Baltimore Real Estate Investing Blog

86 responses so far ↓

• 1 Jake // May 10, 2009 at 2:53 am

  Awesome. Thanks a lot. That makes sense. But yeah just in case, I will make a call. Bah! Why can’t loop holes be easy….

• 2 Emily // May 11, 2009 at 8:50 am

  What if the lien amount due is for an environmental clean-up of a property. Will a tax lien certificate still be sold? Does the owner have to pay the full lien amount to retain the house?

• 3 Ned // May 11, 2009 at 11:59 am

  Emily,
  Thank you for coming to my blog. Yes ANY municipal bill can put a property into tax sale. Yes you must pay the full amount to redeem the property. Environmental clean up has a serious sound to it. Perhaps this is a unique situation and can be negotiated with the city. If you are simply referring to trash clean up or lawn cutting absolutely those will go into the sale.

  Ned

• 4 Will Harris (5 comments.) // May 12, 2009 at 10:18 pm

  Ned you are a genius wrapped into a humanitarian’s body. Thank you for your blog. It is awesome.

  Many of my questions have been answered by reading your blog. I have read several books and visited a lot of websites and you have helped me more in the last hour of looking at your site than all my previous studies.

  Again, a lot of my questions have been answered on your site, but I have two questions to get your opinion on:

  1. Do you have any strategy suggestions when competing with the big boys who also are participating in the bidding game.

  2. Do you have any suggestions to make sure that I don’t overbid on properties?

  3. In Baltimore, there are Assignment Sales a few days after the first bidding ends. What knoweldge can you share on how it works and any strategy to employ. (I even considered purposely sitting out the bidding just so I could take a chance with getting a a tax lien certificate without the added competition.)

  I have been studying this for 2 years and I am finally getting my shot at this next Monday for the Baltimore bidding. Wish me luck!

  You rock! Your blog rocks! And, I will definately return back.

  Many Thanks!

  Will

• 5 Ned // May 14, 2009 at 11:16 pm

  Will,

  Thank you for such a nice compliment.

  Answers:
  1) I bid on a lot and hope that I get some that slip through the cracks the big boys leave.

  2) Due diligence. I physically inspect both the front and rear of every property I bid on. I also spend substantial time checking comps and values for the neighborhood. I will spend all my time for the next three days planning my bids. The biggest risk in tax sale is overbidding. You must also account for the cost of legal fees and subsequent taxes. I have seen a $3,000 lien cost me $16K total for a house after legal fees and expenses.

  3) There is no strategy for the assignment sale. You simply say which liens you want.

  Good luck,

  Ned

• 6 Will Harris (5 comments.) // May 16, 2009 at 1:32 pm

  Ned,

  Please disregard my previous question. I uncovered why I was listed as having $6K in pre. bid. I bid 50% on one home. I have since changed my bid and the issues is resolved.

  But, if I can ask you a legitiatmate question….what is the significance for the following notations in the bid process: HX = Homestead BK = Bankruptcy.

  I know what a bankruptcy means, but how does that apply to my bidding decision. And, I have no clue what a homestead signifies.

  Thanks!

  Will

• 7 Will Harris (5 comments.) // May 16, 2009 at 1:49 pm

  Ned,

  What is the difference in Baltimore between the “Full Cash Value” and the “Taxable Amount”. It looks like the term “Assessed Value” is also used in place of “Taxable Amount”. Here is one example below that I saw:

  Full Cash Value $718,640.00
  Taxable Amount $673,680.00

• 8 Ned // May 16, 2009 at 7:08 pm

  Will,

  I hope you and I aren’t bidding on the same things. It sounds like you might be bidding a lot more than me 🙂

  Homestead means that the tax increases are limited. If someone lives in their home, they are entitled to the homestead exemption and their tax increases are limited. The difference between the homestead exemption and the full cash value is the effect of the homestead exemption.

  The bottom line is it doesn’t affect how I bid.

  Good luck,

  Ned

• 9 Will Harris (5 comments.) // May 17, 2009 at 2:35 am

  Thanks again, Ned. Sound advice as always. And in terms of us competing for the same bids…I might be bidding on a lot more properties but my budget is a lot smaller. 🙂

  My accountant, aka my wife, has reduced my investment budget to $1,300; which pretty much equates to about two winning bids based on what I am bidding on. I am just bidding on a lot more based on your suggestions to increase the number of homes that I go after in the hopes that I get some despite the big boy investors being out there.

  I will be happy if I hit my budget limit in the first round and walk away with just one certificate (but, two would be nice).

  Take care,

  Will

• 10 Will Harris (4 comments.) // May 18, 2009 at 1:42 pm

  Ned!

  I won! I won! I won!

  Or at least I hope I won. Okay, today was my first time at the wheel with bidding on Tax Liens. I had a budget of $1,400. I will give you the play by play of what happened.

  First Round
  The first round I got my butt kicked. I didn’t win anything. I looked over the winning bids and began to see that I was out bidded on everything. So, I licked my wounds and went on to the next round with my head held high.

  Second Round
  Darn it! I got my butt kicked again. I looked over the winning bids and began to see that unless I divided into Prem Bids then the chances of me getting anything was slim to none! In addition, since I had a budget of only $1,400 if I went the Prem Bid route and really raised my bids….then I could only afford to get one. So, I jumped into Round 3 with a new attitude and a new & improved strategy.

  Round 3
  LET’S GET READY TO RUMBBBBBBBBLE! I won a bid. (The key word here is “a”). 🙂

  Here are the facts on what I won: Assessed Value = 34, 066, Owner Occupied, Lot Size = 1554 sq.f., lien = $533.89, winning bid = $17,950, Bid amount = $816.

  This gave me a total amount due of $1,349.89; which was just under my $1,400 budget. But, what makes this one soooo sweet is that I beat out two big boys…Two Thousand Nine, LLC & ETS Maryland LLC. (But, I call anyone who has more than $1,400 to spend big boys to me.)

  Now, with all my joy….I still don’t know what I got myself into. LOL I never went by to see the property. I only looked at the area through the Areal Map on Mapquest. I know what you are going to say, “Good luck”.

  But, I am encouraged for two reasons….#1 Multiple Big Boys bidded high on this and I beat them out. #2 Since I came into the game so late…I only bidded $1400 and I’m not afraid to lose that money if I made a bad investment (i mean guess).

  But, next time I will be smarter and spend more money.

  I hope you did well. I have more questions (like how do I manage this process now that I won a bid). But, I guess I will wait a little while since you are still knee deep in it.

  Thanks!

• 11 Ned // May 20, 2009 at 10:15 pm

  Congratulations Will!

  I think you did a good job. That is a great looking house a pretty decent looking block. I figure that is a $70,000 to $100,000 house so you have made a very safe bid.

• 12 jake // May 26, 2009 at 11:16 pm

  hey wat did u win at the tax sale ned?

• 13 Tasha (1 comments.) // Jun 23, 2009 at 10:25 am

  Hello Ned,

  I’m getting an early jump on research for bidding next year and your site has been very helpful. However, I still have a few lingering questions.

  First, I take it that the winning bid and the bid amount are not the same thing, but I don’t understand how that process works. Is it that if you decided to foreclose on a home you will have to pay the amount of the winning bid?

  Another question I have is how often would you say that you have had to foreclose on a property?

  Also, if you do go through the process and foreclose, how easy/ difficult is it to sell the property?

• 14 Emily // Jun 24, 2009 at 2:08 pm

  Hi Ned,
  If there is a sizeable mortgage (around $120K) on a property and the owner cannot afford to pay the lien (around $20K), the mortgage lender will most likely finance the lien amount. Is this still the case if the loan was aquired through the Maryland Housing Rehabilitation Program (MHRP)? Does the state put more risk on the table when the recipient of a low income assistance program isn’t paying taxes?

  Thanks,
  Emily

• 15 Will Harris (4 comments.) // Jul 28, 2009 at 8:16 am

  Hey Ned,

  I wanted to check in with you and see how you are doing?

  Also, I wanted to ask you about the next steps with my certificate. I haven’t done anything since I won my bid and I was wondering what I am suppose to do next? Do I need to send any type of letter or request notification to the city now? Or do I need to wait until the 4th Month.

  In case the person pays there taxes and my Pre Bid amount…does the city automatically deposit the money into my account?

  All my questions center around…”I have the Tax Lien, now what?”

  Thanks!
  (Editors note: two comments have been combined)

• 16 Ned // Sep 5, 2009 at 11:51 pm

  Will,

  You have a couple of options.
  1) you can file for foreclosure after 6 months but you must first send a letter to the owner 60 days in advance. We are just about at that time now, so if you want to start foreclosure as quickly as possible it is time to find an attorney. You want an attorney who specializes in tax sale foreclosure.
  2) Option two is to simply wait. The 60 day letter or the filing of the foreclosure will cause most owners to pay up. If the owner is going redeem anyway, why not wait and maximize the interest.

  The problem with option 2 is if they don’t pay and you ultimately foreclose you have simply delayed what could have been done much more quickly and that delay will cost you additional taxes when you take title.

  Good luck, – Ned

• 17 Ned // Sep 8, 2009 at 10:53 pm

  Emily,

  I don’t know. I would think any lender would step up to protect their interest. However it could get lost in the bureaucracy and slip through the cracks.

• 18 Ned // Sep 8, 2009 at 11:04 pm

  Tasha,

  This post may help answer some questions
  What is a tax sale?
  The amount you are bidding is the amount you pay IF you foreclose and acquire the property. The day of the auction you pay the lien amount and any high bid premium required.

  I start foreclosure on about 1/2 of the liens I acquire. I bid mainly on vacant properties so I expect to foreclose. The rest redeem before I have a chance to start foreclosure. Most will pay of once they get notice of the foreclosure. I get perhaps 3 out of ten that I start foreclosure on.

  Selling the properties is easy if the price is right so you need to be careful how much you bid.

  Good Luck,

  Ned

• 19 Ned // Sep 10, 2009 at 11:10 pm

  Jake,

  I won 38 liens, see this post.
  http://baltimorerealestateinvestingblog.com/2009/09/2009-baltimore-tax-sale-results/

• 20 craig // Nov 12, 2009 at 11:42 pm

  Hey Ned,
  I’am an investor and I’m trying to learn more about tax liens. Is there a way I could get one on one advise from you over the phone? This typing back and forth thing isn’t for me.
  Thanks,
  Craig

• 21 Ned // Nov 17, 2009 at 3:06 pm

  Craig I will reply privately – Ned

• 22 catrena // Feb 20, 2010 at 5:37 am

  I love your blog and read it often,I wanted to get one on one advice from you ,I think I’m ready to make my first purchase on tax certificate.

• 23 Ned // Feb 22, 2010 at 3:08 pm

  Welcome to my blog Catrena. I’ll be happy to answer your question but I have to know what it is! Leave a comment here or if you want it to be private send a comment via the contact us page. – Ned

• 24 nico // Feb 28, 2010 at 6:51 am

  don’t understand..round1, round 2 and round3..am I allowed to bid and then see other bids and then be allowed to change bids in future rounds..in other words..do u bid n bid n bid on 1 property until “the gavel falls”..thank u

• 25 Ned // Mar 2, 2010 at 3:05 pm

  Nico, I see you asked esentially the same question twice. I will answer your question on this post http://baltimorerealestateinvestingblog.com/2010/01/2010-baltimore-tax-sales/

• 26 jake // May 18, 2010 at 11:28 pm

  wuddup Ned?! how ya been? So i have a complex, farfetched, even silly, question. Could someone purposely lose their house to a tax deed sale, wait til that person claims their house after a redemption period, (and with the person being someone they know that bought the deed) then have that person sell the house back to them for far less than their mortgage was to begin with? So both sides win. Say theres 100k left on the mortgage, person buys tax deed at 5k, then sells house back to initial owner for 40k…then the tax deed buyer profits, while the owner now has a way less mortgage. Possible? Or fraudulent? Or what? Thanks 🙂

• 27 Ned // May 22, 2010 at 3:25 pm

  Jake,

  I don’t know the legalities of something like that, perhaps it could be considered a fraudulent conveyance. However I doubt that is the case, because the mortgage holder has the right to redeem to protect their interest. If the mortgage holder chooses not to redeem and protect their own interest I don’t see where they would have a right to complain.

  However you must understand a tax sale wipes out any claim a mortgage holder has against the property but it does not necessarily remove personal responsibility for the debt. When you get a “mortgage” there is normally two documents; a note which you are personally responsible for and a mortgage or deed of trust which makes the property collateral for the loan. Just because the collateral is gone doesn’t mean the money isn’t still owed.

  This actually came up recently. I got court decree giving me a tax sale property. I offered to sell it back to the previous owner saying that the mortgage was wiped out. The lender had loans on two other properties so he didn’t think it would be a good idea.

  So I am not sure it is practical, but I really do like your creative thinking. I wtote a post about something similar here Why would you foreclose on yourself?

• 28 jake // May 23, 2010 at 6:30 am

  Ohhhhh i see…so wait, i thought after the redemption period is up, that u own the property free and clear? That since prop taxes have first position over mortgages, the govt wipes away the mortgage. So if u do get a tax deed, get the prop after a year, then YOU are now responsible to continue carrying the mortgage debt?
  Thanks

• 29 Ned // May 23, 2010 at 5:03 pm

  Jake,

  No that is not quite right. The tax lien or deed holder Does not owe the mortgage – it has been wiped out via tax lien foreclosure or tax deed sale. The previous owner of the property still owes the bank. The bank could go after the previous owner if they chose.

  My point was that the tax sale releases the property as collateral from the mortgage loan. However the borrower (the previous property owner) theoretically still owes the money, just the collateral is gone.

  Please keep in mind that I am familiar with the laws in MD however if you are talking tax deeds you are talking about a different state that may handle things differently. What I say will apply generally and in most states but you need to be familiar with the rules in the particular jurisdiction that you are buying in.

• 30 jake // May 23, 2010 at 5:16 pm

  oh wow so you really have to have a heart of stone to go through with it then. Bc to do anything with the property youve got to kick the people out as well as leave them with a lot of money to pay back, & them not even have collateral to back it up?…geez

• 31 Jake // Aug 9, 2010 at 10:58 pm

  Hello again sir :). I think I’m about to go to my first tax sale & i started thinking of it unfolding til the very end, & picturing what i would do with my self. Have you actually claimed properties from tax sales and had the occupants evicted? What methods and insight could you provide to where an investor could work it out so that i would still win nicely as an investor, and the owner wouldnt be screwed? Please and thanks!

• 32 Ned // Aug 10, 2010 at 1:42 am

  Welcome back Jake!

  Yes I have gotten properties via tax sale. no I have not ever evicted anyone because I have only gotten vacant houses. I did get a court judgment on a house that did have a tenant in it, but the owner wanted to keep the house so I negotiated with him. He paid me what I was due (Taxes, Interest and legal fees) plus another $2500. Not a bad return for a $400 lien. I could have taken the house and made an easy $10,000 but I was a nice guy and negotiated a deal with him.

  Other options,
  *Rent back to the original owner – probably not a good strategy in MD because of the homeowners in foreclosure protection act.
  *If the owner is older you could grant a life estate. That means they own it until they die and then you get it.
  *Or you could only buy liens on vacant properties or at least non owner occupied properties.

  I really don’t want to kick a little old lady (or anyone else) out of a home they own. I fell less concerned about taking a property from a landlord that didn’t bother to pay his or her taxes.

  PS: Jake can you vote for me as the best blog in Baltimore? Go to the home page here and scroll down a post or two to see how – I can rally use the vote thanks

• 33 Jake // Aug 11, 2010 at 6:12 am

  no prob! ur so helpful i wouldnt mind voting at all. Ok cool that stuff sounds good. What do you think of looking up the tax sales from a previous year that are about to reach the one yr mark. And say 20 sold, 15 were redeemed, and there are 5 left, then you call the owners letting them know they are about to lose their prop. Then the one or 2 that is just planning to let it go or cant come up with the funds to redeem it, you ask them to take it off their hands. You say if you will meet me up & sign the deed over to me ill give u $200 for ur time just to take it off ur hands. Then if they agree, u get the deed, at the last minute pay the taxes and whatnot to redeem the property, and then the property is yours. This way u didnt have to wait out the year, u just let due process narrow the props for u then u snatch ’em up at the last minute. Sound good? Think it’d work? Thanks! 🙂

• 34 Ned // Aug 11, 2010 at 11:09 am

  Jake,

  Approaching people in tax sale is a good strategy. Your exact strategy has a couple of flaws.
  1) You are assuming that someone who is about to lose their house will give it to you cheaply – It does happen but it is not common.
  2) A more important issue is that their will likely be other mortgages or liens against the property. They simply can’t give you the property for $200.

  Yes you can do deals that way. I have. However just be aware that it is a numbers game. You may need to approach hundreds of people to find a deal that will work exactly that way. The way it will happen is to take action and start approaching those people. Good Luck – Ned

• 35 Jake // Aug 11, 2010 at 1:46 pm

  Gotcha. Yeah i figured i’d have to find one that is vacant and free and clear. Like perhaps an unwanted inheritance property or something. Which reminds me, u know anything about acquiring and or investing in probate estate? Ive heard its a great avenue for investment but am clueless on where to start

• 36 Jake // Jan 2, 2011 at 5:09 am

  Hey man hows it goin its been a while. So the local tax sale is coming up & for the first time i am serious about bidding. The closer it gets the more nervous i get. How often are there other liens on the property at these sales? Could i find out at the county courthouse or have to pay for a title search on every property of interest?

  Also, i was curious about Over the Counter Tax Liens…how do i find these?, Is it still sold by bidding or can u purchase it outright w/o competition?, & do the same rules apply for the over the counter purchases as the regular auction tax liens?

  Anyways thx as always & hope to hear from u soon,

  Jake