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!

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  1. Craig says:

    Hello Rick,

    I have been getting your emails about Indiana Commissioners sales and would like to know are those Commissioner tax deed sales or Commissioner tax certificate sales that your reffering to. Also do you have a website where I can find the online auctions for those types of sales. Thank you Rick I find your information very knowledgable.

  2. John says:

    Rick, you mentioned that your rentals are down to $1,000 per year for property taxes. At a 2% tax rate the assessed valuation would be $50,000. You also mentioned that the assessed valuations are several times market value. I take this to mean that the homes you have purchased are worth say $25,000 or less. Seems like these types of properties would be in very low income areas. What are your insurance rates like for these homes? Just trying to gauge the profitability and associated headache of owning rental property in low rent areas. Thanks.

    • Rick Dawson says:

      I’m glad you brought that up (someone’s paying attention!). Here’s what’s at play with my rentals.

      1. Yes they are assessed at several times the value I could actually get for them. Most of them are assessed at $30,000-$40,000. The county will be able to get away with this because a few homes have probably sold this high.

      2. In Lake County only, and within Lake County only the cities of Hammond, Gary, and East Chicago, a “phase-in” period for the 2% cap was allowed, so taxes are somewhat higher than 2% for the next few years – but still low due to low assessed values.

      Most of the properties I have ARE in very low income areas. Insurance is reasonable since the property value is low – about $500 per year each.

      I stay in neighborhoods that appear nice when you visit during the day – in other words, there aren’t 50% “blown out” houses on the block. As long as most of the neighbors are keeping their properties decent, that’s good. Then I prefer Section 8 tenants. Since my rents are only $450-$500 for a small house, and no more than $695 for larger houses, it’s not hard for even low-income people to afford.

      There is an increased incidence of trash-outs, vacancy, and evictions in these areas nonetheless. When your rental portfolio is free and clear, these expenses are much less painful.

      Finally, if you get a portfolio put together like this and decide that the headache isn’t worth it, you could very easily and quickly liquidate the houses for what you have in them or even much more.

      • John says:

        I like your approach of focusing on Section 8 but is there considerable repair cost involved to get the houses up to HUD standards when you acquire the houses via the commissioner sales?

        • Rick Dawson says:

          If you have to do a lot of repairs on the properties you get, this strategy loses a lot of its luster. For example, if you got a house for $1k but had to do $12k in repairs, you might have done just as well buying a carefully-selected foreclosure straight from the MLS.

          That is why I recommend buying only properties that look good from the outside, and are occupied. This gives you a much higher chance of having a property with only minimal repairs to get into Section 8 condition. Also, get to know what Section 8 is looking for – they’re really not that picky in my experience.

          If you get a property for $1k-$2k that meets these requirements but turns out to need a lot of repair inside, try to get your money back by renting to the existing occupants, then it’s a “free roll”. If you have to get rid of those tenants, it’s likely you can sell the property for $4k-$8k pretty quick. And, tax prorations are 0 because the commissioners sale gives you a blank slate.

          About the only way you can lose is if the property looks great from the outside, but doesn’t turn out to have tenants and it’s really bad on the inside. In that case, I would never even record the tax deed and would chalk it up as a loss – and hopefully I had several other successful purchases to balance things out.

          You’re only going to get in trouble if you start relaxing your standards on property condition.

        • Rick Dawson says:

          Also, 2/4 of the houses I got from my last commissioners sale were ALREADY rented Section 8. I went down to the section 8 office, showed them the deed, and they began sending me the rent checks.

          Then it was a matter of doing a couple hundred dollars of repairs each year to keep them happy. Inspections aren’t such a bad thing, it ensures nothing gets out of hand at the property.

          Also, Section 8 people lose their voucher, which is really hard to get, if they trash out a place. So EVERY Section 8 tenant I’ve ever had is cooperative and treats the property well (even clean?!?!)

  3. Cathy says:

    Are there certain counties you would recommend we don’t even waste our time on? This was a great series!!! I really appreciated the specifics. It really helped me understand this whole process better.

  4. i enjoyed your lessons. if you have more info, please include me. do you have any services for out of state lien buyers, such as checking out the properties or neighborhoods.thanks len

  5. Greg C says:

    I have gone after several houses in commisioner sales and while I have not gotten all of them I just did get two that are occupied. One for $556 and one for $1819. They are there is you spend some time looking for them. Gearing up for the regular sales coming up in the fall now and expect to get title to both of these in the next 120 days. Thanks for your help and website.

  6. Rick says:

    Great job Greg. If you want to build a cheap rental portfolio and live in or near Indiana (or have the skills to manage from afar) these sales really are awesome. Very hard to lose getting free and clear, occupied houses for $556 and $1819!!!!

  7. Wayne says:

    You say on some bad properties that you would not even waist time on registering the tax deed and instead, chalk it up to experience. What does that mean? What happens with the property at that point?

  8. of course like your website however you have to test the spelling on quite
    a few of your posts. Several of them are rife with spelling problems and I in finding it very bothersome
    to tell the reality on the other hand I’ll surely come back again.

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