This is going to be a double newsletter issue, so I have packed it with lots of information, ideas and sales dates/tax sale list links. May and June are big tax sale months and I want to address some of your questions and prepare you for upcoming tax sales.

In addition, our entire staff will be attending the BookExpo America convention in Chicago on June 4-6, 2004, to promote the Rogue Real Estate Investor Collection. If you are in the area, stop by and we can chat.

The First Order of Business is Something Many of You Have Been Asking About: Travel Free Tax Sale Investing.

If you have been following my newsletters, you may have noticed that some counties are starting to allow online tax sale bidding. Currently, many counties in California, Nevada and Michigan are using Bid For Assets (www.bid4assets.com) to handle their tax sales. Instead of conducting public auctions at a physical location like the county courthouse, tax defaulted properties are sold directly online using a bidding system that allows anyone to participate from his or her own home.

In a similar manner, other government-owned real estate, including U.S. Marshall-seized property, government surplus property and foreclosures, are also being sold using an online bidding format to anyone with a computer and an Internet connection.

About a year ago, my partner and I predicted this would happen.

Why?

Federal, state and county governments are facing ballooning budget deficits. Meanwhile, individual bankruptcies and credit defaults are at all time highs.

Translated: While counties need money more than ever, a lot of real estate is currently in tax delinquency or in the process of becoming tax delinquent.

The current approach for most states is an antiquated tax sale process that suffers from two big problems. First, most of the tax sales are conducted on one or two days per year and few bidders can attend the auctions. Second, when you factor in advertising costs and the labor required to plan and conduct the tax sales, they are expensive and time-consuming for the county.

The Internet has the ability to solve all these problems.

How has it worked so far?

Better than anyone predicted. The online tax sale conducted by Kern County, California, last year sold more properties at auction than the previous eight years of traditional tax sales.

While the change from physical auctions to online auctions in many states will probably be slow, online tax sale bidding will be the wave of the future. It is simply too costly and time-consuming not to do it.

However, there is one big problem with online tax sale bidding.

Lack of information!

How can you bid when you have never seen the property and have no more information than the parcel number and the taxes due?

This problem with lack of information also occurs with over-the-counter tax sales (mail-in bids) and negotiated sales lists.

When my partner and I wrote the first edition of the Rogue Real Estate Investor Collection, we developed the product so you would have the tools to evaluate foreclosures, REITs, tax lien certificates and tax deeds yourself.

Based on your feedback, for many of you this product has given you the tools you need to get started or enhance your real estate investing. We also continue to provide frequent updates to the Rogue Real Estate Investor Collection so you will have the most up-to-date information possible.

However, as we continue to talk to customers, some of you are looking for more assistance, hands-on training, and more ways to buy properties directly from your home.

We think we have some answers for you.

First, for those of you who want to focus on online bidding and states that offer mail-in bids, we are going to continue offering our interactive online course. In this course, you will be taken through a comprehensive presentation of the entire tax sale process from the comfort of your own home. Each lesson covers a different subject of the tax sale process and includes questions that you must answer correctly to go to the next lesson.

At the end of the course, we include actual mail-in lists for states where we have been able to find mail-in bid lists. We also profile states that offer online bidding. Here is an outline of the online course lessons:

• Lesson 1: Why Do You Want to Invest in Tax Liens and Tax Deeds?
• Lesson 2: What are Liens?
• Lesson 3: What are Deeds?
• Lesson 4: How to Value Tax Sale Property
• Lesson 5: Managing Environmental Risk
• Lesson 6: Bankruptcy Implications
• Lesson 7: How to Protect Your Assets (Insurance, LLCs and More)
• Lesson 8: Take Action – Obtain a Tax Sale List and Start Locating/Researching Properties
• Lesson 9: Take Action – Attend an Auction or Bid Directly Using a Negotiated Sales List
• Lesson 10: How to Make Money Off of Your Investment
• Lesson 11: Advanced Strategies, Including Buying and Selling Real Estate Using a Self-Directed IRA

If you have already purchased the Rogue Real Estate Investor Collection, we will give you full credit for the purchase price of the book if you want to sign up for the course ($100 off).

So that you will get your discount, we have created a special page for Rogue Real Estate Investor Collection customers only. Here is the link to use:

http://www.rogueinvestor.com/tax_lien_course_discount.html

Do not use the link on the home page of the Rogue Investor web site to sign up for the course, or you will miss out on the discount.

If you plan on bidding online or attending a live auction, we think the tax lien course is one way to test if you have the knowledge you need to evaluate properties.

In the future, we also plan on going to some of the counties offering online sales prior to the sale, so we can develop detailed profiles of the properties that look interesting to us. We will add these detailed property profiles to our website using a password-protected area, so members can access the information. Then, when you participate in the online auction, you will have the profiles so you can better prepare your bids. I will let you know when we have some detailed profiles ready.

Also, do not forget to use our web site at www.tax-lien-certificates.com to look up county information and sales dates, as needed. This site also includes basic information regarding the tax sales in each state. If you own the Rogue Real Estate Investor Collection, this information is also on your CD, but if you have left your book at home, it can be handy. I find myself using this site for quick lookups and checks on basic county information before I go to sales.

Second, we have been getting a lot of requests from investors looking to us to do real estate investing for them. We believe the best way to handle this is to start an LLC (limited liability company) that we manage. Due to the rules regarding LLCs, we would need to limit the membership in the LLC to about 35 members. Also, to raise enough capital to make the LLC worthwhile, an investment of about $10,000 per member would be required. To plan for this option, we need interested parties to send us an email directly so we can determine if this is a viable option. If it appears that we have enough interest, we will prepare a detailed email for the interested parties and set up the LLC. For those interested in investing in a real estate LLC, please contact us using the following email address: llc@rogueinvestor.com.

Upcoming Tax Sales

May and June are extremely busy tax sales months. Many counties in California have online tax sales in May. Go to www.bid4assets.com to find tax sale information for these California counties.

Here is a list of states that have traditional tax sales in May and June:

• Alabama
• Arkansas
• Connecticut
• Florida
• Iowa
• Maryland
• Michigan
• Minnesota
• Utah.

Use the county links on your CD or at www.tax-lien-certificates.com to find specific information on the counties you want to visit.

Also, Florida and Iowa are two excellent states for tax lien certificates. To help you with these states, I have done some research online. Here are some links so you can download tax lists and get prepared for the sales.

Florida

Hernando County, Florida

The tax lien sale in this county will be held on May 26, 27, & 28, 2004. For more information and to download the tax certificate file, visit the following web page: http://www.hernandocounty.us/tc/taxsale.htm

Here are the links to two different formats of the tax certificate file:

• text file (1857k): http://www.hernandocounty.us/tc/2004_Tax_Sale_Real_Property_LIVE_DATA.txt
• zip format: http://www.hernandocounty.us/tc/2004DRP.zip

Pinellas County, Florida

Information about this county’s tax lien sale is at http://www.taxcollect.com/Content.aspx?ContentID=251&CommandID=2&DeptID=3

The sale will begin at 1:00 p.m. on Tuesday, June 1, 2004, in the auditorium of the Sunstar/EMS Building, 12490 Ulmerton Road, Largo, Florida. The sale will recess at approximately 5:00 p.m. on Tuesday and will continue as noted on the following schedule or until all tax certificates are sold to a buyer or struck to the County:

• June 1, 2004, Tuesday, 1:00 p.m. - 5:00 p.m.
• June 2, 2004, Wednesday, 8:30 a.m. - 5:00 p.m.
• June 3, 2004, Thursday, 8:30 a.m. - 5:00 p.m.
• June 4, 2004, Friday, 8:30 a.m. - 5:00 p.m.
• June 7, 2004, Monday, 8:30 a.m. - 5:00 p.m.
• June 8, 2004, Tuesday, 8:30 a.m. - 5:00 p.m.

All property, on which taxes remain delinquent, will be advertised in the Gulf Coast Business Review on May 14, 21, and 28, 2004. Copies of the advertisement will be available in all Pinellas County Tax Collectors’ Offices on May 17, 2004. The advertisement will also be available on their website at www.taxcollect.com.

Information on the county’s tax deed sales is available at: http://pubtitlet.co.pinellas.fl.us/servlet/taxdeed.saledates.DM79

Orange County, Florida

Information on the county’s tax lien sale is available at http://www.octaxcol.com/TaxSale2004.htm and at http://www.octaxcol.com/TaxSaleProcedure.htm

The annual tax certificate sale for the prior year delinquent taxes will be held via the Internet from Wednesday, May 19, 2004, and will continue through Thursday, May 20, and Friday, May 21, 2004.

For details, you can visit the Orange County Tax Collector’s bidding site at www.bidorangecounty.com

The delinquent list will be published three consecutive Wednesdays beginning April 28, 2004, by the Orlando Sentinel. The other dates are May 5 and May 12, 2004. Also on April 28, 2004, delinquent accounts will be posted to the Tax Collector's web site at http://www.octaxcol.com, as well as to the www.bidorangecounty.com web site. The delinquent information will be updated periodically until the sale.

Iowa

Des Moines County, Iowa

The tax lien sale is scheduled for June 21, 2004. More information is available at http://www.co.des-moines.ia.us/Treasurer/TaxSale.asp

Polk County, Iowa

The tax lien sale is scheduled for June 21, 2004, and every day afterwards until the sale is finished. More information is available at http://www.co.polk.ia.us:8080/Downloads/Treasurer/TaxSale2004.pdf

Scott County, Iowa

The tax lien sale is scheduled for June 21, 2004. More information is available at http://www.scottcountyiowa.com/treasurer/tax_sale.shtml. The new tax sale list is not posted yet.

Black Hawk County, Iowa

The tax lien sale is scheduled for June 21, 2004. Limited information about the sale is available at http://www.co.black-hawk.ia.us/depts/treasurer.html

Pottawattamie County, Iowa

No information about the county’s tax lien sale was available online. Information about foreclosure sales handled by the county sheriff is available at http://www.pottcounty.com/html/departments16c.shtml 

To prepare for the BookExp America convention, I will be taking off during the month of June. This is why I am profiling sales in May and June this month.

I will return in July. My focus in July will be to profile states that have tax sales every month.

Happy Investing,

Bryan Rundell

P.S. Here is how the sale in Nebraska went when my partner Michael Williams attended it in March.

Otoe County, Nebraska, Tax Sale

Nebraska conducts tax sales once a year on the first Monday of March. This year I attended the Otoe County, Nebraska, tax sale located in Nebraska City, Nebraska. The tax sale list was published in the News-Press, a local newspaper in Nebraska City. For a nominal fee of less than $2.00, the News-Press sent me two copies of the list one week before the auction.

The sale started at 8:00 a.m. at the City Hall. The Otoe County Treasurer conducted the sale by herself. First, each bidder drew a number from a hat. The number represented the order of bidding.

Before the procedure started, the Treasurer asked if anyone was there to only bid on one property. One couple indicated that their intention was to bid on only one property. All registered bidders agreed that this couple could purchase the lien on that property.

The bidding was conducted in a professional and casual atmosphere. Approximately seven individuals were in attendance, with several representing more than one person or entity; therefore, 10 to 11 entities were represented.

The Treasurer recognized that most bidders did not want to bid on liens below a certain level and the bidders in attendance agreed that she would skip over most liens below $300.

The list contained over 400 properties, with outstanding taxes of between $5.00 to over $47,000. Approximately 17 percent of the properties were redeemed prior to the sale, but after the list was published. Roughly 49 percent of the liens fell in the below $300 range. These properties were noted as the Treasurer went through each parcel.

The sale occurred in a round robin process with bidders accepting or rejecting certain bids. Nebraska’s system results in all bidders being able to receive the maximum interest rate of 14 percent, rather than a lower interest rate due to a bid down process. The Treasurer also noted whether certain properties had previous certificates maturing, were in bankruptcy, had special assessments or were mortgage foreclosures. Most bidders avoided those types of properties.

At the conclusion of the sale (9:45 a.m.), about 34 percent of the properties were bid on by about 11 different entities. Therefore, I was able to pick up 13 tax liens ranging from about $400 to $2,000.

The Otoe County Treasure then required a blank check, contact information and a signed W9 form.

My final visit was the Otoe County Assessor’s office (in the same building) to pick up information on assessed values, addresses and as much detailed information as possible on the tax lien properties that I picked up.

As a follow-up to the tax sale, 10 out of 13 certificates have already been redeemed. This results in a situation where the interest rate is calculated on a daily basis, but the $10 certificate fee has to be overcome before the investor can show a positive result. In several cases, I actually lost a few dollars on the redemptions.

In addition, one property owner just filed for Chapter 13 bankruptcy, which will result in filing some paperwork with the bankruptcy court.

So what are the lessons learned?

A round robin process has the downside of the bidder not knowing which properties he or she will be able to bid on; therefore, any advanced preparation can be daunting. On the positive side, a bidder is guaranteed the maximum interest rate and there are no bidding wars.

To avoid the losses on early redemptions, set a minimum amount and only research the properties above a certain amount.