I was a real estate investor before I became a Realtor, and one of the areas that I studied was tax liens. I was a member of AZREIA, read lots, and took one of those multi-day classes from a seasoned investor and CPA. As part of the class, we attended the Maricopa County Tax Lien sale, which at the time was a three day event.
From the class, I learned that research was critical to make a savvy tax lien purchase. And, when we walked into the standing-room only auction hall, I could see that there were a whole lot of people in the room who’d been coming for years, plus many newcomers like me. The pros, which I’ve been told were primarily commercial institutions, had huge notebooks of computer printouts and were very methodical in their bidding. It was very fast moving, and more than a bit daunting.
In Arizona, an investor, who purchases a tax lien, is bidding on the interest rate, and the bidding goes down. The winner pays the tax bill, and then receives interest on that investment, if and when the property owner pays their back taxes. Rates started at 16%, and in that particular sale, bidders were quickly bidding down, often to as low at 6%. The winning bidders then were required to pay the entire tax bill, interest, and fees by the end of the next business day.
Some bidders were bidding on tax liens, because of the guaranteed interest rate, and others were hoping to gain ownership of property, which a investor can acquire through the foreclosure process, after purchasing the tax liens on a given property for three consecutive years.
The reason for this post is that when I was visiting and confirming the county sites for my post on home ID theft, I stumbled across a new feature of the Maricopa County Tax Assessor’s office. The GIS map has been a very useful tool for me as a Realtor, but it was news to me that there’s now the ability to map out delinquent and unsold tax liens.
For investors, this find at the Maricopa County Tax Assessor’s GIS Map is a great time saver. Using the check boxes on the left you have a choice of mapping out unpaid property taxes and also unsold tax liens.
If you not an investor, but are interested in learning more about Maricopa County Tax Liens the Tax Lien Tutorial and Tax Liens – Frequently Asked Questions are great places to start.
The Maricopa tax lien sale is usually held in early February. I’ll post the date when it is available. In the mean time, you have a new tool to start your research now.
{ 17 comments… read them below or add one }
You may think that the Arizona Tax Lien method is a good and profitable business opportunity but I abhore people like you that itch and scratch at every opportunity to get your filthy mittens on properties, homes, and land because of the misfortune of others. What you call good business with tax liens I call shameful, void of integrity, and deplorable. Life isn’t all about finding the easiest way to get rich and make a buck. The real estate business seems to always attract the most dishonestly, least integral, and money-hungry people that I know. It also requires the least skill of any profession that I know…..all so they can make a cut of the closing sales or stealing ownership right out of someones feet all for pennies on the dollar. Make a difference in life and help someone out for once.
Most investors who purchase tax liens are looking for a good rate of return on a short term investment. My understanding is that it’s rare for a property to be foreclosed on because of lack of tax payment.
The reason this whole blog post came into being was because I discovered someone living in my area who had two years of tax liens purchased on his property. It appeared that he had not paid his taxes since purchasing the property. Many homeowners in this area own their homes outright and live somewhere else the majority of the time. In this case, I was concerned that his tax bill had not ever been delivered to him. I called him and shared what I’d discovered. He was shocked and made arrangements to get the situation corrected ASAP.
Your harshness is unwarranted, without all the facts.
The other thing to bear in mind is that Maricopa County has a budget based on tax revenues. If a homeowner does not pay their taxes, it has an impact. An investor who pays that person’s tax bill is providing the county with cash flow to continue operations that impact us all.
Your blog mentioned nothing of researching into the Maricopa County Assessor’s site to help your neighbors identify tax liens. I did however notice though that you directed investors to the Maricopa GIS website that highlights late tax properties, mentioned being an investor in the past, and attended seminars about tax liens. The reality of tax liens is as you mentioned; that the majority of people that have liens on their homes don’t even know it and I’m not sure an investor is going let the owner know that they have bought their late tax payments with a hefty interest percentage price (generally the 16% or slightly less) to pay it back.
As for the Maricopa County budget issue: Whatever sooths your conscience and makes you feel better about draining hard-earned cash from homeowners on high interest rates to pay back the tax lien. I still believe this system to be shameful and greedy. I’m not sure investors have intentions of being saints to people they don’t know and don’t care about to save them from delinquent home taxes. An investor’s relationship to the homeowner is strictly money……hoping that they don’t pay it back any time soon.
Val…….Read your thoughts………..Its a free country and making a good investment may allow some to pay thier tax responsibility.
Like I said….whatever makes you feel better about your actions….the underlying motive is always money behind you people. I find it very unethical and lack of integrity for someone to step forward and say, “I’ll pay your debts for you…..with a hefty attached interest rate.” Sure it’s not against the law but, it’s an awful way to make a living.
Val216 seems to have a chip on his/her shoulder. I see it the way you do Dru. Although this is new to me, I do see it as an oportunity to help others. Even with home owners, as much as you think they are on the up and up, they also try to get away with not handling their responsibilities.
Char-D, The other thing for us all to bear in mind is that the state governments created the tax lien system to help keep their budgets funded. The state also sets the 16% starting point that investors bid down. Last year’s average interest rate was 7-8%.
What dose it mean when on Tresures page it reads “Redeemed Tax Lien”
Erna,
It means the property owner has paid off the tax lien. Then investor is then mailed a check from the tax assessor’s office.
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Let’s say you make it to three years. You have to then go to court. What if the home has a mortgage on it? Do you have to assume the mortgage?
Bill, That’s a great question.
I did a little research on it, but really didn’t find a clear cut answer. From my past training, I believe that the foreclosure process would force payment on all debt. What I do not know, and would suggest you speak with a good real estate attorney, is the order the other debts are paid off.
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Ms. Bloomfield, i attended a conference in which the speaker said that if i waited till after the property isnt bought at auction then i could just get the full percentage of the penalty as well as the money i invested (what he said was that the penalty for maricopa county was 20% of what the person owed in taxes) also that if neither the bank or the property owner paid then you use the escape clause to get your investment as well as the percentage from the county.
is this true
Hello, I am a tax lien holder and the parcel I have are expired. I was wondering how I can go about getting the “Act of Foreclose” which they recommended on the Maricopa website? Do I hire a real estate attorney? Do I need some type of document to go forward with this? I called the county and beening tranfer all over. PLEASE advice,
Greatly Appreciated,
Janie Cao
Why WOULDNT you buy a specific tax lien?
Why not buy ANY tax lien?
Upon winning, if the lien /cash flows you are awarded are hypothetically generously overcollateralized by the real estate asset, why should i be concerned about the location? Im bidding on an interest rate for my cash that will eventually be satisfied by the landowner, or thru an overcollateralized judicial FC process, where I’m in first position (with potentially 3 other lien holders).
Why wouldnt anyone put a “proxy bid” in across all for sale liens?
It’s been a while since I’ve been to a tax sale in Arizona. Your description of your first attendance brought back a flood of memories when I attended my first in your fair state. One of my favorable states used to be Michigan but since they have become a deed state i guess i really need to fill those voids.
Peace
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OMG – so far behind on comments. Sorry for the massive delay.
Red Phoenix – Not sure on this one.
Janie Cao – Yes, I would suggest legal counsel and would suggest that you contact an attorney that specializes in tax liens.
Jaym – It does seem like there are some situations that one might want to avoid, such as an environmentally contaminated piece of land where remediation would be required to resell and claim your profit. There are probably other situations, but this is the one that immediately comes to mind.
tax lien investing – It appears that the tax lien sale has moved on-line exclusively, but I can’t tell for sure. Seems this method would allow for more research to occur during the bidding process. I need to check this out in more detail at the beginning of next year.
.-= Dru Bloomfield´s last blog ..Green Home Features added to Phoenix MLS =-.
Janie, In going back through my emails, I found this response from William Bennett:
“If expired means your have purchased liens each year for 3 years on the property, you have to get a tax lien atty. You have to go to court. The atty will have to officially notify the property owners of this. The judge may or may not allow them to pay the 3 years to take it back. Also, if the property is under mortgage, the mortgage holder may still have a chance to pay you back + interest.”