GETTING STARTED WITH YOUR TAX LIEN CERTIFICATE AND TAX DEED INVESTMENT BUSINESS TED THOMAS
The state of Colorado, on the
other hand, uses a rotational
bidding process. This means
the bidders are all given a card
with a number; the auctioneer
will go around the room in order
from lowest to highest number
asking for bids. At some
rotational bid auctions, the
numbers are printed on ping
pong balls and put into a big
drum, much like you might see
at a bingo game.
Know the Rules
Each county is different when it comes to
auctioning tax lien certificates and tax deeds. They
have specific rules and particular bidding
procedures. There are many bidding processes,
I’m only mentioning two in this tutorial.
The bidding process at a tax lien certificate or tax
deed auction varies. Two types are a reverse
auction and rotational bidding.
At a traditional auction, bidding starts with a
minimum amount and each subsequent bid goes
up; in a reverse auction, it starts at the high point
and then goes lower. This type of auction is used in
the states of Arizona and Florida. In Florida, the
bidding is on an interest rate that starts at 18
percent. The interest rate gets progressively lower
as the bidding continues and may go down to less
than one percent.
Dates and times vary widely
amongst tax districts, too. For instance, the state of
Texas sells tax defaulted properties every month.
Texas counties sell tax deeds; however the deed
has an encumbrance. Texas allows the property
owners to pay the investor directly and redeem the
taxdefaulted property anytime within 180 days. The
owner must pay the
amount of the defaulting
taxes on the deed plus
25%, no matter the
amount of days the debt
has been outstanding.
You could easily make a tidy profit in less than 30
days and that is why Texas is a popular state when it
comes to tax deed investing.
Obviously, there is a lot to learn about the particular
rules imposed by each county and municipality but
learning them forms the foundation of your
business.