The other day, I found a list of houses with delinquent real estate taxes in my local newspaper. I have zero knowledge about tax sale, but it looks like you can buy (pay) the delinquent tax, and you either get the money +interest from the owner of the house, or if it doesn't get paid on time (I'm not sure how long,) I can foreclose the house and get the title.

This sounds too good to be true as it seems like you can't lose money on this. I'm going to check out more in detail when I get a chance, but I was wondering if any of you have any experience/knowledge regarding to tax sale.

Thanks

Soh

The part where it goes wrong is when they owe more tax than the house is worth, and you get hosed.

You have it about right. In a tax lien sale the property is sold at auction. Generally, [and this varies greatly by locality] the price is set at the amount of back taxes owed. Bidders are in competition for the interest rate. The rate will start at the state's allowed maximum and the bidders will bid it down. The winner gets the property. The party that was foreclosed on has X number of months to pay you back plus interest. If he doesn't, you get to keep the property. Normally the redemption period is between 12 to 24 months.

There are a host of laws that you need to understand in order to invest in tax liens. For instance, in some states the redemption period is 24 months. However, the interest rate that is set at auction only applies to the first 12 months. The 13-24 months the interest rate goes up to 24% automatically. So in some instances it may be worth while to bid the property down to 6% hoping that the second year's interest will make up to for the low first year return.

IMO, this is an outstanding way to invest. However, there is a lot of competition for good liens. In my state we don't have tax liens, so I've never bothered to learn that much about them. What I said above is just knowledge I've gleened from sitting in on presentations and talking to friends that buy liens.

In Florida you cant resell a property for 48-60 months after acquiring it by means of a tax lein. So if you can pick up a decent rental its worth it.

Pretty sure it is two years in Florida.

http://www.tax-lien-certificates.com...lorida_fl.html

Jimbo

If I was you...I'd buy a couple books on amazon and read up on it (try to get one of those good books, and not some infomercial book) on the subject.

If done properly, they can be a solid way to invest in RE/general investing.

It's not something I do right now, but it's something I'm personally learning more about and plan to do once I switch 100% to RE and stop being a poker pro.