Other forms of investing (unconventional)

vpr

I was just looking at tax lien certificates. 30% interest and if the property owner doesn't pay, you get the property. Looks like a great deal. I'm thinking of putting a few thousand in this year. Problem is that the auction is next month. Anything any of my fellow members here know about this? Any pitfalls I need to be aware of? I'm in Cook County, IL.

Also, feel free to share any such unconventional investments that can benefit the community! Always interested in good investments outside of the traditional ones.

Julio

When it comes to investing I tend to make conservatives appear liberal. Can't help you but sounds interesting. Take care. jws

streeter

VPR,

I was a commercial/industrial broker for 20+ years and think I have a pretty decent understanding of RE in California.

You should have a THOROUGH understanding of local laws, real estate customs and values. These tax lien certs are not free money. Best to have a mentor teach you where the trap doors are located.

BTW, there can be senior municipal unrecorded liens that can suprise the heck out of an investor.

To put it bluntly, you are dealing with unpaid taxes on overleveraged or problem ownership in sketchy areas 75%+ of the time. The better liens are sought after and yields get bid down.

I hope you know what you are doing before you start throwing money at these puppies.

Best of luck

vpr

Thanks for the advice. I see a few meetup groups for real estate investing. I might attend a meeting or two and find out more.

mrpaseo

A buddy of mine was looking into this, I have a web link somewhere. As I understand it, the list of homes comes out a few months before the auction which gives you enough time to go check them out and make some decisions as to if you want to own them or not. I can not remember the particulars but he seemed pretty excited about it.

He was working with a real estate agent to learn the procedures. I put $2,000 cash in his hand to match his and he was outbid on every home that he wanted. I wish I could remember more, he seemed pretty excited and there didn't seem to be many issues, just the waiting to see if they pay their taxes.

As I understand it, if they do not pay their taxes, you get the house. If they do pay their taxes, you get your money back with a pretty good interest rate (I think it was 12%).

Just do your homework and fully understand before you jump in.

best.

derryb

<< <i>A buddy of mine was looking into this, I have a web link somewhere. As I understand it, the list of homes comes out a few months before the auction which gives you enough time to go check them out and make some decisions as to if you want to own them or not. I can not remember the particulars but he seemed pretty excited about it.

He was working with a real estate agent to learn the procedures. I put $2,000 cash in his hand to match his and he was outbid on every home that he wanted. I wish I could remember more, he seemed pretty excited and there didn't seem to be many issues, just the waiting to see if they pay their taxes.

As I understand it, if they do not pay their taxes, you get the house. If they do pay their taxes, you get your money back with a pretty good interest rate (I think it was 12%).

Just do your homework and fully understand before you jump in.

best. >>


You best watch "Flip or Flop" on HGTV network first.
Also, it is my understanding that in many cases back taxes can be paid up to a year after a house has been seized and auctioned. Why not let the new owner fix her up and then pay the taxes.

Amigo

I've been a Real Estate Broker / Investor for 30 yrs now. I began buying RE Tax Liens 10 yrs ago. Started buying typically 100 a year.

Long Story Short ......... as a newbie, for various reasons, you will get your lunch eaten.

vpr

Looks like I'm a little late to the party.

AUandAG

When I was in RE in Colorado back in the very early 80's I had an associate pay the taxes (no bidding, just overdue)
on 640 acres of land up by Terryall Reservoir. She paid the requisite 3 years to get a tax deed. Then spent several
thousands in a lawsuit (she won) brought by the ex-owners kids. Seems they did not know that Mom and Dad had
bought the property or didn't care.
By the time she could dispose of the land she had more invested than it was worth. Today, 30 years later, she has
parceled the ground into 20 to 40 acre homesites, built roads, installed electricity and phone and seems to be very
pleased with her deal. Only took 30 years and several hundred thousand dollars to make it work!

bob

Edited to add. The kids got the tax bill for those three years and chose to ignore it. Assessor knew where to send
the bill.