H and I are off enjoying our honeymoon. I wont be responding to comments, but I will be posting new article and I’ll read all my comments when I get back. Thanks for reading!
As I mentioned a few weeks ago, I went to a tax lien sale. I was looking to get a bit better return on my money, and at 18% in year 1, this looked like a good opportunity. I didnt want to sink all of my money into lending club, I went to the bank the day before and got some cash to set up a budget for myself, and then headed off to the courthouse a bit early. There were a lot of cars parked outside, so me and my (now) father in law figured it would be pretty full, and it was crazy how full it was! We were there prob 20-30 mins early, and I got number 60! I took a picture of the room they had it in, which was standing room only, and then there was a whole hoard of people hanging out in the hall waiting! All told, there were 85 or so people, and 103 properties available (3 were paid that morning) – so I figured I’d be sure to get at least 1 parcel, possibly 2.
I think the smallest lien you could purchase was for about 60 bucks, which would net you about 10 bucks per year – not bad. The largest lien was well north of 8 grand (!!!), which would net you a cool $1,500 per year in interest. Talk about an awesome deal. Naturally, if they did it first come first serve, the good stuff would be all gone and no one would want the crappy stuff. So, they have to make it fair, and I read the rules differently before I left, and then when I got there I looked over them again and realized this wasnt going to be as easy as I thought.
Before I left, I had assumed that everyone who got a number would get randomly assigned a parcel, then could say “yea” and pay the taxes, or “nay” and toss the parcel back into the pool. Unfortunately, it was the parcels that were doled out in order, and the people who were chosen at random. I realized it before and asked the guy standing next to me if it was possible for some people to get none and others to get 5, he said yup, that’s the way it works. I was pretty dissapointed by this, honestly – even though it’s a fair enough way to distribute it, I wish they would have introduced the randomness into the other side, by guessing which parcel you got, instead of guessing whether or not you got one at all. So, promptly at 9am, the auction started, and each property came up and the computer assigned a buyer.
Unfortunately, Me or my future father in law were not assigned any properties, so we were both pretty disappointed. Numbers before our group and after our group were both drawn, but we didnt get any. The people around us were pulled, and they were each assigned about 3 parcels, worth a total of ~850 or so. Once they looked them over, they had the option to take the parcel or toss it back into the pool, and there was about 7 properties that got tossed back, but they were the crappy ones.
The ones tossed back were all Irrigation taxes or street assesments – which, unlike the others (real property) you cant really take over much if they dont pay for 4 years – with real property, you can take the property. Once everyone had made the decision, the same random process was done for the 7 properties left over. Everyone who got one of those on the first call took it (even the 8,000+ one!) and it was over. We both left empty handed after about 30 mins, feeling slightly shafted throughout the entire process.
Quick Note: I think that most of the people who come to these are there for the interest money – which isnt the only reason I go. I’d love the option to get some raw land for the price of taxes, and the interest is really nice to have (because it’s so high) but isnt the sole reason for me being there. I see this as a cheap way to fulfill my dream of becoming a landowner, for the time being at least. One thing that I suspect is that people may move away from this type of thing when the savings account rates go up a bit. I heard stories from people who said these things used to be completely empty (like, less than 10 people), but has increased since the downturn started.
It would have been nice to get one or two, but I dont really feel too bad about the whole process. I learned something about it, and I’d be happy to go next time. The odd thing about this is that there are 23 counties in the state, and each county does it differently. I didnt care for this process (most likely because I got offered nothing) and will go to one in my own county when H and I get back from the honeymoon and see how that one works out.
Readers: Have you ever given this a shot? Do you think it’s worth your time? How do you feel about the way the drawing works? Are you interested in trying this next year (or this year)?