How to Handle Code Enforcement Liens on Your Tax Deeded Property

We get a colorful variety of interesting inquiries over the phone day to day from prospective clients about anything from therapy sessions resulting from their investing frustrations to asking about how to renew their car insurance. But one question we find that frequently pops up is an investor calling with concerns about a Tax Deed property they bought, or plan to buy, that has various existing liens or Code enforcement violations on it and how that is going to affect the process of getting title insurance.

There is a lot of confusion with conflicting explanations on what is and is not wiped out at a Tax Deed auction. A common misconception that we hear from newer investors is that all liens are wiped out when they buy a property from a Tax Deed auction. This is not true! In Florida, mortgages, state liens, owners liens and even IRS liens (as long as 120 days have passed) are wiped out in a Tax Deed auction, but the catch here is they are wiped out ONLY if the lien holders received proper notice prior to the Tax Deed auction. (That is a whole other topic alone!) Then there are liens that are not wiped out such as municipal liens that are in the city’s name like water, sewer, and code enforcement liens. These liens may be satisfied with the overbid funds, but if not, the owner of the tax deed is responsible for paying the remaining liens even though it was not them who caused these violations against the property in the first place.

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There are many reasons why people stop paying their property taxes, including a concern that their home is worth little to nothing. Then the property gets abandoned and deteriorates into an eyesore for the neighborhood. Now, because this distressed property has been sitting there collecting daily fines from the city, the tax deed owner becomes liable for thousands of dollars in liens that are going to drain their profit. A client of ours recently discovered that one of his properties we were working on had accrued over $200,000 in Code enforcement liens that had been adding up by hundreds of dollars per day! What does the new tax deed owner do in a situation like this?

Think about it this way: The property has been sitting there collecting Code Enforcement Violations for overgrown grass, or graffiti on the sidewalk because no one is there to fix it up. When that property is bought at a Tax Deed auction, more than likely the new owner of the deed has intentions to fix it up to rehab and flip or rent it out. Therefore that new owner is a friend of the city, not the transgressor. They are coming in with the promise that they will fix up the property, therefore bringing up the neighborhood value and image. By going before a special magistrate with that promise it is possible to negotiate the fines down significantly in sheer relief that the property is no longer their problem. Personal stories from our clients here at cleartosell.com have proven that this method works wonders. One of our clients tells how he went before a Special Magistrate and negotiated more than an 80% reduction in payable liens based on his intentions to rehab the property.

Keep in mind that certain violations such as Nuisance Abatement cannot be negotiated down because of the hard costs made by the city, but Code Enforcements are almost certain to be negotiated down to a reasonable level. So if you win a Tax Deed from an auction and come to find out there is a significant fine for a lawn that went unkempt for years, don’t panic! There is a solution. If you would like specific advice on Code Enforcement liens on a tax-deeded property you own, why not book a free 15-minute consultation with one of our attorneys? They will be able to help you understand the right steps you must take in resolving this issue.

June 22, 2015

Posted In: Auctions, Investing, Tax-Deed

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The Importance of Time Management in Real Estate Investing

There are many real estate investing professionals out there that give very helpful advice in solving problems for investors from the beginners to the experienced. Conferences and webinars held by organizations such as National Tax Lien Association are great ways to hear advice from experts in their fields. But just like there are true experts with sound advice, there are also sources from which advice is not as legitimate. Protect your investment strategies and make sure that where you obtain guidance is an accredited source before following it.

After reading about many of the most widely believed myths in the real estate world, a few stuck out as the most common and harmful. One of these common myths that cause investors to give up too early is the belief that investing in real estate is a monstrous responsibility that will drain all of your time. While it is true that it requires dedication and perseverance in order to be successful, if you manage your time right then every second of every day does not have to be sucked up by your investments. One of the best pieces of advice that is given by seasoned investors for time management is to have a clear business plan and goals before getting started. Because each type of real estate has its own set of risks and resources needed, decide what kind you want to invest in so that you may prepare and stay focused. Do you prefer wholesale or Fix and flip? Will you invest in Commercial or Residential real estate? Have all your finances lined up so there are no surprises along the way. In this fast-paced field there is no time for miscalculations on budgets.

So many investors are drained of time and energy because they try to do everything themselves to save money. No one can be a specialist at everything because we are only human. This is why it is important to have a solid team behind you made up of essential players such as a financial partner, a real estate agent, an attorney and a trusted contractor for repairs and maintenance. Andy McFarland, a successful wholesale investor from www.iloverealestatestories.com, gave some great advice on a podcast interview for www.flipjl.com. He suggested hiring a project manager to oversee your projects because managing people alone is a full time job. He explained how coordinating people is a difficult task so having someone with the ability to do that for you and do it on time and within budget is a great resource for your investments. There are sites such as www.Zillow.com, www.angieslist.com, and organizations such as the National Association of the Remodeling Industry that can recommend certified contractors and project managers that fit your criteria and budget.

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As your portfolio grows, so do the responsibilities. The little things start to add up over time and managing the details can get very cumbersome. In the same podcast as mentioned above, Andy told the story of how he slowly brought people on board to help him with tasks. He explained how simply hiring an assistant to answer phone calls alone freed up an immense amount of time and created less stress for him to focus on bigger tasks. Search for personal assistants through friends and family or sites such as www.care.com and www.greataupair.com. You will be surprised how much time those menial tasks actually steal from your day.

Real estate investing does not have to take over your life and drain all your time. There are many time management solutions that can be used to simplify your investments making them quite manageable. It is more than possible to have an abundance of success in real estate if you have a set game plan to focus on and the right partners that have your back along the way. Obviously the recommendations here in may well increase the overall costs of investing, and therefore reduce profit margins, but being sure of a small margin, rather than running the risk of a high margin deteriorating to nothing is the secret to successful real estate investment.

May 26, 2015

Posted In: Investing

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The Death of Live Auctions

Technology has a way of simplifying life in the most glorious ways, but doesn’t it feel like sometimes character is lost in exchange for efficiency?

From the late 90’s into the mid 2000’s, there has been a vast shift from counties holding live, in-person auctions toward online bidding auctions through the help of various technology providers such as Grant Street, RealAuction.com and Bid4assets. Not all counties are online yet, but the rate of change suggests that someday soon they very well may be.

There are many reasons that online bidding is more efficient and cost-effective for the clerks. For the bidder it has some helpful advantages as well. For example, since the auctions are online, the bidder’s ability to use the internet’s resources during the auction are extremely helpful in conducting due diligence allowing one person the ability to bid on multiple properties at once. Holding auctions online also eliminates some forms of auction fraud and collusion that may happen during live auctions. The online auctions have proven helpful in a time when county budgets are under pressure.

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While there are obvious advantages to online bidding, (like the ability to bid in your pajamas while eating a bowl of cheerios!!), some seasoned investors can argue the downfalls. For one, the online auctions have high volumes of bidders per auction making the chances of winning a property that an investor spent weeks researching very slim. Elimination of live auctions also cuts back chances to network and meet fellow investors. To many investors that used to regularly attend these events, auctions were fun and exciting. Sandra is one such professional Tax deed investor who runs a Tax Deed Investors club in Florida. One of the exciting things that she does with her group is go on what they call “auction field trips” where they travel around to live auctions in big tour buses. In one of her recent posts to her club’s public Facebook page, www.facebook.com/QueenOfTaxDeeds, she told a thrilling story about the fun that her group had at a Broward live auction but at the end of the post she expressed her club’s disgruntlement with the switch to online bidding. She wrote, “Bad news is the Broward sale is going online in June 2015 ☹ the whole room gave a collected moan.”

The switch to online bidding does solve many problems that live auctions possess. However, at the same time it is spoiling traditions that many investors believe in such as networking with other investors, professional development and weeding out the serious investors from the not so. There are surly others out there like Sandra who are disappointed in the switch to online.

May 8, 2015

Posted In: Auctions, Investing

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The Pre-auction To Do List: “Buyer Beware” of property condition

Tax deed investing can be a lucrative industry to get involved in, but like with any type of investing, it comes with its own set of risks. We see first hand how successful our experienced investors are in this industry and want to pass on some helpful tips to the newer investors. So how do successful investors do it so well?

When buying properties for sale at auctions due to delinquent taxes, bear in mind that there are reasons why the owners failed to pay their taxes. While those can simply be that they were having money troubles or have passed away, there are many other possible reasons for abandoning the payment of taxes such as extensive natural disaster damage, or even that it is located in a landlocked swamp. Take the warning “Buyer Beware” seriously. Go to every length to BE aware of the condition of properties up for auction to avoid being stuck with a property that cannot be built on, accessed, or sold!

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One key piece of advice any seasoned investor will give is to do your research! Prior to auction day, research the properties on the lists of lands available through the Clerk’s websites and in person. If possible, do a drive by for visible assessment of condition. Many investors have busy schedules and cannot do this themselves. Thankfully, there are companies such as www.realdiligence.pth4.com, www.ebiconsulting.com, and Integra Realty Resources ( www.irr.com ) that will take care of the due diligence process for you.

Select only properties that have a potential for profit. If the cost of repairing the damage would be more than your estimate of the potential fair market value, don’t do it! We have learned from working with investors that it is important to partner with a General Contractor. They will determine the estimates on repairs before buying a property so that you can make sure there will still be a profit after rehab. Pay attention to the location as well. The property may not have much damage, but if it is in a neighborhood overrun with crime or neglect, there may not be any luck in re-selling it.

There are huge profits in Tax Deed investing, but only if the necessary steps are taken when preparing for auctions. Research on each property’s condition is just one of many important things that should be on the Pre-auction to do list, but it is an absolute must to avoid being stuck with a money sink hole (or quite literally a sink hole) of a property. There is no sure fire way of eliminating the risks 100%, but has any successful investor made millions by taking the safe route? With risk comes reward.

April 22, 2015

Posted In: Auctions, Investing

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NTLA camp fire horror stories: Quiet title actions!

Do you remember going to those camping retreats when you were younger with the boy or girl scouts? The troop would gather around the camp fire when it would get dark, melting s’mores on twigs, until it was inevitable that the night would end with scary horror stories that would leave everyone trembling in their boots. In a tax deed investor’s world, the horror stories aren’t those of goblins and ghouls, but instead are of horrible experiences that lead to losing precious time and money on a Quiet Title Action. Shudder!

We recently attended our first NTLA annual conference at the end of February. After congregating and sharing each of our individual experiences we had at our exhibit booth, we found there was a common theme that kept popping up in conversations. One conversation in particular was about spending $6,000 to serve European heirs and another involved spending 6 months chasing down Board members of defunct corporations.

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Who wants to wait four years to apply for a new title when they could potentially sell it as soon as 20-30 days from acquiring it? Why risk paying large amounts in attorney fees and costs and waiting anywhere from 6 to 12 months (or more!) for a Quiet Title when this service is not even guaranteed to clear the title? Why risk having more horror stories? In Florida, the answer is as simple as getting online, taking less than two minutes to create a profile with cleartosell.com, and then having an outcome in 20 days or LESS? So why not give it a shot? Let us help turn horror stories into success stories to tell at the next conference!

March 7, 2015

Posted In: Quiet Title

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More on how our customers feel about our service

I had the privilege of working with cleartosell.com on a property that I purchased in February 2015. I had done months of research with other companies that do a similar process with tax deeds and liens and talked to several attorneys before I heard about cleartosell.com from a closing agent. I wish I had heard of them sooner as it would have made my task a whole lot easier and less research time. Everything that they said would transpire is exactly how my experience flowed. They were on time with their delivery and execution and with the most prestige customer service every time I spoke with any of them. I would recommend this company and their services to anyone looking into tax deed properties.

Tonya, St Petersburg, FL.

February 25, 2015

Posted In: Testimonials

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Never walk away from the full profit your tax deed investments offer

blogpic Recently, we have been privileged to work with some of the most prolific tax deed investors in the state of Florida. These individuals and companies have many years of experience in tax deed investing andare experts in their fields. But all is not golden. Even the most seasoned tax deed investors have been faced with an unsatisfactory choice:  hold their property for four years until title is deemed clear and sell via warranty deed at full fair market value, or sell urgently via special warranty deed or quit claim deed at a discounted price because title is still tainted by the tax deed process. We have estimated that investor’s losses on fair market value from this second choice range from 20% to 30% depending on the property value, but we would be interested to hear your opinions.

 

We have created a third option for investors. There is no reason why even the most urgent disposal should not realize the maximum profit possible for the investor. Our largest customers now get the benefit of our 20-day service to enable a quick sale with full warranty of title and consequently no loss on fair market value. In the time it takes to find a buyer and take the closing process through its initial stages, we can remove all questions over the title of tax deed investments, and the investor/buyer gets to access title insurance free of exceptions or abnormal conditions.

 

Title certification doesn’t fit all tax deed investments, but it particularly benefits those properties that need to be sold on with speed, or where an investor wants to recognize the full fair market value of their assets, not the suppressed value that tax deed properties inherently display.

February 25, 2015

Posted In: Uncategorized

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2015 Exhibition sponsorships announced

Cleartosell.com has committed to sponsorship and attendance at two prestigious events in Florida in 2015.

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NTLA2015 is at the W Hotel in Ft Lauderdale, FL, between February 25 and 27 and is the principal conference and exhibition of the National Tax Lien Association. The vast majority of NTLA’s corporate members covering all services and solutions to the tax lien and tax deed industry will gather to hear the latest trends and new thinking. Cleartosell.com will be exhibiting and providing sponsorship, and our team will be gathering vital new information for our customers.

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The FCCC 2015 conference and exhibition is at the Sawgrass Marriott in Ponte Vedra, FL, between May 31 and June 3. This is the summer conference of the Florida Court Clerks & Comptrollers. Pretty much all the county court clerks in Florida will be in attendance with members of their teams. Cleartosell.com’s attorneys are hoping to address the conference on a CE topic relating to tax deed state statute compliance, and also continue to build professional relationships with the clerks and their staff in the interests of improvement in how Florida counties administer tax deed foreclosure due process.

If you are planning to be at either or both, make sure to come say hello to the cleartosell.com team. We look forward to meeting you.

January 22, 2015

Posted In: Exhibition

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The Power of a Customer’s Opinion

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There can be no greater recognition of the achievements of a company than the sage words of its customers.

The effect on the team here at CTS when we received the kind words of a recent customer was noticeable. As much as we know we are trying our hardest to satisfy the requirements of every customer, a testimonial is the final confirmation that we are reaching our goal.

But rest assured, we treat each kind expression of gratitude for what we have done as a stepping-stone to the next level of customer service.

With thanks to Lewis, Escambia for these kind words:

I want to thank you and the cleartosell.com (CTS) team for your great work.  I am very impressed with CTS in terms of its responsiveness, “time-to-market” performance, and professionalism.  In my experience CTS has actually understated its performance in its marketing and on its website, and that’s pretty unusual in my 30+ years of business experience!

Thanks so much.  I look forward to working with you again, and soon.

January 15, 2015

Posted In: Testimonials

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Improving the balance sheet of Tax Deed investor

pic12So you’ve been successful in bidding for a tax-deed and now are the proud owner of an asset that cost you less than you expect it to be worth.  If you have any doubts about the future value of the asset being higher than the cost to you, you shouldn’t be investing in tax deeds in the first place.

Assuming you are performing appropriate due diligence, you will have a grasp on the physical condition of the property (your asset) and its occupancy status.  So you will have budgeted for your post-acquisition costs to either resale or let the asset and have an expectation of realizing more in income than the costs – this is your return on investment.

But until the title has been cleared of the clouds that the tax-deed due process inevitably creates, your asset is only worth your costs.  Your investment balance sheet has zero worth.  Indeed, until you know the title is clear, the asset value is probably less than the total of cash you have spent on it.

Pro-actively clearing the title on your tax deed assets directly after acquisition means you can be sure of the future value, and your return.  In this situation your investment balance sheet is in profit by the margin between the costs of acquisition and rehab, and the value to be realized at sale.

By improving your balance sheet position, you also open the possibility to leverage your assets by borrowing against them and using those borrowed funds to buy more property.

Thinking about your tax deed assets in terms of your balance sheet is a great way to be clear on your investment gains and losses.  Don’t wait until you come to sell an asset to know that it will give you a return on your investment, or leave you with a loss.

November 20, 2014

Posted In: Tax-Deed

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