While doing some research with a tax lien/deed course, i found some “fully improved lots”. As I searched through 1,000s of listings in counties all across the U.S i came across a subdivision. i knew because all the addreses were similar. (1323 lakehill dr, 1327 lakehill dr, ect). There were between 30, 50 lots that have water, sewer, electric, streets, everything except houses themselves. The theory is a company started builing homes, then the economy in that area or nationwide went down. Now the cost for a buyer to purchase a lot and build a home there is greater then what the homes will be valued at in that area. OR other factors in that area like job market, maybe the company had a lawsuit elsewhere and stopped buliding, things like that. So they stopped building & selling houses, hence no cashflow. All of the property taxes become delinguent. 50 properties times say $800 apiece. I go in and buy them all at $40,000 at auction if Ive got no competition. Each properties assessed value is approx $22,000. That’s pay 40,000 and get $1,100,000 assessed real-estate. I can sell them anywhere between 800 $ 22,000, huge margin. When u buy leins they obviously have a period to pay u back with interest. its the law. But if they have a cashflow problem, not selling any houses or property in the down economy; do they have $40,000 plus interest to repay me? probably not.
My question is: 1) ive found an entire, brand new, liened subdivision, does this sound attainable or ridiculous? 2) if its ok then how do I find an investor to help me purchase, no assignment, 70/30? 3) if im wrong, then which part?
Hi,
You have a bunch of issue's to look at!
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First does the original development approval require the homes to be built from a set of approved plans with an approved look? Were models (Floor Templates) approved to be specific?
If so it means these lots can only have an approved floor plan and unit mix built on site! (Each Lot) -
Just because the property is lost as a tax lien does not necessarily remove contractor lien’s?
You need to check the actual title for every lot for senior and jr. lien’s! -
You will need to talk to building department and all city / county agencies as to any unfinished improvements that were to be done to the property for compliance to the original approval’s?
I looked at a property that was unfinished and about 30 lots, side walks were supposed to be installed but were not, and the perimeter was to be fenced (Wrought Iron) approved design and was not even started, because of these requirements the lot’s had no value because the cost to comply was more than the 30 lots were currently worth! These type’s of issues could be re-submitted to the city / county for modifications however you end up sitting on the property for a year or two without knowing whether they will ever allow you to say “Use wood instead of wrought iron”! -
Has the county been completely paid for entitlements, special assesments, fee’s, etc? These item’s don’t go away just because you buy it for taxes!
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Unless you have development / construction experience and intend to be part of management your better off selling the property outright? If you proposed to me 70/30 and you did not have experience or cash I would not be interested as there are a lot of properties like you describe sitting all across the country.
GR
Be 100% certain you can re-sell the lots. Nobody around here is buying bare land (except for me, and I don’t buy in subdivisions).
Why would you buy bare land when you can buy a house for less than the cost of the materials to build that house?