible to lose money on a properly-managed, free and clear tax sale property as a rental, where there is demand for rental housing?

One would hope that this couldn’t possibly be so, but unfortunately it is, at least for now.

The Sad Truth About Tax Sale Property Perpetuating Itself

Overtaxation is a vicious circle. Once taxes reach a point where cash flow cannot be obtained by renting free and clear properties, property values in that neighborhood get very close to zero.

A viable rental strategy can be to buy houses so cheap that they are disposable – in other words, you never pay the taxes on the property.

Rent it out unti it’s eventually becomes a tax sale property again. Between delays in holding tax sales, and waiting for subsequent “second chance” sales to be held, several years can go by where rent is collected. Yet with property taxes paid (the main expense in this property), and a tidy profit can be made.

This is also known as “milking the property”.

You can probably imagine the effects this kind of business model (which is forced upon landlords by overtaxation) can have on a city. See my recent post on Gary, Indiana.

Tax Sale Property Examples

Let’s look at some typical tax sale property in East Chicago, Indiana, or Gary, Indiana.

Both communities still have well-kept, though low-income, neighborhoods where rental demand is adequate.

Say you get your hands on a well-kept, clean property in Gary’s Horace Mann neighborhood for only $2000. It has a built-in renter getting 100% section 8 assistance. Sweet!

Section 8 pays $450 per month for the property, and the tenant is a pleasure. $5400 per year is direct-deposited into our account each and every month.

Just get some more tax sale property like this and we’ve doubled our social security benefits, right?

Let’s run the numbers:

1. Generally accepted operating expenses for property (includes vacancies and maintenance): 45% of income.

Never mind that in lower income examples, this figure is actually higher because renters are more transient (higher vacancies) and maintance is generally consistent on a property regardless of market value. Cost: $2430

2. Taxes: Taxes in Gary can run as high as $2000 for properties worth no more than $10,000 in reasonable, rentable shape. Cost: $2000 per year

3. Insurance: Insurance for properties in lower-income areas has exploded in cost the past few years. With the mortgage crisis, most low-income areas have a high number of vacant properties, and the opportunities for thugs to cause trouble (and insurance ) abound. Yearly insurance premium: $1000.

Rental income: $5400
Expenses: $5430
Profit: $30 loss for well-managed, free and clear property.

The Solution:

This setup leaves an attractive, high-profit option for the entreprenuer (but potentially devastating for the community)…become a slumlord!

Note that $3000 of the expenses shown here don’t NEED to be paid for a landlord to receive the rent.

So it’s possible to pay $2000 for this tax sale property at a second chance tax sale. You could then turn around and earn almost $3000 per year while paying no county property taxes or insurance. This wave could be ridden for for 4-5 years or more before the property is lost again.

I hope you find the numbers I presented here (and the effect they will have on overtaxed communities) as outrageous as I do. The solution is to spend less and/or obtain city/school revenues from some other source than property taxes. The market will severerly punish any jurisdiction that doesn’t heed this warning, tax sale or not!

Get all kinds of tax sale property with no bidding or waiting – get my “Underground Tax Sale Strategies” guide below.

Over the Counter Tax Sales

At nearly all tax sales, there are parcels that do not sell for even the minimum amount of taxes owed.

An interesting thing to note about this phenomenon is that it indicates overassessment of a property to an almost unbelievable degree. The property is being taxed in excess of its true market value over the course of just one or several installments of taxes! This is shown by the fact that nobody is even willing to pay the current taxes owed for the property.

Of course, delays in holding tax sales can result in more installments building up than intended by law, before a sale is held. See my article, “Tax Sales – Essential for Every Community”, for more information on this effect.

Tax Sales - Leftovers

In most states, counties re-offer the properties that do not sell at second-chance tax sales. Let’s look at a few ways we might be able to get involved.

Opportunities at “Second-Chance” Tax Sales

If a county re-auctions properties that did not sell at the original sale, but doesn’t give special terms, bargains will still be elusive.

Even if the bidding starts at 1 cent for leftover parcels, competitive bidding will usually eliminate any opportunity to get a property for less than market value.

However, since the properties offered at these tax sales are more “bottom of the barrel”, these tax sales may attract fewer bidders and bargains may be had.

Other times, counties will sell the properties “over the counter”. It’s possible to make small profits on these properties occasionally. In general though, even minor bargains that are openly available to the public for any significant amount of time will be snapped up.

“Second chance” sales in tax lien states, however, can be one of the rare opportunities to participate directly in tax sales, enjoy low prices, AND eliminate negatives associated with tax liens.

This is because the county can “sweeten the deal” in more ways than one in the second chance tax sale.

Indiana Commissioner’s Sales

One example is an Indiana commissioner’s sale. Commissioners can drastically cut the minimum bid for properties offered in the sale, especially after multiple failed attempts to obtain what is actually owed in previous sales. In addition to this benefit, redemption periods for owners are also cut to a very attractive 120 days. Return on investment remains at 10% flat amount for the 120 days (30%+ APR!)

Because county officials in many Indiana counties seem unable to perform reassessments in a timely manner, delays in the tax sale happen often as mentioned above. So, in a typical example, taxes on a servicable single family home in Gary, Indiana can reach almost $10,000 from one sale to the next.

The market value of a home like this is around $10,000, and redemption rates are not as high as the rest of the county, so few bidders will participate in the sale of a home like this.

However, the county may cut the minimum bid of a properties like this to $2000 or less, and just as importantly, reduce the redemption period down to 120 days. Because of the volume of properties offered, and the fact that this is not a deed sale, bidding remains subdued in many cases, and bargains can be had.

In a recent sale I was able to acquire 4 homes, 2 of which were rented Section 8, at $450 apiece, for a total of less than $10,000. The two vacant homes required less than $10,000 total to fix up and are now rented at $450 and $600 apeice, for a yearly gross rent of $23,400. At first, the deal sounds unbelievably good with a less than 12 month payback on investment. I was indeed happy with the investment but it’s not nearly as great as it seems.

Work Second Chance Property as a DeedGrabber?
In my experience, it only pays to be involved in second chance sales as a bidder. Typically, if the owner of a “second chance” property wants to redeem (HINT: this is you if you buy it from the current owner), the full amount of taxes must be paid. In the example above, you would have to pay $10,000+ to redeem the property that you observed sell for $2000 at the second-chance sale.

Tax Sales Increasingly Outsourced to Private Companies

Private Companies Taking Over Tax Sales

Responsibity for Tax Sales Now Often Contracted Out

More counties are outsourcing their tax sales to private companies. This has some definite implications for us as investors.

Whereas government often doesn’t have an incentive to create efficiencies, private companies do. As a result we’re seeing greatly enhanced information access almost immediately when a private company is brought in to do tax sales.

This USUALLY makes it easier for us to obtain the information we’re looking for about upcoming tax sales. An exception can be when the private company collects information and hides behind their private status to deny public record requests.

For the most part, this has not proven to be an issue.

Improvements To Tax Sales By Private Companies in Indiana

For years, many Indiana tax sales have been run by a company called SRI out of Indianapolis. SRI developed the proproetary software that tracks the status of properties offered or sold at county tax sales in Indiana. They also hold the actual auction itself onsite in each county.

SRI has also conducted online tax sales (usually second-chance commissioner’s sales) and developed an ebay-like auction system for those sales. It’s quite good, complete with proxy bidding. This allows you to set a maximum bid you’ll pay, but only pay slightly above the second-highest bidder.

Finally, SRI’s website gives stats for completed tax sales and allows for download of upcoming sale lists.

The stats are very useful for determining which counties had significant activity the year before and are therefore prime targets for pre-redemption period purchases.

Another company, Government Utilities Technology Service (G.U.T.S.), has entered the scene of late, and appears to be developing excellent online resources as well.

Significantly, they have been awarded the contract for Marion County tax sales (Indianapolis). This is the county with the highest tax sale activity in the state.

G.U.T.S even posts the bidder lists from tax sales on their website. Amazing the access that is granted to tax sales when there is no conflict of interest, as with the county.

Tax Sales: Blunders and Other Concerns with Private Companies

You may want to take note when a brand-new private company is awarded a contract to perform a sale in your target area.

Onyx, a Valparaiso company hired by Lake County, Indiana to perform tax sale work in 2010, failed to cause the appropriate notices to be filed in local papers as required by law. As a result, the tax sale conducted they conducted had to be totally reversed as a result.

Millions of dollars had to be refunded to tax lien investors, and all of their efforts to participate in the sale were wasted. I wrote about that in a previous post.

Another concern with private companies is that they will become the sole custodians of what should normally be public information (tax sale results). They could then potentially share this data only directly with the counties. This could make our job of obtaining records of tax sales more difficult.


Finally, when private contractors are paid by the parcel to run a sale or earn a commission, the fees borne by the county can be quite high. A relatively small county in Indiana, Boone County, recently paid G.U.T.S. $70 per parcel for a total of $16,030 to conduct their tax sale.

This seems to indicate that 229 properties were offered at the sale.

Responsibilities of private companies usually include providing initial notice by certified mail for each owner involved in the sale, arranging for publication of notice as required by law, conducting the actual sale, and providing software necessary to track status of the properties in the sale.

For smaller sales where several hundred properties are offered, these rates seem somewhat within reason. But larger counties would pay up to $770,000 or more for tax sales to be conducted privately. Lake County, Indiana for example has recently had tax sales where more than 11,000 properties were offered.

SRI was recently awarded a contract to perform a tax sale in Lake County in which a 10% commission on all proceeds were paid over to SRI. The amount of taxes being offered? $48 million!

Do you think you could remember to place the required newspaper ads if you were awarded a contract for $770,000 or a share of $48 million?

You’ll learn several ways to profit from tax sales in my Underground Tax Sales Secrets report, which you can get below for free.

Tax Deed Sale Bidders (Money Wasters!)

Tax Deed Sale Bidders Kill Each Others Profits

Ha, Ha, I Wasted More Money than You!

Will These Tax Deed Sale Bidders Kill Each Others’ Profit?

At least these tax deed sale bidders can laugh about it!

Apparently, Don Hecht and Jim Dietz of North Dakota have run into each other before at tax deed sales, and helped each other pay more for properties at the sale.

In a recent article in the Grand Forks Herald, several bargain properties were bid up to several times their original starting bid.

A property starting at $6,070 was bid up to $24,000. A house in Manvel, ND started at an amazingly low $1329 and ended up at $8,000.

Another notable property in the sale was a 160-acre tillable farm that sold for $65,000. All to tax deed sale bidders who paid something approaching retail price for these properties.

I think it’s safe to say that if we had gotten in front of any of the former owners of these properties, we would have had a great chance at a decent payday. And this is in North Dakota!

The article went on to mention that the length of time of tax delinquency before tax sale in North Dakota has recently been reduced from 5 years to 3 years, and all properties on this sale were only 3 years delinquent.

In my article “Tax Deed Sales – A Way to Get Good Property?”, I describe the main disadvantage of tax deed sales – competitive bidding. This bidding almost always turns great buys into mediocre or even terrible buys.

This is all thanks to multiple tax deed sale bidders. But bidding at tax deed sales can be very good for us. Tax deed sale bidders creates “overbids” that are often due to the owner who lost the property, when they compete for properties.

We make a very good living locating and collecting those surplus funds for the owners who lost their properties. Most don’t know about the money and wouldn’t have the first clue how to collect it.

Did you think that Tax Deed Sales Create An Unexpected Profit Source, for tax sale bidders? Nope, it creates an opportunity for you.

Unfortunately, North Dakota doesn’t want to share and they do not let the owner get his surplus.

The county forecloses tax delinquent properties completely, without public bid, THEN auctions them off once the county is the owner!

Now why didn’t I think of that?

Get out in front of tax deed sale bidders to buy properties, then collect their overbids in many states. Learn more in 9 minutes than most tax deed sale bidders know, with my “Underground Tax Sale Secrets” report, below.

Indiana Tax Surplus Finders Die Quick Death

Tax Sale Surplus Finders Soon to be Extinct in Indiana

Another noble profession dies

Indiana tax sale surplus funds have led to some of the best opportunities in the country for collecting finder fees. The funds, created when more is paid for a property at a tax lien sale than what was owed, and available to the owner of the property upon the issuance of a tax deed, often went uncollected.

This created the perfect opportunity for finders to track down the claimants of these funds and earn a commission.

It is no surprise that most counties in Indiana have never made earnest attempts to contact the rightful claimants to make them aware of the funds, because the county gets to impound all funds on hand 3 years after the tax sale.

And, due to the nature of foreclosure property, most property owners were listed at the property address and never updated their address after they were removed from the property. So a letter went undelivered to the property, and that was it!

I outlined the process in my recent article, “Government Tax Sales – How you can Profit Without Attending Auctions”.  Smart tax sale investors have always used unclaimed surplus fund recovery as a legitimate way to increase their income while helping tax sale victims recoup at least some of their loss.

It appears that this industry will likely die this year, 2010, with the passage of updated Indiana tax sale code sections, especially in section 6-1.1-24-7 and 7.5

The two sections that put the “nail in the coffin” for finders everywhere?

1. Section 7.5 (b)1- Requires payment of compensation of not more than ten percent (10%) of the amount collected from the tax sale surplus fund – in other words, finder fees are limited to 10% from the moment funds are available.

A few adventurous souls might continue working at the 10% level, but this section will make it even more difficult to eke out a living:

2. Section 7 (c) 2 – Requires a court order for release of funds,  if the claimant is using a power of attorney or acquired the property by deed after the initial sale takes place.

While obtaining a court order for release of funds is not terribly expensive in most cases, there is already very little profit to work with, on only 10% commission.  The delays that this new code will introduce add the final insult.

The irony of the new regulation is that, while ostensibly to keep Indiana victims of tax sale from being “ripped off” by “bounty hunters” like ourselves, the change in rules will almost certainly result in LESS surplus funds being returned to the rightful owners overall.  The counties will no longer have the handful of finders, working on their behalf for free, to help return the funds due Indiana’s tax sale owners.

But they like it that way.  The decrease in collections that will result will lead to more revenue for the county.

If Indiana legislators truly wanted to ensure that the maximum amount of surplus funds reached the rightful claimants, they would stop worrying about finders and they would repeal the provision that calls for the funds to revert to the county after 3 years.

Why not send the funds to the unclaimed funds office so the claimants have a chance to collect them after 3 years?  That would be a tough one to answer for the politicians who just called for this “benevolent” change in the law.

Be sure to comment below – why would legislators make it harder for surplus funds claimants to learn about their surplus – and continue the clause that allows the counties to keep all surplus funds that aren’t collected quickly?

Postponed Property Taxes About to Kill Gary, IN?t

In my neighboring city of Gary, Indiana, tax rates are very high because of low-valued housing stock, a high percentage of abandoned homes, and a huge appetite for cash by the city government for such essential services as a “Human Relations Department” (which regularly hauls landlords before it to answer for racial discrimination).

Properties in the city already have a low value because of the quality of the neighborhood and the high taxes. In many cases, properties are just barely worth what is owed in taxes on them when they’re offered at the county tax sale.

Because of the high rents and insurance costs, rents often barely create cash flow for a landlord, even when a property is owned free and clear. For example, it’s not unusual for taxes and insurance to exceed $250 per month on a property that rents for only $450 per month. With AVERAGE operating expense for a home of 45%, this leaves a landlord owning such a property at a $2.50 per month LOSS even if the property is owned free and clear.

Delaying the Tax Sale

It should not be a surprise that with numbers like these, home values hover near zero even when a property is in rentable condition. Typical sale prices range from $4,000 – $12,000 on many homes.

And, typical starting minimum bids at Lake County’s tax sale auction for a house in Gary are $3,000 – $5,000 so there is little room for those bids to go up. Indeed, many properties are not even purchased at the initial sale for what is owed in taxes.  See my Article “Tax Sales – Essential for Every Community” to learn more about how delayed tax sales can quickly set into action a disastrous sequence of events.

When tax sales are delayed (recently, by a inept attempt to assign a market value to properties), more taxes are allowed to build up before the property is offered, rendering it absolutely worthless.

Nobody bids on the property, and a viscous circle ensues. More properties drop off the tax roll, increasing the taxes on the remaining properties further. This makes landlording or living in Gary even less attractive than it already is, and MORE properties exit the tax roll.

Rebuilding the City

Gary Indiana in the good old days

Gary, Indiana in Better Times

In Gary and other towns like it, the answer is not to raise taxes in an unlimited fashion to meet a city budget. If the city cannot operate with a reasonable tax rate of 2% or so of a property’s TRUE value (in Gary’s case, $200-$500 per year), some serious changes need to be made. With a reasonable tax rate like other cities in Indiana, Gary would attract many investors and find more and more of its properties back on the tax rolls with regular collections.

Luckily for the residents of Gary, their fellow Hoosiers have voted in a permanent 1%/2% tax cap (homeowner and landlord) of assessed  value for yearly property taxes.  With any luck, the properties won’t now be assessed for several times their true market value to make up the difference!

Gary Indiana in the good old days

Gary, Indiana in Better Times

Tax Sales – Essential for Every Community

Tax Sales are GOOD for the Community

Tax Sales are GOOD for the Community

Tax sales allow us to make our living – but they are also essential for every community’s health.

Each year, a certain number of properties “fall through the cracks” – the owner becomes unable or unwilling to do what’s necessary to keep their property maintained – financially for sure, and physically as well in most cases.

Perhaps the owner dies. Perhaps he or she moves out of the area and gets busy with a new life. Maybe an heir receives the property and that person just isn’t meant to own property.

Sometimes banks even start foreclosure proceedings against a property and never get around to finishing the foreclosure. Without a mechanism to clear out the dead wood in a community, we would find a growing number of “orphan” properties that would just sit and rot.

Tax Sales: Necessary Evil?

Many people think of tax sales as an evil – after all, poor innocent homeowners have their hard-earned homes “taken away”. Rarely is that the case.

Rather, tax sales are often the rain that washes clean the community each year.

The properties sold at the sale are usually purchased by investors who, in exchange for receiving a good price for the property, proceed to fix up the property and return it to life.

These properties then return to the tax roll, and reduce the amount of property tax burden that everyone else has to pay.

In fact, there can be disasterous results when a community holds off its tax sale for even one year – especially a community that’s already teetering on disaster.

This really makes our mission of contacting tax-delinquent owners not only a profitable, but NOBLE cause. The sooner we get these properties into the hands of a profit-minded individual (another investor usually) or a caring homeowner, the faster the community improves and recovers from the lost tax revenue that this delinquent owner causes.

When Tax Sales are Delayed

It would seem to be no big deal when tax sales are delayed for an extra year or two to “give homeowners more time”. But in reality, this is very harmful to the community, especially a low-income community. This extra time actually causes the tax burden on many properties to exceed their market value, especially if the properties are in run-down shape.

This means the properties will not be purchased at the next tax sale, and may remain off the tax rolls for years, or even forever! Properties laying around vacant are no good for the community or the county coffers.

By pursuing tax-delinquent and tax sale property before tax sales occur, you are helping to maintain your community that much faster.

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Government Tax Sales – Profit Without Cash

Government Tax Sales – The Hidden Bargains

There are actually several different ways to profit from government tax sales. You can avoid attending auctions, bidding against others for properties, or waiting for tax liens to mature completely. More in a second.

In order to obtain properties directly from government tax sales, you will need to do a significant amount of research on the properties being offered. Then you’ll attend a sale where you will need to pay all cash for properties that you generally cannot inspect.

In addition, you may have to bid much more than the minimum advertised price to actually get the property. For tax liens, you’ll wait many months or years to have a chance to acquire the property.

Let’s look at some ways you can profit now, without attending government tax sales, investing cash, or waiting.Government Tax Sales and Immediate Profits

The first opportunity is to get out in front of actual government tax sales by requesting a listing of all tax-delinquent properties in the county you want to work.

These tax-delinquent listings can be anywhere from 1 day delinquent to several years delinquent. Either way, the properties have not been offered at a tax sale yet.

Start with the properties that have been delinquent the longest, and also those with owners who live out of the area. These properties are prime candidates for a bargain purchase.

Many times, and out-of-area owner who is delinquent may not even know about the delinquency because they have basically forgotten about the property. The property may be run-down or may be occupied by family members who are not paying the owner.

You can get properties like this under contract and resold to an investor before the government tax sale occurs. And walk away with a nice profit with no risk.

Or you can sometimes buy these properties outright for a very small token payment to the owner. Then quickly resell before a sale on the property occurs.

This way you’re using some of the purchaser’s money to redeem the taxes, and then the rest is yours.

Getting Started with Government Tax Sales

Watch for government tax sales to be announced, and acquire the list of properties about to be auctioned. These owners will lose the property in a matter of months or even weeks.

A sense of urgency is now created to do something with the property. One technique is to “partner up” with these owners.

This can mean either redeeming the property and reselling it some time later, or reselling it immediately to an investor. You can even arrange to split the proceeds with the owner instead of paying them anything upfront.

This way the owner gets something for the property and you profit with minimal investment.

You can even profit from government tax sales in many areas even after the sale takes place and the property is lost to an investor.

This is because many areas have a bidding method for properties, where the county can take in more money on the sale of the property than what was owed. For example, a county may auction a property for the amount owed, $5,000, and receive $25,000 for the property at the sale.

The extra $20,000 that is collected above and beyond what’s owed is usually due to the former property owner. You can look up the results of past government tax sales and see which properties generated surplus funds like these.

Then, you can negotiate with the owner to receive a finder’s fee for money the owner didn’t even realize was theirs! For full details, see our course, “Hooked on Overages”, available here.

These are just a few of the “side opportunities” that government tax sales can offer, without risking money at the actual sale, bidding, or waiting.

In fact, as I showed you in the finder’s fee example, we can even use the competitive bidding aspect of some government tax sales to our advantage by helping owners recover funds due to them.

Discover these, and other insider techniques you can use at government tax sales, in my “Underground Tax Sale Secrets”, available below.

Tax Deed Sales – A Way to Get Cheap Property? Not Usually

Tax Deed Sales and Cheap Property

Are tax deed sales an effective way to acquire property for bargain prices? The short answer is: hardly ever. Let’s look at a few reasons why purchasing property at tax deed sales can be problematic.

The first obstacle you’ll encounter is that you will have to research each and every property on the tax sale list. In many areas, hundreds or even thousands of properties can be listed on a county’s tax sale list. When there are this many properties listed, it becomes a huge expenditure of time to drive to each property (if you can even find some of them without an address) and assess a value you’d be willing to pay for each one.

Tax Deed Sales - Bidding Ruins the Fun

Bidding Kills Bargains At Most Tax Deed Sales

Also with a large list, there will be mostly garbage properties available that will not even be worth the taxes owed. It’s easy to confuse an adjacent lot, next to a valuable property, with the property you’re looking to bid on, and make a bad purchase.

Now that you’ve spent hours researching the properties, you’ll have to have cash available to purchase the property at the sale. Don’t think that the amount listed in the list is necessarily what you will be able to purchase the property for – – this is just the minimum bid.

At the sale, you’ll be joined at most tax deed sales by several other bidders with deep pockets. They’ll almost always bid the property out of the bargain range and closer to retail value.

The last significant item is that most properties purchased at tax deed sales do not have marketable title at the time you buy them. Though any mortgages or liens are usually wiped out by the tax sale process, title companies want an additional step performed, called a quiet title, which can take 3-4 months and cost an additional $500-$2000 to perform. Many times during the quiet title process, interested parties who were not sufficiently noticed about the sale will come forward and attempt to overturn your deed. This is the whole reason the title companies want the quiet title done successfully – – they have been burned too many times by insuring tax deeds bought at auction.

The only way you will succeed at tax deed sales in buying a cheap property, is if you manage to attend an auction where nobody shows up, or everybody who does show up misses a valuable property on the list and does not bid.

These experiences will be few and far between, and you’ll have to research all tax deed sales in the meantime to be prepared in the event you get lucky.

However, tax deed sales do present a great investing opportunity. You can simply contact the owners of property going to tax deed sales and buy the property directly from them. Much of the time, the reason the property is going to tax deed sale is because the owner doesn’t want it. In these circumstances you can offer the owner as little as $50 for the deed to the property and pay the amount owed in taxes, with no quiet title or bidding necessary.