Building a Bigger Portfolio | Think Realty | A Real Estate of Mind
Investing Strategies

Building a Bigger Portfolio

TaxLiens

Despite serious competition for the good deals, the tax lien real estate sector definitely rewards effort. Investing in tax liens and acquiring properties through tax sales is a highly effective way to build a big, profitable portfolio, if you are willing to put energy toward developing a strategy and understanding your competition.

In my March 2018 article in Think Realty Magazine, I wrote about the types of buyers in the tax lien investing space and how to identify them. Here, let’s look at the pros and cons in different states, why bidders flock to specific sales, how the sales are conducted differently, and how to conduct yourself at a sale.

Sales are conducted differently depending on state due to legislation surrounding sales. Also, certain sales prove to better benefit private investors verses institutional investors, while some are better for redemption verses property acquisition.

Georgia

Illinois

Florida

Around the two-year mark, a tax lien buyer files a Tax Deed Application (TDA) on any unredeemed tax liens within their portfolio. Included in the TDA can be title search costs, subsequent taxes, etc. After proper servicing, notice, and publication has been provided by the county, the tax collector then holds a second tax deed auction, selling the property to the highest bidder. As a result, a tax deed auction is a great way for a property investor to acquire properties for their portfolio.

Earlier I mentioned the importance of your conduct at a tax sale, or for that matter, at any public auction. In the 20+ years I have attended live auctions, I have seen everything from fist fights, to elected county officials being indicted for and sentenced to jail for bid rigging. By innocently saying to a competing buyer at an auction, “Hey buddy, you take that one at 18% and I will get the next one at 18%,” you have violated antitrust laws, punishable by up to 10 years in prison. I have seen more than 20 tax buyers and elected officials go to jail for 18 months or longer for this punishable infraction.

When you attend an auction, leave your emotions in the car. Experienced buyers are tasked with the job of making you second guess your bid or prevent you from bidding at all. Professional, yet catty remarks are the norm at an auction. Bidders who fall prey to this game tend to get wrapped up in the moment, overspend, and never come back. Ignore the comments, be certain of yourself, and don’t exceed your set budget, no matter how much you may want to prove a point to the bidder pushing your nerves.