Tax Foreclosure Season Is Upon Us!

I am in a tax deed state, Washington state, and I am hoping to pick up a few of properties at these sales. Here are my questions/concerns.

1. What pitfalls should I be aware of? (Seems to good to be true, if you know what I mean.)

2. I have read that getting financing after you purchase a tax deed is very hard. What is the reality of getting a mortgage (70%-80% of FMV) so I can keep as a rental and pull cash out as opposed to flipping the property?

3. How many properties is a realistic estimate that I can expect to get at these sales? (I have approx. $200K to invest)

Let me know anything else that you feel is important to my success at these sales.

Thanks in advance,

SlushMan.

Hello,
Good luck in your venture. I live in Louisiana, a tax lien state. We have a long redemption period (essentially five years).
My wife and I have bought tax liens since 2000 and buy maybe 20-30 each year.
So far there are only two properties that we have acquired. The competition over the past two or three years has been brutal. Louisiana is a "bid down the interest" state and you hardly ever get 100 per cent of a tax lien. This isn't a good situation to find yourself.
We buy the liens strictly for the interest and if we happen to actually get a property, we consider it lagnappe.
The properties that you actually DO get in most cases are properties that most people don't want.
I've heard about people getting excellent properties for "pennies on the dollar"...but it's like UFO's and smart blondes...I've heard about them but have never seen one myself....
Good luck!
Mike in North Louisiana

What pitfalls should I be aware of?

hazmat site (there were former oil field sites on the list)
unbuildable / useable due to zoning / land use issues
Is the building still there?
Sr. liens

I am wondering what these homes sell for at these sales. On average do they sell below 50% of FMV or do they go for around what I buy them for at the foreclosue auction at around 70% of FMV.

Any insight on this would be great. I know that it varies from state to state and from sale to sale but if someone regularly attends these sales can shine some light on this it would be great.

Thanks in advance.

Slushman,

Shame on you. You haven't been watching the late night John Beck infomercials. Typically a $40,000 home will go for around $317. All you have to do is show up at the auction and hold up your hand.

But if for some strange reason you don't get a property, you will get opportunity for receiving telephone mentoring for only $12k to as low as $4k, depending on how many times you say no to your prospective mentor, who is a college kid paying his way through school.

You should stay up late nites and get in on this deal. Just pick up 50 or so of these homes and you'll be set for life!

Tbird
I must be doing this all wrong. Where is this John Beck guy when I need him. Silly me, I thought you just went to the sale, held up your hand, and when the sale was over take your hand down. Kind of what I been doing past couple of years. Purchase about 24-26 properties each year. In last two years I have aquired about 12 properties, rest were redeemed. I guess with Becks help i could be doing much more gooder

Haven't got the John Beck course yet. Thought about looking at it for a couple weeks then sending it back.

Anyways, I have invested in bank foreclosures the last couple of years but I want to buy more rentals and thought this would be a great way.

I need to hear from someone from a tax deed state. So anyone that buys tax deeds, preferably from Washington state, please respond or write me a private message.

I know some people are afraid to give advice because they are scared to give up "their secrets" but I just have a couple general questions.

1. How hard is it to get quiet title that a title company will insure?

2. What is the time frame on getting a loan on one of these properties to leverage them?

Anything else that you can think of and want to offer would be great.

Thanks in advance,

Slushman

SlushMan,

You mentioned that you are looking for properties with cash flow. I think you should be aware of the current tenant issues that could possibly come up. The existing dwellers would most likely needed to be evicted, as you probably don't want the same people living there. These are the same people that probably had some kind of an interest in the property, but failed to pay their property taxes. It would be hard to imagine them sending you the rent, now that you are the new property owner.

So there are costs to the eviction process, and who knows what will happen along the way.

I don't know about your state, but in CA, most title insurance companies won't insure tax deeded properties for at least a year as there is a one year statutory challenge period for tax assessed owner of record to challenge the validity of the auction. Some will insure after the one year, some will not.

To obtain marketable title, you will need to consult with an attorney for a quiet title action, in which you bring suit against all owners with any interests in your property, get a judgment, then take it to your title company and you will have marketable title. Quiet title action can take anywhere from 6-12 months. With marketable title in hand, the only thing to consider is which lender to finance with.

I'm not an attorney and this is not legal advice, but only my personal opinion.
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