Tag: liens

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 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.

County Tax Liens: A Good Way to Acquire Cheap Property?

County tax liens help counties recover taxes

County Tax Liens for Acquiring Property?

One of the greatest misconceptions in the real estate investing world is that county tax liens lead to cheap property acquisition. All on an ongoing basis, for pennies on the dollar.

Examples are given on late night TV and other sources of properties worth $30,000 – $200,000, being obtained for as little as a few hundred dollars over and over again. Nothing could be further from the truth.

In the real world, county tax liens on property provide an above-average return on investment. It looks especially good versus traditional guaranteed investments like bank accounts and CD’s. But this is when the investment in the county tax lien is properly managed.

Tax lien gurus often cite that county tax lien investments are “guaranteed by the government”. This is also false. County tax liens are guaranteed by the underlying property only. And only if the tax lien buyer follows proper procedure throughout the process.

In exceedingly rare cases, a county tax lien may go to maturity and lead to acquisition of the underlying property. And in these cases, the underlying property CAN BE worth many times the investment in the lien.

However, the underlying property may actually be worthless, or worth little more than the investment made in the lien itself and subsequent costs.

In order to obtain the underlying property if the taxes are not paid, strict procedures must be followed by the lien buyer.

Therefore, county tax liens are not a passive investment at all. Significant time must be spent prior to the investment, performing due diligence.

Due diligence consists mostly of making sure that any county tax liens purchased are against properties worth at least as much as the investment in the lien and subsequent costs.

Many tax lien lists consists of thousands of properties, all of which must be analyzed prior to the sale.

Because several bidders may want the same group of county tax liens at the sale, there is usually a bidding method at the sale. Either the cost of the lien is bid up, or the interest rate is bid down.

In either case, the investment becomes less attractive as the bidding continues. Not all liens you may desire to purchase will be available for the minimum bid or maximum interest rate.

County tax liens are really only worth getting involved in if you have a large sum (well in excess of 6 figures) to invest. You must also be willing to take an active role in the management of the investment.

An investment of less than 6 figures provides only several percentage points’ difference over a federally guaranteed investment. Therefore only a few thousand dollars difference in return is realized. The added risk and due diligence needed to participate in any kind of tax sale is not worth the extra return.

For larger investments, especially in the millions of dollars, it’s more efficient to do the research and the effort can be worth the while.

At every large sale, it’s inevitable that several properties, or even several dozen properties, will be lost by the owners as a result of the sale.

However, to have a chance at acquiring all of these properties by buying tax liens, you would have to buy every single county tax lien offered at the sale.

In order to actually acquire properties for pennies on the dollar, just stay out of the sale and let all of the other investors buy the liens offered.

Let them do the due diligence and determine which liens are worth investing in (many times 50% or more of the county tax liens offered at a sale don’t even sell).

Then, once the redemption period is about to expire, see which liens are still unpaid. Simply approach any property owner with a lien remaining with a last-minute proposal to buy the property or get it under contract before it is lost.

You’ll save 95% of the due diligence time, and you won’t have to invest any money. You won’t have to follow procedures like noticing. You won’t have to get a quiet title on the property.

You can just get involved at the last minute, and buy unwanted properties for a token amount or get them under contract and flip.

Profit from county tax liens like the pros – get my “Underground Tax Sale Secrets” guide now (below).

Tax Lien Listings Increase All Over the Country

tax lien listings at the courthouse

Tax Lien Listings At All Time High

Every day I’m seeing record numbers of tax lien listings being announced all over the country. Take Park County, Colorado.  It was recently reported in the “Fairplay Flume” newspaper that properties with delinquent taxes in Park County have risen by more than a third over last year.  Tax lien listings this year showed over 1900  properties, up from around 1400 last year.

Here in my home state of Indiana, the trend also exists.  The Kokomo Perspective reports that Howard County, a major rust-belt county in Indiana that once held thousands of auto manufacturing jobs, is in the same boat.  More than 1200 parcels were expected to hit the tax lien listings section of the newspaper and shortly before the sale begins October 12, there are still over 739 parcels left on the list.

While some conventional investors might salivate over the chance to attend an auction, bid on these liens, and wait out the redemption period to obtain the properties at the sale, smart investors are looking over LAST YEAR’s sale to see which properties sold and have not yet been redeemed.

They then contact those owners who are about to lose their property and pick up unwanted parcels for as little as $50.  I showed how to do that in my article “Tax Lien Foreclosures – The Mortgage Pre-Foreclosure Alternative”.

In addition, investors wishing to acquire properties from this year’s sale recognize that 90-95% of radomnly selected, worthwhile properties will redeem.  In order to maximize their chances of buying a lien that doesn’t redeem, these investors are busy sending postcards to the owners who are about to have liens auctioned next month.

By purchasing only liens on which they received returned mail on their postcards, these investors have several times’ greater chance of getting a property. With the increases in volume we’re seeing, there is greater opportunity than ever to take advantage or either. Yet with larger tax lien listings, you must work smarter.

If you’re out there bidding at tax lien sales, have you seen larger and larger lists?  Be sure to add your comments below.