This newsletter, I want to talk about Washington State Tax Foreclosure Sales.

Most sales occur in December, January and February. Washington State law allows a tax payer to be delinquent up to three years. After three years the County has the right to sell the deed to the delinquent real estate at the annual tax sale. At the annual sale, bidding starts at the amount of taxes, fees and penalties owed. If you are the successful bidder, you will be required to pay the full amount in cash or cashier's check. In addition, you will be required to pay a small recording fee.

Washington tax deeds have no right of redemption after the sale unless it can be proven that the owner was a minor or mentally incompetent. In addition, you do not have to pre-register for most sales.

State law requires delinquent owners to pay their taxes on the day prior to the sale. This is a bonus for tax sale investors because you can check for last minute redemptions a day before the auction and not have to wait until the actual auction.

Finally, online information is available, but none of the sales are conducted online.

One other interesting thing to remember is the remainderment or the excess amount bid at a tax sale. By law the County is only supposed to recover the taxes, fees and penalties; however, in many cases investors will bid properties above the minimum amount owed. In this case, the excess is actually due to the property owner. However, the County is not responsible for notifying the property owner of his/her proceeds and after three years, if not claimed, the County takes possession of the excess money from the sale. Some investors actually make a business out of finding and working with property owners to recover these excess funds.

Washington State also has a system setup for properties that are not sold at the tax sale. These properties are sold to the State and are referred to as "Tax Title Properties." Tax title properties are often offered for sale at a later time.

So what does all of this mean?

Washington is a pro-investor state that may suit your real estate investing needs. In fact, prior to teaching our Tax Foreclosure Sale Seminar in Seattle on January 14 and 15, 2006 we will be attending a live Washington State Tax Foreclosure Sale.

If you have been looking for tax sale experience and hands on training, this gives you a great opportunity to attend a sale with us and then go to our two-day Tax Foreclosure Sale Seminar in Seattle.

If you want to meet us at the sale, please get signed up for the seminar as soon as possible so we can make arrangements prior to the sale. 

Here is the link for more information: 

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

Also, we want to let you know that for 2006 we have decided to limit the number of physical seminars that we teach, so the Tax Foreclosure Sale Seminar in Seattle will be the last physical seminar that we offer for some time.

Now on to other matters.

We just attended a tax lien sale in Rock Island, Illinois. Interestingly, the sale was conducted at the county offices but the participants in the sale were given laptops and software that allowed bidding in 1% increments from 18% to 0%. The sale was attended by several big-time investors, banks and investment funds.

Most of the liens above $500 in value, especially liens on residential houses, were purchased for 0% to 2%. Liens on commercial properties were purchased for 0% to 3%.

Why would anyone bid the interest rate on a lien this low?

First, in Illinois this interest rate is actually a penalty for six months, so even if the lien gets redeemed in a few weeks after the sale which is common, you get the full interest rate.  For banks this means they get a 1% to 2% return in less than a month, not bad when you consider that they can move money from one tax lien sale to the next and earn close to 12% per year on their money in some cases. 

Second, the banks have done their research and some of the liens they bid to zero will go to foreclosure.  It only takes a few of these to raise your total return substantially. 

So where were the deals for small investors?

Generally, the banks were not interested in the liens below about $500 and thus interest rates on these low priced liens ranged from about 18% to 5%, with an average somewhere in between.

What should you know about investing in Illinois?

Illinois is a competitive state, so if you are planning on attending a sale in 2006, one strategy to employ is to go after the smaller liens and buy many liens. This will allow you to obtain a higher average interest rate and to have a higher chance of foreclosing on a few properties. And because you are focusing on what are perceived as the least desirable liens, your competition will be limited and the foreclosure rate will be higher.

The downside of this type of investing is that you should really do more research or just accept the fact that you may end up with some liens that are not worth foreclosing on and will just be factored into your overall return.

Join me next time when I focus on Online Tax Sale Investing for 2006.

January

January 12 - Snohomish County, WA Tax Foreclosure Sale
http://www1.co.snohomish.wa.us/Departments/Treasurer/Services/forclosures.htm

January 13 - Thurston County, WA Tax Foreclosure Sale
http://www.co.thurston.wa.us/treasurer/delinquent.htm

January 14,15 - Tax Foreclosure Sale Seminar in Seattle, Washington - Two full days of interactive learning with the authors of the Rogue Real Estate Investor Collection and an optional additional day where you get to attend a sale with us. To sign up, visit this link
http://www.rogueinvestor.com/tax_lien_course.html or call us at 913-381-4520.

January 20 - Cowlitz County, WA Tax Foreclosure Sale
http://www.co.cowlitz.wa.us/treasurer/Foreclosure_Maps/FORECLOSURE%20AUCTION%20FACTS%202005.pdf

February

February 3 - Clark County, WA Tax Foreclosure Sale
http://www.clark.wa.gov/treasurer/property/ForeclosureInfo.html

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Happy New Year,

Michael Williams

P.S. For new Rogue Investors, previous newsletters are archived at: http://www.rogueinvestor.com/real_estate_newsletter/archives.html