Building a Bigger Portfolio
ACQUIRING TAX LIEN PROPERTIES IS A STRATEGIC INVESTMENT THAT VARIES BY STATE AND CONDUCT OF SALE.
by Charles Sells
espite serious competition for the good deals, the tax lien real estate sector definitely rewards effort. Investing in tax liens and acquiring properties through tax sales is a highly effective way to build a big, profitable portfolio, if you are willing to put energy toward devel- oping a strategy and understanding your competition. In my March 2018 article in Think Realty Magazine , I wrote about the types of buyers in the tax lien invest- ing space and how to identify them. Here, let’s look at the pros and cons in different states, why bidders flock to specific sales, how the sales are conducted differently, and how to conduct yourself at a sale. Sales are conducted differently depending on state due to legislation surrounding sales. Also, certain sales prove to better benefit private inves- tors verses institutional investors, while some are better for redemption verses property acquisition.
TAX SALE: BID INCREMENT:
First Tuesday of every month Bid up on advertised tax amount, up to full price of property (or over) Set penalty rate of 20% 1 year
MAXIMUM BID: REDEMPTION PERIOD:
Georgia is a great state for the property investor. With a high set pen- alty rate of 20%, and a very short redemption period, odds of taking possession of the property are strong. Most institutional investors also tend to steer clear of states like Georgia, because they are leveraging their investments with banks that limit the amount of REO an institu- tional investor can acquire. Georgia can also be a good fit for the redemption investor willing to put in a little more work. With a penalty rate of 20%, if you bid a $5,000 tax bill up to $100,000, that means the owner, or their lender owes you $20,000 in penalties. It could be paid off the next day, or in the twelfth month, but they still owe the full penalty. As a result, if a redemption investor’s strategy were to focus on only those liens sold that have a mortgage, odds of redemption are going to be much higher.
76 | think realty magazine :: may / june 2019
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