Real Estate FAQ for tax deeds, tax liens, tax sales, tax certificates, auctions, foreclosures. If you have a real estate investingFAQ let me know, submit below.

P.S. There have recently been some Statute and U.S.C. changes which affects you. This is need to have information for tax deed, mortgage foreclosure and certificate investors.
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Real Estate FAQ
TAX Deed Title Insurance and Underwriting
Hi James. We're the ones you called and commended for being upfront about the lot for sale being a tax deed property. Is there a specific Fl statute about holding the tax deed prop 4 years and then being able to get title ins? Also, can we hire you to do title searches for us? We live in Vero and it's a long ride to Citrus County courthouse to do research. And now I'm concerned I may have overlooked some things before we purchased our lots. Thanks for the favor of a reply.

Real Estate FAQ Answer
I was looking at the underwriting requirements for tax deed properties I received from an underwriter and came across the FL. Statute number specifically relating to our conversation.

So Stated in the underwriting requirements for issuance of title insurance,

The tax deed has been of record for less than 20 years AND there is any 1 of the following conditions:

• i. A conveyance from the prior owner by virtue of a quit claim or warranty deed;
• ii. The prosecution of a quiet title action pursuant to FL. Sat 65.081 in which all necessary parties are joined as Defendants.
• iii. The tax deed has been of record for atleast 4 years; AND

• (a). The underwriter is satisfied etc,etc,
• (b). There must be recorded competent, substantial evidence establishing at least 4 years of continuous adverse possession as defined in FL. Statute 95.191
• (c) The prior owner was not in actual possession of the property for one year or more following the tax deed issuance as defined in Fla. Statute 95.192.

Real Estate FAQAnswer
As a new tax deed investor I would avoid those tax deeds which: are issued against property previously owned or conveyed by Sky Development Group, have more than 6 parties of interest or owners listed in the Owners and Encumbrance report (applicable if quieting title), properties whose owners reside outside of the USA (applicable if quieting title), properties with federal or state liens.

Good Counties to look into: Charlotte, Orange, Duval, Martin, Citrus, Hernando, Marion, Okaloosa.

Counties to avoid due to either lack of online resources, huge cost in time and money per tax deed: Miami-Dade, all the smaller counties in the upper central region, Palm Beach, Monroe.

With the intent of immediate resell, you may consider hiring an attorney to conduct quiet title actions so the property can be resold with title insurance and warranty deed. A tax deed is not an insurable instrument of conveyance.

I hope this answers some of your real estate questions

Real Estate Investing FAQ Answer
Thank you for the positive response. I do happen to have a few pointers:

1. Avoid properties previously owned by Sky Development Group. Many of the properties owned by them were conveyed by fraudulent deeds. Many of these properties are undergoing quiet title actions brought forward by the true owners whose property was conveyed without their knowledge. Buying tax deeds for these properties can lead to a great number of defendants in a quiet title action and a lot of headache. I believe Sky was conducting sales in Palm Beach County.

2. As a new tax deed investor I always advise you to set up a business entity such as an LLC, it is relatively easy to do and the cost is minimal, around $300.00 with Click and Inc. This can limit your liability in the event something goes wrong, seek legal advice.

3. If you intend to do a quick sell and will be utilizing an attorney to conduct a quiet title action, the standard fare is $1,000 plus expenses. Make sure you get an estimate of cost. I, when doing this, would premise the question as, what quiet tile action expenses are normal for a single property with 3 defendants all being in the US? The costs for the advertisement, clerk's fees, mailings should be consistent among the different attorneys you approach. The inconsistence will be if they use a paralegal for document drafting, legal courier or in house provider, do they appear telephonically or appear in person for the hearing. It is perfectly acceptable for the attorney to appear telephonically in a quiet title hearing.

4. Be warned, the time between the Tax Collectors ownership/encumbrance certification and time of tax deed auction can be months, so conduct your title search before bidding. I have site pages which can point you in the right direction in my Tax Foreclosure Info.

5. If you are new to the game don't attempt to do your own quiet title action, it can lead to a lot of aggravation and wasted time. I have known people who spent a year of time and a lot of money, only to have their case thrown out over and over again. One such person was attempting to represent himself while the property tax deed was in the name of his company. Can't self represent as a corporation in a quiet title action, only an individual can act as a pro se litigant in this type of case. In time you, after having a few attorney represented cases completed, will be able to follow the time line and document trail for conducting your own.

6. NEVER TRUST A SINGLE SOURCE FOR INFORMATION

Real Estate FAQ Question: when you say $5,000 is a "high dollar" amount and $500 is "middle of the road", is that for counties in the middle of the state that might not have as high tax bills and face amounts as Palm Beach, Broward, and Miami-Dade, or do those numbers still hold true for these 3 counties? I guess same question as it pertains to your suggested target assessed values of $25k-$80K?

I need to sift through the Miami data from last year a little more although there were over $45,000 TLC so I don't know what I will really be able to determine. Do you have any data that shows the ranges of face amounts or assessed values that get eaten up by the institutions, or bid down low, or whether it's homesteaded properties or some other factors?

Real Estate FAQ Answer
The difference between investing in Dade, Broward, Palm Beach versus a smaller less populated county really comes down to risk assessment. I prefer to allocate my risk over as many properties as possible while staying around the $500.00 per certificate rule. What you will find in Dade County is that there are few certificates available in that price range, due to the lack of vacant land. The certificates you do find in that range, won't be worth the risk or investment. It is not uncommon for property taxes in these counties to exceed $5,000 annually. If you do purchase a $5,000 certificate and it is not redeemed, when applying for the tax deed you may have to redeem 2 years of additional certificates. This equates to, officially out of pocket $15,000. If the property owners file for bankruptcy, it can really hurt. If the property becomes riddled with code enforcement liens, it can also hurt. You may have difficulty getting your money out. It just isn't worth the risk, in my opinion, to invest in this area for tax certificates. The old rule still rings true, less than 1% of certificate holders end up with the property after the tax deed sale unless they bid at the tax deed sale.

I would much rather be in a smaller county, not that surrounding counties are much smaller these days, but your net can be cast over more fish. With so many counties certificate auctions being online, it makes sense to seek out smaller counties. I find that in central Florida there are thousands of tax certificates to purchase that fall in the $500 category which are against property with a value around $25,000. Marion and Polk have a considerable number. Being safe while at risk, is really the name of the game. With the current revaluation of many properties through out Florida, your $500 will go farther than it has in the past few years. I own some lots in Marion which carried a tax bill of $1,000 annual per lot with assessments around $50,000 but in the last year I noticed that my tax bill has come down to $400 on these lots while the assessment has only gone down by 40%. So, these numbers, 25k-80k, $500-$5,000 are just my standing numbers, which change over time, but make for a comfortable and safe place to start.

Regardless of what county you are considering, if the property value exceeds $80,000 it will almost always be redeemed immediately.

In regards to institutional buyers of tax certificates, there is no rhyme or reason. They seem to buy at random and I really don't know what their criteria are. Don't waste your valuable time searching through data of previous auctions to find the hidden key, there is not one. Your time would be better spent shooting yourself in the eye with a rubber band, I have wasted a huge amount of time on tracking different aspects of tax certificate sales for years-all pointless.

Real Estate FAQ Reader Response
thanks so much I appreciate your insight. I see what you’re saying. I think for my first time I am a little more comfortable doing it in my own backyard in one or all 3 of the counties. The only county of the three with reliable data is Miami-Dade. Palm beach switched to Real Auction so Real Auction didn’t run their sale last year and doesn’t have the data and Grant Street shut it down when Palm beach left. Broward has been live until now so they don’t have on-line data either. Their IT guy did send me some raw data, and I glanced through it briefly and saw that of approximately 46,000 TLC’s last year, 3,618 were below $1,000 or 7.8%, 24,890 were between $1,000 -$5,000 or 53.6%, 13,702 were between 5,000-10,000 or 29.5%, and 4,199 were over 10,000 or 9%. I should probably bifurcate the 1,000-$5,000 a little more.

I guess, given that property values are relatively higher here, maybe target a minimum value of $50,000 versus your $25,000, and face amounts in the 1,000-$2,500 range. Does that sound out of whack? If I limit the face amount, not sure if it even matters what I cap the value at. Another way to look at it would be the lien to value ratio. Using your 500/$25,000 that would mean a max value of 20%.

A couple of other things you mentioned. When you say those over $80K almost always get immediately redeemed, that sounds like a good thing. With that statutory minimum of 5%, if they get redeemed in 30 days that’s a 60% annualized return. Also, while the higher certificates will require more out of pocket when you apply for the tax deed, your total outlay receives 18% until it’s sold which sounds like a pretty good deal as well. I wasn’t aware it could take that long to quiet title if it got to that point, although I knew it could cost a few thousand bucks. Someone told me that another option was some sort of specialist title insurance.

To mitigate my risk, in addition to what we’ve discussed , I was planning on focusing single family homesteaded properties which seem to have the highest redemption rate as well as other single family homes. Avoiding industrial, exotic, and probably commercial properties as well. I suppose sticking with first year TLC’s or at least those with a history of redemption and without more than one existing TLC.

I appreciate your help. I learn something new every time I read your site or receive emails. I can’t believe you offer that website for free. You should charge people something. It’s good info. Do you only bid in those central Florida counties?

Real Estate FAQ James Response
Your assumptions are correct, in regards to the numbers we have been discussing.

The $80,000 redemption statement may be a good thing it all depends on your objective. Either way, redemption or not, when you can make a good return with little out of pocket and limited risk-its a good thing.

Example: You purchase a county held tax certificate which has been held for 120 day. Your purchase amount will be the face amount plus the interest accrued, 6%. If the certificate is redeemed 30 days after the transfer to you your return would be the 1.5% interest accrued during your holding period, with reimbursement made for the face amount and interest paid, numbers are based on the 18% annual interest for county held certificates.

Example: You purchase a certificate at auction and your certificate is redeemed in 60 days you receive your 5%. You then go purchase a 1st year county held tax certificate and it is redeemed in 60 days add 3%.

So, with these examples in hand, if your county auction certificate purchase yields 5% and is redeemed lets say 60 days after issuance, and subsequent county held certificates yield 1.5% per month with an investment window of 10 months, your maximum annual return could be 20%. If, on the other hand, your first certificate isn't redeemed you are looking at a total annual return of what ever your interest bid amount was.

Thanks, Kim

Real Estate FAQ Answer
Some specialty title insurance agencies advertise they can obtain title insurance on tax deeds in Florida. Conversations, with title agents, clerk of courts, underwriters, have all been the same. These insurers issue an affidavit and a certification that all parties were properly served but it does not purge the title of prior owners or parties of interest. So, the insurance issued by these agents’ corporate affiliates is not viewed as acceptable by many title insurance companies and underwriters.

One of our best clients came to us, after obtaining such insurance, and then paid our attorney to quiet the title to the same property. It seems client could not obtain title insurance through any local title agency when he had a buyer for the property. He informed us that the title certification disclosed that a quiet title action may be necessary, but after he had paid them. It was presented as a standard disclosure, so he assumed it was the norm not the exception.

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