I went to 2 tax sales this morning and got no liens. At the first sale I went to I only opened my mouth to bid once. Everything except for one small $72.00 lien got bid down to 0% and premium was paid even for small sewer liens. This was at the same sale that I had gotten a couple of liens the year before, so what happened?
It just so happens that you really can’t tell how a tax sale is going to be from how it was last year. One year a tax sale will be good for investors and there will be a lot of good liens available and few investors at the sale. And then the next year at that very same tax sale, there will less available and more buyers, thus more competition. Tax sales where there are large liens really bring out the big players and the big investment companies that didn’t get the big lien will bid on everything else. It makes it difficult for the individual investor to get tax lien certificates at decent rates.
So what is an investor to do? A couple of weeks ago I went to another tax sale where I was able to pick up three small sewer liens, 2 at 18%, and one at 17%. This sale was in a very little municipality, kind of off the beaten track and a little rural. The 2 sales that I went to today were in the same county as that sale, but they were bigger townships and each of them had one fairly large lien which attracted 4 of the big companies. Two of these companies bid on the small sewer liens as well as the larger liens. At the second sale that I went to one large lien with a certificate amount of $65,000+ went at 0% with a premium of $100,000!
The secret is that if you go to enough tax sales, eventually you will be able to get a decent lien at a good interest rate. I would rather wait until I can a tax lien for 10% or more (I prefer to get 18% on my liens) than bid something down, or bid premium just to get a lien. Do not fall into the trap of bidding something down (or up as in the case of premium) just to get a lien – it’s not profitable! Instead, go to a few sales in various places to find one that for one reason or another is poorly attended and has just enough available that you can get some liens.
If you have an experience going to tax sales – good or bad, or if you have questions about what went on at a tax sale that you attended, post your questions or comments here, and I’ll answer them to the best of my ability.
Happy and Prosperous Investing,
Joanne
By Carl D January 29, 2011 - 4:21 pm
I have been looking for a list of states that allow excess proceeds from tax sale overages to be claimed by previous owner, can you help??? Frank
By Joanne January 30, 2011 - 10:30 am
Hi Frank,
I am not an expert on excess proceeds, although I do have one course on the subject where I interviewed someone who is an expert at only one method of collecting the excess proceeds on tax sale properties. You can find information about that course at http://www.TaxForeclosureFortunes.com. There is no definitive list with this course of states that allow excess proceeds from the tax sale overages to be claimed by the previous owner as you suggest. Such a list would have to be constantly updated to reflect changing laws, not only that but some states frown very much on investors that buy properties prior to the tax sale in order to collect the excess proceeds, so you would also have to know which states those are.
The person that I consider to be the expert in all areas of excess proceeds is Rick Dawson and you can listen to a webinar that I did with him this past summer at http://taxlienladyrecommends.com/online/?p=302, and find out more information about his program. I believe that he includes such a list in his comprehensive program that includes deed grabbing and getting finders fees from excess proceeds.
Hope this helps,
Joanne
By Gina December 26, 2010 - 12:01 am
For sewer liens, if the owner redeems before they are $1500 delinquent, do you not get any interest earned on your investment? Are homeowner typical owners of sewer liens? If not, then are they a worthless investment? i never knew about sewer liens, interesting.
By Joanne December 28, 2010 - 12:34 pm
Hi Gina,
I’m going to try to answer your question in a separate blog post, but I’m not sure that understand it thoroughly, so if I don’t answer your question completely see if you can clarify it for me. For the answer see the blog post titled “Are Sewer Liens Worth Buying?”
By Joanne December 8, 2010 - 9:29 pm
Hi V,
As the lien holder you have the ability to pay the subsequent taxes if the owner doesn’t pay them. Taxes in NJ are due quarterly on the 1st of the month in February, May, August, and November. Taxes are considered late if not paid by the 10 of the month and the lien holder is then allowed to pay them. You get 18% on all of your sub taxes after the owner is $1500 delinquent (including your lien and any prior liens).
By V December 8, 2010 - 8:10 pm
Do you have first rights (18% in NJ) to property lien if you own lien certificate on sewer and water from previos auction?
Thanks,
V
By Michael November 3, 2010 - 3:05 pm
If you bid on a sewer lien but real estate taxes are current, are you precluded from paying subsequent real estate taxes should they become past due? Can you foreclose after redemption period for past due sewer liens if real estate taxes are current?
Thanks,
Mike
By jmusa November 3, 2010 - 3:33 pm
Hi Mike,
A sewer lien is treated just like a tax lien, so if the owner doesn’t pay the taxes and you have sewer lien on the property, you can pay the subsequent taxes. This is how I’ve been able to very well on some of my liens, by buying the sewer lien and then later getting to pay the taxes. And yes you can foreclose on sewer liens even if the taxes are current.
By jmusa December 15, 2009 - 11:12 pm
Hi Laura, If you read the previous comment I think you’ll find the answer to your question
By Laura December 15, 2009 - 9:42 pm
Joanne,
I appreciate your blogs. They are informative and I like your down to earth approach without hype. Can you explain what a small sewer lien is?
By jmusa November 19, 2009 - 9:46 am
Hi Greg,
Utilities such as water, sewer and in some municipalities even electric bills can be sold in the tax sale. You are issued a tax lien certificate and have the same priority as a tax lien, and in states that allow you to pay subsequent taxes, you can pay the taxes if the owner does not pay them and add them to your lien.
By kiwikauri November 19, 2009 - 4:09 am
Hi Joanne
What are sewer and water liens please?
Thanks
Greg
By jmusa November 18, 2009 - 1:46 pm
Hi Donna,
Right now most of time spent investing in with tax liens, I would like to change that and spend more time using Jack’s method. I pland to start implementing his Land Profit Generator right away. I started to do it last year, but then got side tracked with my lien investing and my web sites. This time I plan to stick with it. Get info about the webinar that he’s doing tonight at http://www.Jack-Bosch-Land-Profit.com
By donna howard November 18, 2009 - 1:10 pm
What is the proportion of time you spend between tax liens purchased at auction, buying delinquent properties before the sale (excess proceeds)and buying land (Jack’s method) or any other delinquent property method? I am trying to streamline my tax lien sale process but feel I’m spending too much time. I want the time to integrate these other methods you’ve taught and achieve a better balance and spend more time in the area that is most profitable.
By jmusa November 18, 2009 - 1:00 pm
Hi Jim,
I happen to like land, but a lot of investors do not, especially if it doesn’t have a loan on it. They want to know that they’ll get paid, they’re not in it to own the property. They don’t know how to sell land and they don’t know how to create cash flow from it. You also have to be more rigorous in your due diligence on land, residential properties with houses on them are a safer investment.
To understand why companies pay big premiums on properties in NJ I would suggest that you read the chapter on premium in my Tax Lien Investing Secrets e-book available at http://www.taxlienconsulting.com.
By Jim Stiner November 18, 2009 - 12:46 pm
Our company is atttempting to purchase NJ tax liens. We have attended several tax lien sales and have noticed that the “large investment companies” pass over the empty land and other property owned by development companies and other corporate entities.
(1) Why is that? What is wrong with good land as security for the tax lien, vs. a residential property? Is there a higher risk with a development corp. or other corp as the owner?
(2) This morning we saw one NJ residential property (appraised value, $1.6 mil) tax lien sell for a $30,000 premium? Seems crazy. How do the large investment companies make money on these?
Thanks for any thoughts.
Jim
By jmusa November 18, 2009 - 9:26 am
Hi Kim,
When there are not enough big liens for the large investment companies they will go after smaller ones. Also I think that what is happening to some of these companies is that they have less cash available, so they are purposefully going after the smaller stuff and the problem with that for us individual investors, is that you have to get a lot of the small liens to make it worth while, since half of them redeem right away. So now some of these companies are not bidding on the real big liens, instead they will go after medium size liens ($1500 – $5000) and try to get as many small sewer liens in the ($200 – $1500) range as they can. This is what I see in my neck of the woods anyway.
By Kim November 18, 2009 - 8:56 am
I find the same thing happening at the sales I attend. It used to be the big companies ignored sewer & water liens, leaving those to the individual investors. Do you know why they are now bidding on the little stuff as well?