Hi Friends!
Does anyone know about state tax sales? I’ve heard them mentioned several times in the past. Supposedly, you can buy them for the back taxes owed & costs of sales. Anyone know more about that?
Thanks!
Shelly
Every state is different and in Indiana every county can be different.
In our most populated county, Marion. Indianapolis covers all of Marion. Here is how it works. Say Frank has a house that comps at $100,000. His back goes out and he does not pay his property taxes. He owes $2000. You see that Franks place is going to be in the tax auction. You think WOW I am going to go down and get that $100,000 place for $2000. You start bidding and all of a sudden you need to drop out of the bidding because a few of the bidders, bid it up to about $80,000. What happened ? Well Mr. Deep Pockets is there and he is only looking to find a place to invest his money. { the odds are it is a big corporations money } Mr. Deep Pockets does NOT want the house. He wants the interest. I will explain.
Mr. Deep Pockets puts up $80,000 to the Marion county Treasure. The Treasure takes $2000 and pays Franks past due property taxes. The other $78,000 he holds on to. That $78,000 is called the overbid. Frank still owns the house. He has a one year redemption period.
On the $2000, Frank will need to pay back the taxes plus 15% or $2300. No matter when during the year it is $2300.
On the $78,000 , it is building interest like putting money in the bank. During the first 6 months it is 10% and during the second 6 months it is 15%. Frank could be out a nice chunk of change. So when Frank pays his back taxes, he will need to pay. $2300 + the interest on the $78,000. Now after one year if Frank did not pay up. Then the Treasure gives Mr. Deep Pockets a Deed to Franks place. Now Mr. Deep Pockets will need to foreclose on Frank if he is still in the house.
Mr. Deep Pockets has people that work around the country doing the research to see what are the “nice” properties that would most likely have someone step up to the plate and pay the back taxes. He does not want Franks Property. He just wants the interest… So Mr. Deep Pockets will not bid on junkers. If you are into major rehabs. this could be right up your alley. My county even has property that did sell last year that you can get with a three month redemption period. Look on the net or call your county treasure and find out what the rules and laws are in your county. If you find a few property’s you wish to bid on. Due your Due Diligence. Go to the county court house and look then up. Do a drive buy.
Do not buy a Pig in a Poke!!
I hope this helps
Bruce
I sometimes buy in arizona and florida. there is a three year redemption period that he homeownver goes thru. I.e. if you are into vacant land and find that taxes havent been paid the past 6 years. You can go back 3 years and pay that. Apply for the deed and bring up all the taxes to paid status. You send notice to the homeowner that you are going to take the property. If they dont reply, then after you apply for the deed and then do whatever you want with the properyt(This is a very simplified version)
In florida, you can do the same thing. Howver, there is one more step after you apply for th deed. The law requires that the home got to auction. So you gotta be thre and make sure someone doesnt get the house you paid back taxes on. Good news if someone does, they need to pay you back all your money plus the 18% interest lol.
Hope this helps
steve