Earn 20% aand More on Georgia Tax Deeds - Special Report
A few months after I began investing in Georgia Tax Deeds, my mail carrier appeared at my door with a certified letter from an attorney. Now, getting an unexpected letter from a lawyer can be downright traumatic. It is always bad news, right? Well, not this time. The attorney represented a woman who had fallen behind on payment of her property tax. When she applied for a loan, the bank informed her that someone else had the deed to her property. Her property had been sold earlier that month – to me! In order to regain full control of her land, and get her loan, she had to pay a redemption fee. A week later, I went to the attorney’s office, signed a few papers, and walked out with a fat check. Exactly one month from the date of the tax sale, I had received my full investment back PLUS 20%. That’s a 240% annualized return!
Was it luck? No, not really. I had done my homework. From the moment I purchased the Tax Deed in front of the County Courthouse, I had already locked in a minimum gain of 20%. The only luck was in the fact that the previous owner redeemed so quickly.
Perhaps you have already heard that Georgia is a great place to invest in Tax Deeds. You should be ready to go out there and buy everything you can get your hands on. There is just one problem: you do not know where to begin. The purpose of this SPECIAL REPORT is to provide you with enough information to get started in the exciting business of Tax Deed investment. You will have the confidence to research – and buy – these outstanding sources of income.
Getting Started
Georgia has more than 150 counties. It is the largest state east of the Mississippi River. Every county has property owners who fail to pay their taxes. This means that there are incredible opportunities awaiting the informed investor. Unless you understand how Tax Deeds are advertised and sold, you will waste time and money while getting nowhere.
Three County Officials Are Important to the Investor
Visiting an unfamiliar county courthouse can be a daunting task. In Georgia, three county officials are important to the investor. They are the Tax Assessor, Tax Commissioner, and the Clerk of the Superior Court. Briefly, here are the duties of each official. Specific information about these officials will be covererd later in this special report…
Tax Assessor
The assessor’s job is to determine the value of all property in the county, so that it can be taxed. The taxation records are freely available to the public, and are valuable sources of information for the investor.
Tax Commissioner
The Tax Commissioner handles the actual collection of taxes, including property taxes and motor vehicle taxes. When a real estate owner defaults on payment of property tax, the Tax Commissioner initiates a series of legal steps leading to the sale of the property at the courthouse steps. Each Tax Commissioner conducts tax sales as he or she sees fit. Some are reluctant to auction off their neighbor’s land, and hold tax sales as a last resort. Others conduct sales at regular intervals. The investor’s challenge is to locate the counties where sales will be held. All counties must have their sales on the first Tuesday of the month (Wednesday, if Tuesday is a holiday.) You must choose the county with the best possible opportunity.
Clerk of the Superior Court
The office stores all land transaction records. The clerk maintains two very important sets of books: deed books and plat books. The deed books contain the written records of real estate activities in the county, including property sales and mortgages. Plat books hold the survey records. Not every piece of land has been surveyed, but for most properties, a map is available showing the lengths and compass bearings of boundary lines, along with total acres.
Georgia County Courthouses
The typical county courthouse in Georgia is a picturesque old building set in the middle of a large square. Over time, with increasing population and records keeping, these have become too crowded for all the county functions. Some offices have been relocated to a nearby building that is often referred to as the courthouse annex. If you have difficulty finding an office, ask someone in the main courthouse.
Where are the Sales?
The Tax Commissioner publishes announcements of tax sales in the local legal newspaper. Often this is a small-circulation weekly with an unusual name like The Sparta Ishmaelite or The Jackson Progress-Argus. State law requires ads to run once a week for the four weeks prior to the sale. If you travel a lot, simply buy the newspapers as you pass through the various counties. They are usually sold in convenience stores, or outside in vending machines. Look in the legal ad section, and search for ads headlined “Notice of Tax Sale” (or similar wording.) Clip out all of the ads, and save them in a book or file folder for future use.
If you are willing to spend about $3,000 annually, and sort through thousands of papers, you could subscribe to every county newspaper in Georgia. You can also call Tax Commissioners in each county to find out when the next sale is planned. Networking with other investors is also a good way to learn about tax sales. I used a combination of methods. I kept looking until I found a county with a tax sale. It is a good idea to have 2 or 3 counties lined up, in case all the properties in your favorite county get redeemed and the sale is cancelled.
Researching the Properties
Okay, you have found a county with a tax sale. You are all set to join the other investors outside the courthouse and get your share. Not so fast – there is work to be done first! Set aside some time during courthouse business hours for research. Ideally, it should be within a week of the sale date. Otherwise, you might spend time researching properties that will be redeemed just before the sale. If the county has the public records accessible via the internet, then you can do the research from home using your computer.
The First Order of Business is to Call or Visit the Tax Commissioner
Have a list of properties handy. Ask which properties are still available, and cross off the ones that have been redeemed. Some Tax Commissioners have folders on each tract, with vital information such as title search, maps, photos, and assessed values. It does not hurt to ask what they have. In most cases though, you will need to do your own research.
Next, Go to the Clerk of the Superior Court
The legal ads from the local newspaper should list the book and page numbers where information on the property has been recorded. In that case, just ask to see the deed books or plat books, and find the pages referenced by the legal ad. For a small fee, you can purchase copies of these pages.
If you do not have specific book and page information, the clerk should have indexes by Grantor and Grantee. Large counties have this information on computers. Ask for help if you need assistance, the county officials are there to help you.
Look For Any Restrictive Covenants That Might Apply to the Property
As you study the Records in the Clerk’s Office, look for any Restrictive Covenants that might apply to the property. It is a good idea to know all the rights and limitations, in case you end up actually owning the property. You should also look for information about Homeowners Associations or Property Owners Associations (sometimes called POA.) Any yearly or monthly POA fees must be factored into your profit calculations.
Occasionally your research might show that the current owner acquired the property at a tax sale. That is a huge red flag, which you should ignore at your own risk! If the owner is an investor who got the property at a big discount, and is not paying the taxes, then it is likely that the property is a “Do Not Want”. Chances are, you do not want it either! However, go ahead and check it out. There is always the chance that the owner keeps poor records, and has simply failed to follow up on his tax obligations.
Other Important Information Can Be Gathered At the Clerk’s Office
- How long has the current owner held the property?
- Did they buy it, inherit it, or receive it as a gift?
- How much did they pay?
- Often the deed will say something like “Ten dollars and other good and valuable considerations” instead of the true sales price.
- You can get clues about the actual price by seeing how much transfer tax was paid. Let us say the transfer tax is one dollar per thousand dollars of value. If a recorded deed shows a fifty-dollar transfer tax, then the property must have sold for $50,000.
Three Important Tasks
After getting information from the Clerk’s office, go to the Tax Assessor’s office. Three important tasks should now be done…
- Check Property Listings
The Assessor has listings of all properties in the county. Usually there are two books. One has an alphabetical listing by owner name; the other is a numerical listing by map number (both the owner name and map number are usually included in the legal ad from the county newspaper.) Find the listing for the properties you want. There will be two listings of assessed value. One is full market value, the other is 40% of that total, and is the amount on which taxes are actually assessed. Values of land and improvements are listed separately, giving you the opportunity to research the estimated values of each. The codes used for these listings indicate zoning and other valuable information. Be sure to find out what these codes mean, this way you will understand the existing land use.
- Compare Recent Sales
Look for a separate listing of the most recent real estate transactions. Compare the price paid with current assessed values to get a better feel for actual values. If the Tax Assessor has not re-assessed properties for several years, there could be a large gap between assessed values and actual retail prices.
- Consult the Maps
Armed with the map number, you can find any property by using the map book. This book divides the county into logical blocks. For each block, there is an aerial photograph showing roads, buildings, lakes, fields, and forests. Property lines and road names are over-laid onto the photo image. This gives you visual information about the property, and will help you answer questions such as…
- Is the property urban, suburban, or rural?
- Does it have road access?
- Is the property large enough to be useful? A small sliver of land may be nearly worthless.
- Is the area developed in an orderly manner, or haphazardly?
- Are there any trees, buildings, fields, creeks or lakes on the land?
- Are industrial sites, landfills, sewage treatment plants, or busy highways nearby?
Purchase a County Road Map and Copies of the Photo Maps
Before leaving, purchase a county road map and copies of the photomaps that apply to your search. These will cost $3 - $5 each, but will help immensely in locating the property on the ground. If your target property is developed land with a street address, a good road map will do.
An Investor with a Tax Sale List and an Internet Connection Can Handle Much of the Necessary Research at Home
Many Tax assessors allow visitors to access property information on a computer system. Often, the database will contain excellent information such as the street address of the property, a diagram of structures showing age and square footage, and sometimes even a photograph of the improvements (if this information is not on computers, it will often be on “property cards” stashed away in filing cabinets.) More and more counties have their data online. An investor with a tax sale list and an internet connection can handle much of the necessary research at home.
Mapping Information is also Computerized in Many Counties
It might be in the Tax Assessor’s office, or in a separate Mapping Department, or in the Planning and Zoning Department. Here is an example of how useful this information can be: I was interested in some rural land, but suspected that it was prone to flooding. An employee in the Assessor’s office pulled up the tract on her computer, and added an overlay of the 100-year flood zone. Sure enough, the entire tract fell within the flood area.
The Field Trip
Take a few minutes to plan your trip through the county. If there are several properties to visit, good planning will save many miles of driving. When you locate the property, make a drive-by, or walk-by inspection. Remember that you do not own it yet, and trespassing can be hazardous to your health. Many people who live in Georgia like to own shotguns.
- Look for any features that would make the property a good investment or a poor one.
- If there is any evidence of past or present industrial use, cross it off your list unless you are experienced with such properties.
- Look for other problems such as abandoned structures, open wells, or trash dumps.
- Use the aerial photos to help you interpret what cannot be seen from the road.
- Check the neighborhood in all directions before leaving.
- Look for evidence of adverse possession by a neighbor (Adverse possession is the hostile taking of land by someone who does not own it. After a number of years – depending on state law and court rulings – that person can legally become the owner of the land if the original owner does not try to stop him.)
- Take notes for later reference.
Ask the Following Questions
On the Friday or Monday before the sale date, contact the Tax Commissioner one last time. Ask the following questions…
- Which properties are left? Do not despair if everything has been redeemed. There will be more sales!
- What time do you plan to hold the sale? The legal hours of sale are between 10am and 4pm. Most Tax Commissioners start the sale promptly at 10am.
- At which courthouse entrance will the sale be held? I met one investor who admitted to waiting at the wrong entrance. It was peaceful there, because all the action was at another door.
- What form of payment do you require, and how soon do you require it?
- What is the opening bid on each parcel? The opening bid is the amount of back taxes, plus interest, penalties, legal fees and advertising fees.
Before the Sale Begins
Before the sale begins, decide what you are willing to pay for each of the Tax Deeds that you are interested in. De disciplined, and do not exceed the maximum price you have set. If you end up owning the property later on, you want to be able to brag about how cheaply you acquired it. Do not put yourself in the position of having to explain how you were caught up in the bidding, and paid retail price at a distress sale.
The Tax Sale – The Big Day Has Arrived
It is the first Tuesday of the month. You wander up to the courthouse about 9:45 and a few other investors are there. Go ahead and talk to them – you might learn something. Some people might be there to bid on one property, or merely to watch the action. Occasionally you will learn that a competing bidder lives next to one of the properties. That is a bad sign, because an adjoining owner is often willing to pay a premium to control the property. Consider concentrating on other parcels if this happens. Learn what you can before the sale begins. It will help you decide where to focus your bidding.
Finally, the Tax Commissioner appears, makes an introductory statement, and then begins reading the legally required description of one of the properties. Then, the Commissioner announces the minimum bid and asks for offers. Now the excitement begins! With adrenaline flowing, the interested bidders raise the price until only one is left. Going once, twice, SOLD! One property after another hits the auction block, until all the deeds have been sold. Sometimes you leave with a tax deed, or two, or three, other times you may be shut out. Whatever the outcome, it will soon be time to plan for next month’s sale. If you prefer to avoid the hassle of foreclosing, simply wait 4 years. The former owner forfeits all redemption rights after 4 years have passed. For full details on legal requirements, consult an attorney.
I have a Deed! Now, what is Next?
The Tax Commissioner will record the deed and mail it to you after the sale. Put it in a safe place, and let the time pass.
- You already have an instant 20% return on your investment, even if the previous owner redeems after a day!
- After one year and one day, it is 30%.
- After 2 years and a day, it is 40%.
- After 3 years and a day, the former owner must pay a 50% premium to redeem.
Any time after 1 year, you have the option to “foreclose on the right of redemption”. Upon completion of the process (which takes a minimum of 45 days), the property is yours, no matter how much or how little you paid for the Tax Deed. Now you own the property free and clear of any mortgage liens.
There are 2 Basic Strategies to Follow after Acquiring a Tax Deed
If you believe that the former owner is highly likely to redeem (for instance, there is a nice house on the property), consider sending a letter right after the sale, showing how much you paid and how much they must pay to redeem. This can shorten the time until redemption, and give you a quick 20% return. If there is a lien on the property, the mortgage holders are often willing to redeem in order to protect their investment. They will pass the cost to the property owner, or foreclose on the owner. Find out the names and addresses of everyone with a legal interest in the property, and send letters to them. Sometimes the Tax Commissioner will let you look at their files to see the title search information (after all, you are now paying the taxes.) If not, go to the Clerk of the Superior Court, and search the Grantor and Grantee index files for the debt documents that have been filed on the property.
30% Return
If the property has an absentee owner, especially if it is rural acreage, just keep quiet for a year. At that point, decide whether to foreclose or to continue waiting. You have already locked in a 30% return, so any option you choose is likely to be profitable.
Be Sure you Pay the Current Year’s Taxes as They Come Due
In any event, be sure you pay the current year’s taxes as they come due. The Tax Commissioner usually sends the bill to the former owner, not to you. Find out when the taxes are due in that county. Call the Tax Commissioner and get the amount of tax due. Consider the money you spend to be part of your overall investment. If the former owner redeems, you collect all of your tax payments plus 20%.
You are Ready to Begin Investing in Georgia Tax Deeds
That is it. You are ready to begin investing in Georgia Tax Deeds. The rest is up to you. May you have the best of success, as long as you are not bidding against me!