Here are some tax lien investing questions that I’ve gotten this week:
“I’m interested in tax sale overages, specifically in finding overages that are owed to others and getting a finder’s fee. What is the most comprehensive course that will teach me to do this?”
“What happens at an auction in New Jersey if someone already has a prior on a property? What are the benefits/disadvantages to owning a prior lien?”
“I have looked at some tax lienss that an investor has put up for auction on bid4assets.com, the liens are already 2 years old. My question is should I bid on these, since the face values of the liens are way below what investors are currently bidding?”
And here are the answers:
The best course for getting finder’s fees for tax sale overages is Hooked on Overages. The digital course is not longer available on it’s own, but you can get the physical course, which also comes with the digital version at www.TaxLienLady.com/taxsaleoverages. The course is not cheap but It is the best course out there on how to collect finder’s fees for tax sale overages.
In NJ there is a clear priority of liens. If you purchase a lien and there is a prior lien holder, they can redeem your lien, but you may not redeem the prior lien. You can (after the redemption period is over) foreclose on the property and in doing so you will foreclose the prior lien holder out if they do not redeem your lien. So if there is a prior lien, you are more likely to get paid, unless you just didn’t do your homework and it’s not a good property and the prior lien holder doesn’t want it either.
The prior lien holder will have the ability to foreclose before you will, but they would have to bring the taxes current and redeem you. However if for some reason (perhaps they have already started foreclosure when you purchase the tax lien) they foreclose without redeeming you. You still have a lien on the property and you will be able to foreclose when the redemption period is up. They cannot foreclose you out of your investment as you can do to them if they do not redeem the lien.
The downfall to purchasing a tax lien on a property that has a prior tax lien on it is that the prior lien holder can redeem your lien right after the tax sale. It doesn’t make sence to bid agenst the prior lien holder. I do not bid on properties that have prior tax liens on them if the prior lien holder is at the tax sale.
People get carried away when bidding on secondary tax liens in these online auctions because they think they are bidding on the property, or they think that they will be able to foreclose on the property. Remember, you will only get the interest on the face amount of the lien if it redeems – which it probably will. You didn’t say which state these liens are in but I would not bid on them since the amount that you would have to bid is much more than the interest you would make if they redeem. You’re only chance of coming out ahead is if you do get to foreclose on the property.
If the liens are in Florida, you don’t even get to foreclose but the lien has to go to a deed sale. As long as it’s a decent property it will be sold in the deed sale and you will only receive the face amount of the lien and the interest on the face amount, plus any other taxes that you will have to pay before you can apply for the lien to go to the deed sale, and interest on that. So you may or may not make your money back, depending on how much you bid and how much outstanding taxes there are.
If you are interested in purchasing secondary tax liens that are ready to redeem keep an eye on this blog, as I will be offering them to my subscribers! You will also want to tune in to next week’s webinar with tax lien agent Platinum Investement Properties – West to find out not only how you can purchase secondary liens from their clients, but how you can someone to handle the foreclosure process for you. You can register for the webinar at www.TaxLienLady.com/WebinarTraining.
By Toxanne Richards May 18, 2013 - 4:01 am
I’m interested in the tax deed sale regarding overages where I would be the last owner on record. Basically I would purchase the deed from a owner; but, I did not pay the property taxes. I allowed the lien to go to auction. The back taxes for example, were $3500. The property sold at auction for $15,000 causing an overage of $11,500. I would be the last owner of record. What course do you offer that would teach how to collect the $15,000 overage from the auction as the last owner of record. Or, is something like this still allowed?
By Joanne May 21, 2013 - 3:21 pm
Hi Roxanne,
The Tax Foreclosure Fortunes Program teaches about how to purchase tax sale properties from the owner ahead of tax sale, then let the property go to sale and collect the overbid. This does not work in all states however. In Florida for example you must be the owner of record at the time the property is assessed in order to collect the overbid. For more information on Tax Foreclosure Fortunes and to get a short mini-lesson go to http://www.TaxForeclosureFortunes.com.