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Maricopa County Tax Lien Auction Results

Posted on February 8, 2012 by admin| Leave a comment

On Monday, February 6, 2012, Maricopa County conducted their tax lien certificate auction for tax years 2010 and earlier.  The results were the most competitive in over three years, with the reported average investor CP rate at roughly 8.455% according to Grant Street, who conducted the auction.  Kudos once again to Grant Street, whose software continues to run auctions very well without incident.

Participation was very broad this year, with over 800 NEW registrants and roughly 600 investors winning cps.  By far the largest participant was the Mooring Tax Asset Group via MTAG Caz Creek (with Cazenovia Investment Management of Charlotte), with purchases in excess of $9mm.  The next 10 in the ranking of top purchasers included many usual suspects, such as Aberon, Kolonia, INA Group and others in the $1-3mm range.

Looking across the top 15 (yours truly at #15) at face amount won, average rate, average face and number of cps, it is apparent that even the largest investors employed a wide range of strategies.  As always, the average figures mask the reality that most people experience.  This year, cps with underlying high quality, owner-occupied homes went at sub-5% rates in many cases.  One new registrant with substantial winnings,  #12972, won at least 8 cps at 3%.  Aggressive!

There are two things we would like our readers to know.  First, we apologize that we needed to take down most of our content.  Some of our loyal clients were upset that we were creating competition, and many visitors to the site never offered to share any information with the group in return.  We decided no more free lunch for them.  Of course, we will always be pleased to offer our assistance and advice to our longtime friends and clients.

Second, we do have a number of new secondary market listings, but we won’t be posting them until after the auctions.  We are focused 100% on the auctions right now, so we thank you for your patience until then.  Keep in mind that our secondary market listings service is a free service.  If you are interested in something, we will introduce you directly to the seller.

Good luck with the auctions!

Kind regards,

AZTLS

 

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Posted in Selling Arizona Tax Liens

Texas Tax Deeds

Posted on November 18, 2011 by admin| Leave a comment

As our readers are aware, we are allergic to firms that sell lists and information that are available for free elsewhere, or who only share information with the intent on selling a book or program. Finding high quality sources of information on tax lien investing that are free and readily accessible can be challenging, so when we come across good sources, we want to let you know. Over the weekend, we learned about a site that discusses investing in Texas tax lien deeds: http://www.texastaxliensales.com/index.html

We found the information helpful, and when we followed up with the site’s owner, our questions were answered promptly and completely. Please let us know what you think!

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Secondary Market Tax Lien Listings

Posted on November 17, 2011 by admin| 2 Comments

Remember, there are three ways to buy tax lien certificates of purchase in Arizona: at the auctions in February, in the OTC market, and finally in the secondary market from other investors.  Buying in the secondary market is the only way to get a tax lien certificate of purchase for less than face value.

After a big flurry of activity in September and October, where we had multiple buyers and sellers connecting with each other and transacting, November has been quiet.  We do not broker any transactions: we merely make it possible for buyers and sellers to negotiate directly with each other.  We do not charge fees for listings, but we do reserve the right to choose which listings we accept.

Two sellers have recently dropped the prices for some older listings, as they did not attract potential buyers.  In one case, they cut the prices in half.  We moved the listing dates forward so that these would appear in the “Listing Age < 30 Days” filter.

As always, we welcome your comments.  Thank you!

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Posted in Buying on the Secondary Market

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Mohave County Tax Liens – Some Special Considerations

Posted on August 21, 2011 by admin| Leave a comment

Like most counties in Arizona, Mohave County has a few rules and procedures that differ from those in other counties.

On the positive side, their GIS system is quite good, and, as of 2011, they are still paying February interest, which even Maricopa stopped doing earlier this year.  Also, you will find that the people in the Recorder’s office are among the nicest people you’ll find anywhere!

On the negative side, getting detailed information on outstanding CPs and their owners is difficult.  Mohave also passes through a $7 per CP charge to cover the cost of using the RealAuction platform, whereas other counties include such charges in the $10 non-refundable TIF.  Continue reading →

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Posted in Mohave, Selling Arizona Tax Liens

Introducing Arizona Tax Lien Services Book Reviews

Posted on August 12, 2011 by admin| Leave a comment

We receive so many phone calls and emails from people who are looking to learn about all aspects of tax lien and tax deed investing. While we pride ourselves on our knowledge about investing in Arizona tax liens and in handling most of the issues that can come up for investors, we are not able to answer all of the questions that people who are curious about tax lien investing may have. Since we ourselves have learned so much about tax lien investing and real estate investing from books, we wanted to share some of our recommendations with you.

If you have read a particularly good book that you think our readers would enjoy, please feel free to suggest it to us. Enjoy!

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Secondary Market Listings of Arizona Tax Liens

Posted on August 10, 2011 by admin| 4 Comments

We have been getting much more interest recently in secondary market listings for Arizona tax lien certificates. Perhaps this is because money market and bond market yields are near zero, or maybe it is because the stock market creates too much indigestion? Whatever the reason, we are happy to help, and we appreciate the feedback we have received.

First, posting listings on the Listings page of our site is free, so long as you are offering a manageable number. If you are trying to sell an entire portfolio, it would be better for us to write a blog post for you with an attachment that people can download. The point is: we do not charge anyone fees for facilitating the secondary market for Arizona tax liens. We will introduce interested buyers to the sellers directly and leave the rest up to you.

We caution investors from purchasing secondary market liens from some other sites that charge large settlement or service fees. One common scam is to offer a low-value CP while charging a high transaction fee. We strongly urge investors to do their homework, understand what they are buying, and be very careful not to agree to fees which are often excessive and unjustified.

People will not want to visit our Listings page if someone is trying to sell scratch-and-dent CPs for full price, so we reserve the right not to post anything that is overpriced, in our opinion. Also, if something is getting stale and not moving, we will either ask that you lower the price or remove the listing.

We have seen numerous situations where, through hard work, people have recovered full value on scratch-and-dent CPs. You can learn a lot from working with these situations, but please know that the risks are high.

To see how to read one of the listings, the following steps will take you through the process using a real example.

  • Click on the Listings tab of our navigation bar. This will take you to a Terms and Conditions page, which you must agree to in order to see any listings. Also on the Terms and Conditions page, you will find a few ways to filter the listings that you would like to see. The most common filter will be to select a particular county of interest. If you do not use any of the filters, you will see all of our current listings that have been posted. (Please be aware that we cannot list CPs with incomplete information. We actually have a large number of Mohave County tax liens for sale right now at deeply discounted prices, but we cannot present them due to some missing information. Interested investors should inquire by email.)
  • After hitting the Submit button, you will be taken to the listings of secondary market tax liens available for sale from our clients. Each listing consists of a summary row (beige background) and detail rows (white background) that can be unhidden by clicking on the green plus sign to the left of the county name and parcel number. The parcel number is itself a hyperlink to county-provided information on that specific parcel.
  • While most of the listings on our site are from clients, a small number are from affiliates of AZTLS. Let’s take one of them as our test case: Gila 208-10-012-B.
  • The summary row for Gila 208-10-012-B has ten columns, each of which we will explain.
    1. The green plus sign expands the selected listing to show more detail for the CP.
    2. The Jurisdiction column shows the county in which the parcel is located.
    3. The Parcel column has the assessor’s parcel number for the CP, and it functions as a hyperlink to the county web site information for that parcel.
    4. The CP date originated is the date that the CP was first offered for sale. This is the date that starts the clock ticking for the three year period before the investor is able to foreclose. Our example CP was purchased at auction on February 20, 2009.
    5. Column 5 has the interest rate on the CP. In this case, it is 16%, the maximum.
    6. Column 6, Principal Face, is the sum of the original and subtaxed principal amounts for the CP. This is the amount on which the CP is earning interest.
    7. Column 7, Principal Price, is the price at which the investor is offering to sell their CP. In this case, we are offering this CP at 98%, a small discount to full value.
    8. Column 8, Accrued Charged, is a Yes or No. If an investor wants to be paid for interest accrued to-date, they will put a Yes here. If they do not require payment for interest accrued to-date, they will put no. If Yes is selected, the accrued interest on the CP is added to the principal times the price to determine the total amount required to purchase the CP. Normally, solid CPs will require payment of accrued, while scratch-and-dent CPs will not.
    9. Column 9 is the Purchase Amount, the full amount required to buy the CP, excluding the $10 assignment fee charged by the county. This is the Principal Face times the Principal Price, plus the Accrued interest if it is being charged.
    10. The final column is the most recent Full Cash Value of the property in question per the records of the county assessor, when it is provided.
  • The detail rows for Gila 208-10-012-B each have eight columns. Before the detailed information, you will see the CP number. Also, when provided, you will find Seller-provided, subjective notes at the bottom of the detail section.
    1. Column 1, Tax Year, indicates which tax year is covered by a particular row in the CP detail.
    2. Column 2, Accrual Start, shows the date that interest began accruing on the Principal amount for a particular tax year. This will normally be an auction date for the CP’s first year and subtax dates for later years.
    3. Column 3 repeats the rate for the CP.
    4. Column 4 shows the Principal amount for each tax year covered by the CP.
    5. Column 5 shows the number of months for which each tax year principal amount has been accruing to date.
    6. Column 6 shows the amount each tax year for a CP accrues each month. This is arrived at by multiplying the principal amount for each tax year by the Rate / 12. In the case of our example, we subtaxed CP 9032507 (Gila County tax lien on parcel 208-10-012-B) for the 2010 tax year on June 9, 2011. As of today, August 10, 2011, it has earned two months of interest. The subtax payment was $3,950.47. At 16%, this equates to a monthly accrual of $52.67. So, the accrued interest as of Aug 2011 is $105.35 on the 2010 tax year part of the CP.
    7. Column 7 shows the total accrued interest for each tax year covered by the CP.
    8. Column 8, the final column, shows the full principal amount plus accrued interest for each tax year covered by the CP.
  • Summarizing the example listing, we are offering this CP for $15,914, which is a $265 discount to the full redemptive value of the CP. Note that this CP will be eligible for foreclosure on February 20, 2012, three years from the date it was first purchased at auction.

Of course, if anyone needs further explanation of how our Listings page works, please feel free to send us an email via our Contact page. Better still, write a reply post to this blog post!

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Posted in ABCs of Tax Lien Investing, Buying Arizona Tax Liens, Buying on the Secondary Market, Gila, Selling Arizona Tax Liens

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Investments in Arizona Tax Liens Bear Simple Interest

Posted on July 16, 2011 by admin| Leave a comment

When comparing investments, it is always a good idea to compare their risks and returns. Naturally, if one investment is much riskier than another, it must pay an appropriately higher rate of return to warrant your attention. Judging the relative riskiness of investments can be extremely difficult, and comparing returns is not as easy at it might appear. This blog post talks about one aspect of comparing returns from tax lien investments with other investments.

Arizona tax lien certificates pay simple interest. The actual computation for interest earned on an Arizona CP is covered in a separate blog post entitled “Calculating Interest Earned on Arizona Tax Lien Certificates”. What simple interest means is that your interest does not earn interest. Arizona CPs accrue simple interest on the initial investment amount until the CP is redeemed or the investor successfully forecloses on the property. For example, assume you buy a $1,000 CP at a bid rate of 8%. After one year, you will have earned $80 in interest, but it won’t be paid out to you, as you have to wait for redemption for that to happen. The next year, you again earn $80, because the interest is calculated only on your principal and not on any interest accumulated along the way. After three years, you would have earned a total of $240 in interest, bringing your redemption amount to $1000 + $240 = $1,240.

Compound interest is where your interest earns interest also. The more frequently the compounding occurs, the better off you are. Picking up again on the example above, let’s assume that compounding occurs yearly. After year 1, the results would be the same: you earn $80 and have a total principal plus interest of $1,080. In year 2, however, you earn interest on $1,080, rather than $1,000, as would be the case with simple interest. So, during year 2 you would earn $1,080 * 8% = $86.40 in interest and have a total value at the end of the year of $1,166.40. During year 3, you would earn $1,166.40 * 8% = $93.31 and have $1,259.71 at the end. So, with annual compounding, you would have earned $19.71 more than you would have with simple interest.

This matters when comparing tax lien investments with other investments that offer compound interest, either directly, or indirectly by paying out interest along the way that can be reinvested. Most corporate bond yields reflect semiannual compounding, for example. The more frequent the compounding, the higher the interest rate, and the longer the time period, the greater the benefit of compounding becomes. The following chart compares the growth of a $1000 investment over five years at 4% and at 16% with no compounding (simple interest), annual compounding and monthly compounding.

Simple Interest versus Compound Interest

Simple Interest versus Compound Interest

You can see that at the end of year five, at 16%, monthly compounding leaves you with $414 more than simple interest!

When considering purchasing an Arizona tax lien in the secondary market, one should always bear in mind that the interest you will earn will be based on the principal amount of the lien only, and not an any accrued interest that you might have to pay to the selling investor. The older the lien is, the more this will matter. Consider a $1000 tax lien certificate that, for simplicity’s sake, has a rate of 10%, is five years old and has never been subtaxed. It would have accumulated interest of $1000 * 10% = $100 per year or $500 in total. If you were to buy this from a seller at its fully accreted value of $1500, your return going forward would be interest of $1000 * 10% and not $1500 * 10%. This would essentially lower your return to $100 / $1500 = 6.7%.

When you see secondary market offerings, such as those on our Listings page, you should consider this example when deciding to bid for certificates where the seller expects to be paid for the accrued interest. They might understand your point and negotiate with you. On the other hand, you don’t have to wait as long, if at all, to foreclose on older certificates, leading many sellers to expect to be paid in full, despite the disadvantage of simple interest demonstrated herein.

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Posted in ABCs of Tax Lien Investing, Buying Arizona Tax Liens, Buying on the Secondary Market

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The Three Ways to Buy Arizona Tax Liens

Posted on July 15, 2011 by admin| 5 Comments

By far the most popular and straight-forward way to acquire Arizona tax liens is to buy them at the annual Arizona tax lien auctions.

  • Advantage:  Typically the best liens are sold at the auction, leaving the more problematic properties remaining.
  • Advantage:  The dollar value of the liens which are sold each year at the various Arizona tax lien sales is quite large.  If you want to invest more than, say $10,000, in an Arizona county, it is much easier to achieve that level of investment at the auctions vs. the OTC or secondary markets.
  • Disadvantage:  The auctions are very competitive, and the rates at which liens are won is usually well below the state’s rate of 16%.
  • Disadvantage:  All 15 of Arizona’s counties hold their tax lien sales during the month of February.  If you are not able to attend the sales at that time, you will need to wait until the following February to participate in any Arizona tax lien sale.

People who miss the February auctions may buy tax lien certificates directly from the counties via the Over-the-Counter market (OTC).  Most counties will give you a list of the tax liens that are available at the time of your request, and after careful research, you can purchase these liens directly from the county.

  • Advantage:  All liens bought over-the-counter from the counties will accrue at the state’s 16% rate — you will not have to compete with other investors to win the lien at a lower interest rate.
  • Advantage:  You can be relatively efficient with your research, as you have a very high likelihood of being able to purchase any of the liens that you want after the auctions are over.   When you are participating in the auctions, you will likely research a large number of liens for every lien that you actually win (unless you bid extremely low rates), as you are in competition with many other bidders.
  • Disadvantage:  OTC liens can be more difficult to research than the liens that were sold in the February auctions.  In fact, many of the properties that are available in over-the-counter tax lien sales are available precisely because they are more difficult to research (often there is missing data or the parcel is difficult to locate on a map).  Many are also of questionable value, as you will likely find liens on useless scraps of land that  may not redeem and that you may not want to end up owning.  Remember, many  experienced investors participate in the February auctions, and if they failed to bid on a lien, perhaps they had very good reasons for doing so.

A third way of buying Arizona tax liens is via a secondary market such as the one on this site (available under the “Listings” tab).  The tax lien secondary market is where individual investors in tax lien certificates sell their liens directly to other investors.  This is a very exciting and potentially lucrative way to acquire Arizona tax liens, but again, you must do your research before purchasing.

Some of the Arizona tax liens for sale in the secondary tax lien market are eligible for immediate foreclosure, others are being sold at a discount to reflect either the questionable quality of the underlying property or the seller’s wish to find a buyer quickly.  There are many reasons that people sell their Arizona tax lien certificates; sometimes there is a death in the family and the entire portfolio is put up for sale, other times a seller does not wish to foreclose and is looking to be redeemed by another investor who will then go forward with the foreclosure proceedings, some people find themselves needing liquidity, and this is the only way for them to sell their unredeemed liens, other sellers want to get rid of their purchasing “mistakes”, however we have found that at the right price, someone else’s “mistakes” can be your opportunity.  Again, it is imperative that you do your own research and due diligence before buying a tax lien from another investor secondary market for tax liens.

It is also important that you do NOT pay any fees for the purchase other than the transfer fee charged by the county.  There are many scammers out there who offer liens for sale via online marketplaces such as Bid4Assets or Ebay, where the seller or the marketplace charges you a large fee.  You should always consider how fees will impact your investment return before investing.

  • Advantage:  People who want to sell their tax lien certificates have few options, and some may be willing to sell perfectly good liens at a discount.
  • Advantage:  Investors who are interested in properties that they can foreclose on, will have shorter waiting periods than if they bought at the auctions, as the three-year holding period before the owner of the tax lien certificate can initiate a foreclosure lawsuit starts from the day that the certificate was issued.  Several of the liens currently available on this site can be foreclosed upon right now.
  • Disadvantage:  There is an element of trust inherent in purchasing a lien from another investor.  First of all, it is possible that the seller is offering their tax lien certificate for sale because they know something about the underlying property that makes the investment  unattractive.  Secondly, while each county has an official process for transferring Arizona tax lien certificates from one investor to another, there is a point in time when the seller has your money, but you are not yet the registered owner-of-record.  If the seller were to fail to do his/her part of the transfer,  you would have your work cut out for you to get your money back or to pressure the seller to complete their part of the transaction.

 

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Posted in ABCs of Tax Lien Investing, Buying Arizona Tax Liens, Buying on the Secondary Market

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Tax Lien$

Posted on July 12, 2011 by admin| Leave a comment

While this site is called Arizona Tax Lien Services, and our focus is on helping you invest in Arizona tax lien certificates, we have also invested in other states, including New Jersey. We attended our first New Jersey tax lien auction with only this book (and our knowledge of investing in Arizona tax liens) as preparation. Since New Jersey tax liens are sold by individual municipalities, it is not uncommon for a tax lien sale to have fewer than a dozen properties available. We were thrilled to have won 2 liens at our first auction, following the guidance from this book. The book also helped us navigate New Jersey’s complex recording and redemption requirements. One lien paid off in 2 weeks, giving us an extraordinary annualized return; the other is still outstanding, and has been giving us very attractive sub-tax opportunities. Two thumbs up!

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Getting to Yes

Posted on July 12, 2011 by admin| Leave a comment


One of the principals of AZTLS had the rare privilege of taking a negotation class at Harvard Law School directly from the authors of Getting to Yes. This book offers a systematic framework for negotiations, accompanied by real world examples. This is a timeless classic. Despite being a bit dry for some people, it is our opinion that this is one of the most important books around for business. As a tax lien investor, you may find yourself in situations where foreclosure is not an optimal outcome. When negotiating a deed in lieu of foreclosure, tax lien investors would do well to approach their negotiations thoughtfully and systematically. Deed-grabbers beware!

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