What online tax lien sales are coming up this spring?
And which of these sales are worth bidding on?
Thanks to the pandemic in 2020, more tax lien sales have gone online in the last couple of years. Some counties have gone back to having live tax sales, but many are still conducting their tax sales online. And states that only had a couple of counties with online tax sales before 2020, now have more counties with tax sale auctions online…
Here’s the scoop on tax lien sales that are happening online in the next couple of months…
The state that is probably best known for it’s online tax lien auctions, and one of the first states to have their tax lien auctions online is Florida. Florida online tax lien sales happen in May of each year. There are 67 counties in Florida. All but one of these counties now have their tax lien auctions online. Competition in this state is very competitive and good liens typically get bid down to 0.25% interest. The redemption period is 2 years.
Two other states on the eastern seaboard also have tax sales this time of year, and have increased the number of these tax sales that are online. Those states are Maryland and New Jersey.
New Jersey is the state that I started investing in. And while I do like that state for investing, it is one of the more complicated states for bidding, and also very competitive. In New Jersey the interest rate is frequently bid down to 0% and premium is bid. You don’t get any interest on the premium bid or the face amount of the tax lien when you bid premium. But you do get the statutory rate on any subsequent taxes that you pay and you get paid the penalty amount (2, 4 or 6%, depending on the amount of the lien) on the face amount of the lien.
Maryland is also a complicated state to bid in. But what I like about Maryland is that the interest rate is not bid down. Instead premium is bid – which means the price of the lien is bid up. The other things that I like about Maryland are the short redemption period – only 6 months. Each county in MD has different rules and different interest rates, so you must pay attention to the rules of the sale for each county! Because Maryland tax sales are somewhat complicated, but I also think it’s one of the better states to invest in, as long as you stay out of Baltimore City. I did a Done With You training for the Maryland tax sales last year and it will be updated with the dates for this year’s tax sales when the information becomes available.
Other states with online tax sales coming up this season are Louisiana and Alabama. I am not a fan of the tax lien auctions in either of these states for different reasons.
In Louisiana the percent ownership of the property should the lien not redeem and the tax lien investor foreclose on the property is bid down. I do not believe that owning anything less than 100% is enough leverage to get paid on your lien.
What I don’t like about the Alabama tax sales is how long it takes for properties to get into the tax sale and the long (3 year) redemption period. I prefer to invest in states with shorter redemption periods – the shorter the better!
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