LAND vs HOMES

Should I Buy Raw Land or Homes?

Many people starting out in tax sale investing wonder if they should focus their efforts on land or homes. Both have advantages and disadvantages so it is important to consider these up front and decide which will be best for you or if you want to do both.

With homes, there is a greater margin of error because usually there will be more equity in terms of raw dollars. For example, if you buy a piece of land for $500 and the market value is $1,000, there is only $500 for profits and margin of error (in case your research isn’t completely accurate, which can happen, or if things don’t go exactly as you plan). On the other hand, if you get a home for $50,000 that is worth $100,000, there is $50,000 of equity, and thus, a much greater room for that margin of error factor. If you need to, you can sell the home at a significant discount and still make a good profit.
Usually, homes can make you more money per transaction. While this isn’t always the case, it is nice to be able to make a lot of money on each transaction. With land, you may need to do more transactions to make the same amount of money.

Land is more readily available. As you get your property lists, you will likely find that there are more parcels of raw land on the list than there are homes. If you own a home, you probably realize that most people who own a home have a mortgage. Mortgage companies usually require the property taxes to be paid through an escrow account and that portion of the payment is made along with the regular monthly payment. Mortgage companies are careful about making those property tax payments each year so that they can secure their interest in the property.
People are less likely to redeem land than homes. Many properties that end up on a tax sale list do so because the property owners are having financial difficulties. In such circumstances, they may have to prioritize which bills they pay. They are more likely to pay the taxes on their primary residence than on any raw land they own. They are also likely to pay other important bills first and let the land go.
Land is easier to research, especially from a distance. Sometimes it is very difficult to research homes you can’t see for yourself. There is an inherent level of risk in purchasing properties that you cannot inspect first-hand. That same risk is much less with land since there is less that could go wrong.
There is less competition. Some people decide they only want to purchase homes at tax sales. When I started out, that was my feeling. But with so many people competing for home and with less homes available than land (generally), it becomes very competitive sometimes. That competition may also drive up the winning bid on homes.
Starting bids (and usually winning bids) are usually lower on land. This only makes sense. Since counties are trying to collect property taxes and taxes are based on property values, it usually follows that the amount of taxes due (and usually the starting bids) will be lower on land. This makes land a more affordable option for those who don’t have a lot of money to start investing.
Getting land can still be very profitable. You can usually sell land faster. Online auctions allow you to sell your properties in a week or so. This can create faster turnaround on your money.
Land generally has fewer liens and other encumbrances that can cut into profits. Having fewer liens also increases the chances that you can sell the property quickly.
Personally, I focus on land and take the homes when they are in my area and good deals come along. I am willing to buy land anywhere in the country as long as my research indicates that there is a good profit to be made and that the property itself is a desirable property. I stick to homes that I can inspect personally, at the very least from the outside.

OTHER USEFUL SITES

Other Useful sites:

www.netronline.com

www.naco.org

www.zabasearch.com

www.zillow.com

www.geocommunicator.gov

www.whitepages.com

ONLINE SITES TO FIND PROPERTIES

Here are some online auction sites to get you started. There are many other sites out there waiting to be found. I came across these by researching counties and making phone calls; that is how you learn about them! Please make sure that you read all of the documentation on these sites before bidding! I will post more in the future on using these sites and maximizing our opportunities online.

1.http://www.nysauctions.com - New York
2.http://www.tax-sale.info - Michigan
3.http://www.grantstreet.com/
4.http://www.iltaxsale.com/
http://www.cooktaxsale.com
5.http://www.cosl.org/ - Arkansas
6.http://www.publicans.com/
7.http://www.pbfcm.com/
8.http://www.mvbalaw.com/tax_sales/index.html
9.http://www.rwblaw.net/
10.http://www.revenue.alabama.gov/advalorem/transcript/transcript.htm
11.http://lands.sos.state.ms.us/tfl/index.asp - Mississippi
12.http://www.shelbycountytn.gov/FirstPortal/dotShowDoc//dotContent/Government/CountyServices/PublicWorks/realestateindex.htm
13.http://www.douglascountywi.org/countyland/countyland.htm
14.http://www.bid4assets.com/help/index.cfm?fuseAction=TaxSale
15.http://www.ebayliveauctions.com/
16.http://www.wslca.org/

FOUNDATION – Tax Delinquency

FOUNDATION – Tax Delinquency:

Tax Delinquency – Why we have an opportunity

Counties need taxes to provide public services (roads, law enforcement, fire and emergency services, etc.). Counties collect these funds through real property taxes. County budgets are based on how much they expect to collect in property taxes.

When people can’t or don’t pay their property taxes, the county’s budget is affected since they aren’t receiving the amount they expected to receive. So they allow other people to pay those taxes for the delinquent property owner and may receive compensation for doing so. Each county sets the type of compensation. In general, there are four ways this happens as determined by each state or county.

Don’t Get Confused

Be careful not to confuse tax sales with “mortgage foreclosures”. They are two different things. If you use the wrong terminology when talking to the county, they will not give you the information you are looking for.

Two Types of Tax Sales

1) Tax Lien Certificates (Commonly referred to as “Liens”) - When you pay the taxes due, you receive a tax lien certificate. The owner will then have a period of time in which to pay you back with interest. The interest rate is specified by the state. If after that redemption period, they have not paid you back, you will be able to begin the foreclosure process and get the deed to the property. Ex. – Iowa (24% annual interest with a 2 year redemption period).

2) Tax Deeds (Commonly referred to as “Deeds”) - When you pay the taxes due, you get either the full deed to the property or a partial deed to the property which immediately conveys ownership to you. If you get the full deed, you can then sell the property immediately, hopefully for a good profit. If you get a partial deed, you may have to go through some additional procedures or wait until the property sells.

Four Types of States

1) Tax Lien States – In these states, only tax lien certificate sales occur.
2) Tax Deed States – In these states, only tax deed sales occur
3) Hybrid States – These states do both tax lien certificate sales and tax deed sales depending on the county. Ex. – Florida (the first two years the county conducts a tax lien certificate auction and if, in the third year, taxes are still not paid, they conduct a deed auction to foreclose on the certificate(s) previously issued).
4) Redeemable Deed States – A few states do a tax deed sale with a redemption period. You receive a deed to the property but it can be redeemed within a period of time and given back to the property owner. Ex. – Texas (winner gets deed with a redemption period of 2 years for homestead or agricultural land or 6 months for all other land – 25% penalty attached – not an interest rate).

What to Expect

WHAT TO EXPECT:

Congratulations on making the decision to change your life through real estate. I am delighted to be your mentor for this exciting program. I will do everything in my power to help you make money as soon as possible, but remember that this business and success depends on your determination. I am excited to be able to work with you.

As your coach I am committed to providing you with the very best information available. I will help you to apply what you learn in the most efficient way. We are creatures of habit so please get in the habit of using all of our resources to help you reach your goals. My mission is to help you to be successful.

Our meetings are set up once per week. They are generally 25 to 30 minutes in length. I always strive to be on time, but if I am running a bit late please be patient. I pride myself on consistency, but at times things may come up. If I cannot make it to our meeting I will see to it you are notified. I will do so on the phone if possible, but have also been known to do so via email if it's an emergency.

One of the most important aspects in this coaching program is consistency. I want to make sure we are holding our meetings every week if possible. I cannot reschedule if you're not progressing as fast as you would like. That is all the more reason to meet, and I will help you. It is anticipated that we will be meeting at the same time each week unless otherwise arranged. Please be sure to give me at least 24 hours of notice if you will be unable to make our meeting.

I have developed this Blog (website) to help you throughout our meetings. I am always adding to it and anticipate it will be better in the future than it is now. It is not perfect, but I would like it to be. If you find any mistakes, or have suggestions please let me know.