How a small over the counter tax lien buy actually plays out, worked through a real example

The over-the-counter route is the part I want to push on. Those 61 certificates went unbid at the sale. Some of that is just a thin bidder pool, some of it is that the professional bidders looked at those exact parcels and passed. You screened out the drainage strips and the burned house, which is presumably what the bidders did too, so what was wrong with your three? Or is your county genuinely just under-attended?

@jordan_ellis2 that's the right question. @devon_pierce, roughly how many bidders were at the sale that produced the leftovers? If it was eight people in a room, the leftovers mean nothing except that eight people ran out of money.

$88 on $2,380 over six months annualizes to something like 7%, which is not nothing for money you weren't going to deploy anyway. What's not in that number is your time. You screened 61 parcels and did detailed work on nine. Call it ten hours. At any hourly value you'd assign yourself, this transaction lost money.

That isn't a criticism of doing it once. The first one is tuition. It matters a lot if you're planning to do the same thing with $24,000, because the screening time doesn't scale down per dollar unless you buy bigger certificates.

The code enforcement case is the thread to pull. In some states municipal liens and code enforcement judgments survive a tax sale and in others they are wiped, and it turns on the statute, so a real estate attorney in your state should tell you which. If yours is a survive state, and that owner had not redeemed, and you had gone all the way through foreclosure, you would have inherited an abatement order on a house you paid $700 of taxes for. That is the scenario where the small size stops protecting you.

This post is worth more than most of the ones with big numbers in them. Small and repeatable, and you found out what the process feels like for $30 of fees. The GIS step taking eleven minutes is the useful line.

Where do you find the leftover list? I've been on my county's site for a week and I can find the annual sale notice and nothing else.

@bmoreno23 mine calls it "county held certificates" and it's a spreadsheet linked from a page you can't get to from the menu. I found it by searching the county name plus that phrase. Might be worth trying whatever your state's term is, the naming is all over the place.

Move one variable: the month five redemption becomes month thirty-four and the owner dies in between. Now you are deciding whether to spend on a foreclosure action against an estate for a house you have never been inside, and the statutory interest you have accrued is a rounding error next to the legal cost. Most certificates redeem, so that path is unlikely on any single one, and it is the path that determines whether the parcel selection was actually good. Your three were owner occupied with long ownership history, which is a redemption screen. It tells you nothing about whether you would want the asset. Did you write down, before buying, what you would have done on each of the three if it went to year three?

The thing that saved you is that you were paid the full statutory rate with no bid-down. Run the auction version in a state where the rate gets bid down, win eleven certificates at an average of 1.75%, and the same fast redemptions turn that into a net loss. Same screening logic under a different pricing mechanism, and the outcome flips. Over-the-counter at the statutory rate is a genuinely different instrument, and reading your result as evidence that the screen was good would be a mistake.