Over-the-Counter Tax Sale Investing: Part 1

Hello Rogue Investors,

So, here is the question:

The answer is:

What happens when liens or deeds are not sold at a tax sale auction?

In many states, this triggers a second process of selling tax liens or tax deeds. This process is known as buying over the counter. In Texas it is called "resales" or "struck-off" properties; in Arkansas, it is referred to as "negotiated sales"; and in Alabama these properties are referred to as "sold-to-state." Whatever the name, the process is similar.

The properties or liens that are not purchased at auction are put back into the county's system and offered for sale. For states with over-the-counter lien sales, you can purchase the liens directly from the county and the interest rate bears the maximum annual interest rate, for example 18 percent in Florida. So instead of going to an auction in Florida and bidding down the interest rate, you go to the county, pick up their county-held lien list, bid on a first-come, first-serve basis and, if the lien is redeemed, you earn the full 18% annual interest rate.

In some states, the redemption period is already triggered at the tax sale auction, so if you pick up a lien that was in a sale two years ago and the state has a three-year redemption period, you effectively reduce the redemption period to one year. In a state like Alabama, the liens automatically turn to deeds three years after the tax sale auction.

What do I like about over-the-counter tax sale investing?

It's like a treasure hunt!

Suppose I handed you a box full of lottery tickets and told you that a few of the tickets were worth $100,000 each? Chances are you would get excited enough to look through the box to find the valuable tickets.

Over-the-counter lists follow the same pattern. If you spend the time and look hard enough, you can occasionally find the gems that are worth much more than the effort expended.

Whenever I research or travel to an area, one of the first things I do is collect all the over-the-counter lists I can find.

This year, I dedicated most of my creative energy into compiling an "Over the Counter Super List."

Covering 13 states that have over-the-counter sales, this Over the Counter Super List includes 67,240 liens and 25,200 deeds that can be purchased over the counter. Over the years, over-the-counter lists have given our company many good real estate investing opportunities.

Here are some examples:

• In Texas, the struck-off lists can be diverse and undiscovered. Over the past year, we have picked up lake lots for $3,000 to $5,000 that realtors sell for $15,000 to $25,000.
• On an Arkansas negotiated over-the-counter list, we found a lake property worth $75,000 selling for $10,945.
• On a Colorado over-the-counter list, we bought a lien that can be converted into a deed in less than six months. The property is 14 acres of forestland south of Denver. The cost of the lien was $987.

As part of a three-part series, I am going to profile the over-the-counter market across the United States.

This time around I want to focus on Alabama over-the-counter sales.

Properties that are not sold at the annual tax lien sale in each county are automatically sold to the state. Alabama's "Sold to State" properties are offered as tax liens for the first three years from the date of the original tax sale. After three years these liens automatically become deeds. Therefore, when buying Alabama sold-to-state properties, you can purchase either liens or deeds, the best of both worlds.

Alabama offers an interest rate of 12%. In a traditional May tax sale, you would bid up the value and receive 12% on the minimum bid or 12% on the first 15% of the property's appraised value, as determined by the county. Oftentimes, bidders will take the bids up to about 30% of the property's value, which results in an interest rate of about 6%.

By purchasing over the counter, you will receive the full 12% on the minimum bid; or, if you would rather look for properties to purchase, just search for the liens that have matured and become deeds.

Why consider Alabama "sold-to-state" properties?

There are more liens and properties available than potential bidders. Also, most large investors do not mess with over-the-counter properties. They would rather attend one sale and deploy millions of dollars and be done with it. This is why the over-the-counter market is best suited to individual investors like you and me.

This last summer, I picked up a list so large that I could not even hope to look at all of the liens and deeds. After doing field research on the type of properties available, I saw a few run-down houses and lots as is often the case, but surprisingly I found liens on new four-bedroom, brick ranches and commercial land in a thriving area.

In the next issue, I will profile the over-the-counter market in Texas.

Our dedication to the tax sale market has also taught us a few things about this undiscovered market.

First, you need to have good research skills to find the gems.

Second, you need to keep updating your lists. The fresher the list, often the better the bargains.

Third, you need to know how to navigate the county or state's over-the-counter process. Every process is different and the agency that handles tax sale auctions is often not the same agency that handles the over-the-counter sale process.

Finally, many of you have told us that your job, busy schedule or health prevents you from doing a lot of traveling and you need a way to invest in tax liens and deeds from your home.

Rarely do we find an investing approach that matches our talents and your interests and needs so well.

If your goal is to find the gems, avoid the travel and competition, and either earn a full interest rate or pick up a valuable property for a few cents on the dollar, the Over the Counter Super List may meet your needs.

The Super List includes over-the-counter liens and deeds in the following states: Alabama, Alaska, Arizona, Arkansas, Colorado, Florida, Iowa, Montana, Nebraska, New Jersey, Tennessee, Texas and Wisconsin.

In total you will have thousands of liens and deeds to choose from in 13 different states that offer over-the-counter tax sales. In just one county in Alabama, you'll have over 630 pages of liens and deeds to choose from.

But what if you don't know how to research the lists?

No problem.

We will be conducting Over-the-Counter Teleseminars to help teach you how to screen the lists. The Over-the-Counter Teleseminar will be a full hour of training and an additional hour of questions and answers, so you get two full hours of training.

As part of the Over-the-Counter Teleseminar, you will be given Rogue Investor's "Guide to Over-the-Counter Tax Sale Investing." This guide contains step-by-step instructions on how to screen through over-the-counter lists so you can work through an actual list and feel comfortable about your screening expertise.

If you have been waiting for hands-on training but cannot attend a physical seminar, this is your chance.

For more information, please visit:

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

Happy investing,

Michael Williams

P.S. As a special bonus, I'm including a hard copy printout of thousands of tax liens and tax deeds from over-the-counter lists that can only be obtained in person. Bryan and I do so much research on tax liens and tax deeds across the U.S. that we pick up many over-the-counter lists in person that cannot be obtained any other way. Talk about undiscovered. Some of these hard copy-only lists are located in counties where it is rare for anyone to request the information.

P.P.S. Attention: I want to remind you that we are holding a physical tax lien/tax deed investing seminar in Los Angeles, California on November 12-13 (Saturday and Sunday), 2005. You are invited to attend. For more information, please click on the link below:

Los Angeles, California tax lien/tax deed seminar
November 12-13 (Saturday and Sunday), 2005
http://www.rogueinvestor.com/tax_lien_course.html