It seems that when any county goes from having live tax sales to online tax sales there is a lot more bidding competition, sometimes making it not worth it to bid in those counties.
What happened recently in the Douglas County Nebraska tax sale is an example….
Nebraska has an interest rate of 14% and the interest is not bid down at the tax sale. What is bid down is the percent interest in the property. The lien is awarded to the investor willing to accept the lowest percent interest in the property should the lien not redeem and the investor foreclose on the property. Because this leads to sticky situations where the investor only owns a piece of the pie so to speak, and there is no real incentive for the owner of the property to redeem the lien, many NE counties use a random selection process instead of the bid down ownership method.
In the past tax sales for Douglas County all liens were awarded at 100% ownership, by random selection. When all the bidders bid 100% ownership, the bid is awarded randomly. But this year, the first time that Douglas county went online, some bids were awarded for as low as 1% ownership. And the bidders who won these liens were institutional buyers, not new investors that didn?t know any better. They bid 1% even in spite of a warning on the Douglas County tax sale web site not to bid under 100%. Here is the warning that was posted on their site:
“First Time Nebraska Tax Certificate Bidders – Mandatory Reading….”
“In all previous Douglas County tax certificate auctions, liens have been sold at one hundred percent ownership. Ownership of less than one hundred percent raises questions concerning title insurance and foreclosure rights. Be sure you know your rights before placing bids at less than one hundred percent ownership.”
The bottom line is that if you want double digit returns in Nebraska, or in the states that bid down the interest rate like Arizona and Florida, stay out of the online tax sales that make it too easy for all bidders to bid. If that leaves you out of tax lien investing because you don’t live in a tax lien investing state and you don’t want to spend the money to travel to lien state, then you do have a couple of alternatives. You can invest with a tax lien agent or a tax lien investing fund. You can even do it through your self directed IRA. These tax lien agents and fund managers are experienced investors that get great rates for their clients, better than you can get on your own. You may want to read the previous post Done For You Tax Lien Investing to find out more.
By Robert April 4, 2011 - 2:03 pm
Are there similar issues that are “premium” states like in Colorado where there are more people bidding up the premiums online so that it is a loss to purchase the lien?
By Joanne April 6, 2011 - 4:34 pm
Hi Robert,
When I reviewed the results of one of the Colorado tax sales (I forget which county it was), I thought that it would have been a good tax sale to bid at because the premiums that were paid were not that high. I’m sure that there is competition, but if you live in Colorado I would definitely look into bidding at the tax sales next year.
By deborah March 24, 2011 - 3:11 pm
Hi Joanne,
Only had one chance to listen to you and that was the PIP webinar. Do not have the $20k for their required investment, but would love to hear a replay of the Comian webinar if possible. Or, at least get their contact information. Thanks, Deborah
By Joanne March 24, 2011 - 8:34 pm
Hi Deborah,
You can get the replay of the Comian webinar along with a list of questions that were answered on the webinar at http://www.taxlienlady.com/Comian/Comian_Webinar.pdf
By Randy March 15, 2011 - 1:32 pm
Thanks. I just listened to the PIP-West webinar. Very interesting. Has anyone opened an account? Have the results been as advertised? Are they easy to work with?
By Joanne March 18, 2011 - 7:52 am
Hi Randy,
I’m not personally invested in PIP West, only because I don’t have $20,000 in my IRA. I just stared my SEP IRA a couple of years ago, so it doesn’t have that much money in it yet. I was able to invest in Comian though, this is the last time that they will have a $10,000 minimum. You don’t need to invest with your IRA, you can invest in either Comian or with PIP West with after tax money, but I like to use my after tax money to pay the subsequent taxes tax liens that I’ve purchased myself, or to buy new ones myself.
Some of my members have invested in PIP West, but I don’t know if they’re on this blog and have seen your comment. You can also try posting in the forum at http://www.TaxLienLady-database.com.
By Joanne March 14, 2011 - 8:34 pm
Hi Randy,
I will put up another blog post tomorrow with some info on Comian and a link to a registration form to get more info directly from them. Because this is a private fund, they are regulated by the FTC and have to follow strict regulations. They cannot give out information without first getting a registration form. It does not mean that you are going to invest in their fund. There is no obligation. They just have to have the form signed before they release any information about the fund.
By Randy March 14, 2011 - 9:51 am
What is the contact information for Comian? Thanks, Randy
By Jim March 12, 2011 - 10:33 am
Randy,
Joanne Musa, “The Tax Lien Lady” is a great resource for those that want to get started.
I think you have found the right place here to get started.
She is very knowledgeable and “tells it like it is,” unlike a lot of folks out there making claims that you can pick up properties very easily for “pennies on the dollar.”
I suggest signing up for some of her courses.
–Jim
By Joanne March 14, 2011 - 7:27 am
Randy and Jim,
Thanks for the vote of confidence Jim! Randy, where you should start depends on what your goals are, how much money you have to invest and where you live. If you haven’t taken advantage of it already, you can sign up for my free video e-course at http://www.taxlienlady.com/freevideos.
By Randy March 11, 2011 - 2:08 pm
I’ve read a lot of material regarding tax lien/deed investing and have a good understanding of the basic concepts. Does anyone have any recommendations for taking action and actual getting started with my first purchase?
By Anna Lark March 11, 2011 - 12:53 pm
Like Greg, we too got double digit returns in Arizona’s online auctions — in several cases we bid single digits and proxied up to double digits. While a great home in a great area was bid down to 6% or so in most counties — both online and offline — there were a lot of good properties that went for higher rates. In Pima County, we saw a number of property’s go for 0%, which likely would not have happened in an online auction. Next year, we may skip the in-person auctions that we attended this year, as they were just as competitive as the online auctions, we had to spend time and money to travel there, and we were not able to put enough money to work at high enough rates to justify the trip. From our experience attending Arizona’s in person auctions, there is no way that an agent would get rates enough above the online auction rates to justify paying a fee.
By Joanne March 14, 2011 - 7:24 am
Anna and Greg,
That’s great that you were able to do well at the AZ online tax sales this year. I just find that I can get maximum returns by investing with Comian and letting them do all the work. Yes I have to pay 3.5% per year from my profit to have them do everything for me, but it’s well worth it.
Anna, I didn’t realize that the live sales are morcompetitive than the online tax sales, I thought that they would be less competitive. Looks like that’s not the case. Now I know why PIP West no longer invests in Arizona. This game of investing is constantly changing all around the country. I notice at the tax sales in New Jersey for instance that I can go to particular tax sale one year and get a few liens and then the next year that sale can be so competitive that I don’t get anything, or the reverse could happen, you just never know! So you just have to show up and be prepared.
By Greg March 11, 2011 - 11:57 am
Some great discussion on the Douglas, Nebraska sale on the comments to your previous post:
https://taxlieninvestingtips.com/blog/2011/03/02/your-questions-answered-subsequent-taxes-and-left-over-liens/
By Greg March 11, 2011 - 11:56 am
>The bottom line is that if you want double digit returns in
>Nebraska, or in the states that bid down the interest rate
>like Arizona and Florida, stay out of the online tax sales
>that make it too easy for all bidders to bid.
It’s certainly something to watch out for. But I was able to get
double digit rates on decent improved properties in the Maricopa AZ
sale this year so that there is more competition does not
necessarily mean that there are no good deals at all.
But you certainly can have a dud sale like the Nebraska sale more
easily with an online sale then with a physical sale.