2013 Tax Lien Sales

Last year, I wrote about one of my non traditional investment opportunities: Tax Lien Sales. I was able to attend two tax lien sales last year, and unfortunately I my number didnt get drawn at either one of them. I didnt get discouraged though, and decided to try again this year with a different strategy.  You can find my post about the sales here, and my report after the first one I went to here.

Last year, I went to my counties sale, as well as the county 1 to the north of me. Each of them followed the following procedure:

  • Register for the sale and get a number
  • Each available lien was matched with a number.
  • The holder of that number could take the property or pass (I dont remember exactly, but I do not think I heard anyone pass on anything they were drawn for)
  • This was continued until all the properties were drawn and matched

I had thought these worked slightly differently. I thought that each person’s number would get called, and then they were able to select a property. This was not the case, as neither of the times I went my number got drawn, but some peoples numbers got drawn 3 times! I was naturally annoyed by this because I was missing out on my chance for 18% ROI in year 1 but I just let it go.

This year though, I’ve been looking at some different counties. The state statues only say they have to be auctioned off, but not in what manner. Some counties (including the one to the west of where I live) do it the way that I thought they all would be done – a person’s number is randomly drawn, then they choose from the liens available and pick which one they want. Obviously, you’re at an advantage if your number gets called first, but even if it’s not, you still get a chance to purchase a lien, unlike the other ones.

I’ve scanned the map for this year, and my goals (like last time) are two fold. The first thing that I like about this is the return on investment. The state mandates that the property owner pay 15% interest per year, plus a 3% late fee. That’s pretty good money if you ask me. Now you ask, what if the reason that they didnt pay their property taxes in 2012 is because they are going broke and can no longer afford it? Well, that’s where the really attractive part comes in. If you purchase their tax lien from the county, you will get notified the next year to pay the lien again. After year 4, if you have paid every year and still hold the lien, you can move to take control of the property. In Wyoming where I live, you have to go through a process that involves a few legal steps and a notice in the “paper of record” (typically a local newspaper) and after you do all of that, the property title will be yours.

This year for the county to the west of H and I, I’ve located a few nice properties on a lake that I think would be great to put a small summer cabin on (they are about 30 ac). I’ve looked for prime properties that wont be worried by future development, so I’ve found stuff that’s backed by national forest or BLM lands. If the property defaulted to H and I, it would be about a 2.5 hour drive from our city to this little cabin, so it could be something fun to do for long (or short weekends). Of course, if I dont end up taking over the property, I’ll have to console myself with the 15% interest!

The sale is in september, so I’ll let  you know how I do!

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