When it comes to investing in real estate there are many avenues to explore when identifying a property, financing structure or hold and exit strategies. One option for many investors who have limited cash reserves or who desire a limited risk strategy could be county tax sales.
County tax sales provide an opportunity for investors to purchase liens resulting from delinquent property taxes.
An investment in a property tax lien should be viewed as a potentially long-term investment with a predetermined return on investment (ROI) not as a pure real estate investment. Keep in mind that you are not purchasing an ownership interest in the property; you are purchasing a lien interest in the property that may convert to vesting in the title in rare cases.
Here are some facts to help you understand what a tax lien sale investment is, and perhaps more importantly what it is not:
- When you purchase a tax lien sale certificate on property, you become a lien holder on the property. In essence, you loan funds to the owner to pay taxes.
- You purchase the tax lien, not a deeded interest in the property. In the majority of cases the property owner redeems the lien by satisfying the delinquency and the deed does not transfer. For example in Douglas County, eventual transfer of deed has occurred in less than 2 percent of all purchases.
- Investing in tax liens through a purchase at from a county tax lien sale should be viewed as a secured investment with a pre-established interest rate. The annual interest rate is set at nine points above the federal discount rate. The time-line for payout may be long-term; redemption of the certificate can occur immediately upon the Treasurer's Deed being issued or up to 15 years from the date of sale, whichever comes first.
- The State Banking Commission determines the rate of return. The annual interest rate is set at nine points above the federal discount rate as a certain date. The County Treasurer's Office operates the sale on a "all sales final, buyers beware" policy. The county will make every effort to remove a property with bankruptcies, FDIC or RTC connections, although they will not guarantee a property to be build-able or desirable. The bottom line is that you must know what you are buying.
2007 - COLORADO COUNTY PROPERTY TAX LIEN SALES
ADAMS COUNTY - November (TBD), 2007 Poss:INTERNET BASED SALE
http://www.co.adams.co.us/index.cfm?d=standard&b=1&c=14&s=107&p=257
ARAPAHOE COUNTY - November 14-18, 2007 INTERNET BASED SALE
http://www.co.arapahoe.co.us/Departments/TR/TaxLien/TaxLienInfo.asp
BOULDER COUNTY - November 30, 2007 http://www.co.boulder.co.us/treas/tax_sale/tax_lien_sale.htm
BROOMFIELD COUNTY - November 9, 2007 http://www.broomfield.org/centralrecords/TaxSale.shtml
CLEAR CREEK COUNTY - November 2, 2007 http://www.co.clear-creek.co.us/Depts/Treasur/tax_info.htm
DENVER COUNTY - (November (TBD), 2007 INTERNET BASED SALE
http://www.denvergov.org/PropertyTaxInformation/TaxLienSaleInformation/tabid/425589/Default.aspx
DOUGLAS COUNTY - November 15, 2007 http://www.douglas.co.us/treasurer/Tax_Lien_Sale_Information.html
EAGLE COUNTY - November (TBD), 2007 http://www.eaglecounty.us/treasurer/taxSale.cfm#4
ELBERT COUNTY - November (TBD), 2007 http://www.elbertcounty-co.gov/dept_treasurer.asp
EL PASO COUNTY - October 30-31, 2007
http://trs.elpasoco.com/NR/exeres/EBE390F2-ED28-4177-AAED-E239D648CDB9,frameless.htm
GILPIN COUNTY - November 14, 2007
http://www.co.gilpin.co.us/Treasurer/2006%20Tax%20Lien%20Sale/TaxLienSale.htm
JEFFERSON COUNTY - October 25-29, 2007 INTERNET BASED SALE
http://jeffco.us/treasurer/treasurer_T68_R9.htm
LARIMER COUNTY - November 14, 2007
http://www.co.larimer.co.us/treasurer/taxsale.htm
PARK COUNTY - October (TBD), 2007
http://www.parkco.us/treasurer.htm
PITKIN COUNTY - November 1, 2007
http://www.aspenpitkin.com/depts/30/taxes.cfm
PUEBLO COUNTY - November (TBD), 2007
http://www.co.pueblo.co.us/treasurer/taxlien_info.php#P2_379
SUMMIT COUNTY - October 17, 2007
http://www.co.summit.co.us/Treasurer/tax_lien_info.htm
TELLER COUNTY - NOVEMBER 2, 2007
http://www.co.teller.co.us/Treasurer/treasure.htm and
http://www.co.teller.co.us/Treasurer/TAXSALEINFO.pdf
WELD COUNTY - November (TBD), 2007 INTERNET BASED SALE
http://www.co.weld.co.us/departments/treasurer/treasurer_taxsale.html
To learn more about real estate investment strategies contact James A. Holmes, CMPS, CML. Cherry Creek Mortgage Company - Private Mortgage Banking. Visit www.PrivateMortgageBnaking.net
Comments(1)