How to Foreclose on a Land Tax Lien (1022)
Steven Butala: Steve and Jill here.
JilL DeWit: Hi.
Steven Butala: Welcome to The Land Academy Show, entertaining land investment talk. I’m Steven Jack Butala-
JilL DeWit: And I’m Jill DeWit, broadcasting from the beach in sunny Southern California.
Steven Butala: Today, Jill and I talk about how to foreclose on a land tax lien. This background that we have and our little beach house here in this beach community out of Los Angeles couldn’t be more inappropriate for this topic. How to foreclose on a land tax lien is maybe like one of the most boring things we could possibly talk about, yet maybe one of the most profitable, and then the stuff going on behind is like all fun and games [crosstalk 00:00:37]-
JilL DeWit: Hilarious.
Steven Butala: And horsing around. Who cares about taxes?
JilL DeWit: For those of you who do not see this on YouTube, you’re just watching or just listening or Spotify or something like that, it might be worth checking out the YouTube channel just so you can get a little glimpse of what’s going on behind us and I’ll explain the bicycles and the yelling and the frisbees and the noise behind us. It’s good.
Steven Butala: If you foreclose on several tax liens this month, this is where you hang out.
JilL DeWit: Oh, that’s true. There you go. This can happen to you.
Steven Butala: Before we get into it, let’s take a question posted by one of our members on the landinvestors.com online community.
JilL DeWit: Cody asked, “We have a property under contract to buy, but part of the heirs cannot be located by a closing attorney, and the other relatives do not know anyone from that side of the family.” Well, that happens.
Steven Butala: This is a very, very, very appropriate question for this topic today.
JilL DeWit: Yes, this is good.
Steven Butala: This is why, this story that Cody is telling, this is why that properties become in this tax situation that they’re in, and this is why they’re foreclosable. I’ll get to that in a minute.
JilL DeWit: “Is there a service or an investigator that you have used to track down heirs and see if anyone is still alive on record? Any help you can give would be greatly appreciated.” This is in North Carolina.
Steven Butala: Good. North Carolina is a very good tax lien foreclosure state, by the way. What Cody is asking is, “Look I’ve contact”… he’s sent a letter out or offer out, it got accepted, it got signed, and the seller says, “I would love to sell you this piece of property, but you got to find the other people because they’re on deed and I know they’re alive.” Cody hired somebody or he’s asking if he can hire somebody to close the deal and to find the heirs and get everybody ready to sign. The answer is no… the answer is yes, you can absolutely hire somebody to find all these people. It’s called skip tracing or private investigation, and here’s the tools that most people use.
Steven Butala: You can use a very glossed over service called Salesgenie, you can use LexisNexis, which is what most lawyers use to locate people to serve them, TransUnion, the credit score company, has a tremendous database on skip tracing. You need to find somebody. You can do it, but here’s my real answer to this question. Why? Why wouldn’t you just purchase… What you need to do is accomplish equitable title, which means you have an interest in the real estate and then you can go through a foreclosure action [crosstalk 00:03:17]-
JilL DeWit: There you go, but then it’s [crosstalk 00:03:17]-
Steven Butala: Which is a judicial foreclosure action and through adverse possession, which is what it’s called all across the country, you’ll own the property.
JilL DeWit: Do it with an attorney. That’s what I think. That’s the easiest, and for me, it’s one of those that first you got to make a judgment call. How much money is in the deal? It’s going to be a long process and it’s going to take several months. If you stand [crosstalk 00:03:38]-
Steven Butala: Six months [crosstalk 00:03:38]-
JilL DeWit: To make north of $50,000, I would do it.
Steven Butala: That’s about my number.
JilL DeWit: If it’s south of $50,000, I’d probably move on. That’s really the easiest thing and an attorney will walk you through the whole thing. It’s going to make several phone calls to find the right attorney. Make sure you find one that has done this before-
Steven Butala: Like thousands of times.
JilL DeWit: Not one that says, “Sure, I can do it because I’ll throw it in with the six divorces I’m doing right now.” No, you don’t want that attorney. They may not be the best and [crosstalk 00:04:08]-
Steven Butala: Imagine?
JilL DeWit: Your six months might take six years.
Steven Butala: Can you imagine being a divorce attorney?
JilL DeWit: No.
Steven Butala: I cannot imagine waking up in the morning to go to work to manage someone else’s divorce. Can you imagine being a dentist?
JilL DeWit: Where did this go?
Steven Butala: Can you imagine like what [crosstalk 00:04:27]-
JilL DeWit: I’d like to be a dentist.
Steven Butala: You would?
JilL DeWit: Well, hold on a moment. I wouldn’t like… Well, dentists seem to do very well, let’s leave it at that, and if they need something or there’s a vacation coming up, all they have to do is kind of tell their staff, “We need three more root canals this month”, because I swear that’s happened to me.
Steven Butala: Oh, there’s like a quota to fill to hit [crosstalk 00:04:47]-
JilL DeWit: Apparently [crosstalk 00:04:47]-
Steven Butala: To hit their revenue goal?
JilL DeWit: Totally.
Steven Butala: Oh my gosh. I hope that’s not true.
JilL DeWit: It’s like it’s really weird.
Steven Butala: I know it’s true.
JilL DeWit: It’s weird. I’ve had times at the dentist hit me hard for money. There’s times they’re like, “Okay, have a nice day.” I’m like, “What happened to the last time that we talked about all these things and now you don’t really care?” It’s really weird.
Steven Butala: Do doctors do that?
JilL DeWit: I don’t know. I don’t know. I hope not. Let’s get to the show.
Steven Butala: Today’s topic, how to foreclose on a land tax lien. This is the meat of the show.
Steven Butala: Here’s what happens and why property become in a tax-defaulted status. Most of the time, some life event happens, usually it’s death, and whoever owns stops paying the taxes. In Cody’s example here, what happened is some of the people that own part of the property and the other people that own part of the property, together they own a hundred percent of it, some are contactable and some are not. They just went MIA. The person who’s managing the whole thing says, “You know what? I’m not going to pay the taxes anymore. Nobody cares about this stuff. This tax bill is huge. I get one twice a year or once a year, in certain cases.” Somebody stops paying the taxes.
Steven Butala: After a certain amount of time, usually it’s three years, and this is in Arizona laws, all different states are different, certain statutes start to kick in and at some point the state or the governing authority takes the property back into its possession. At which time, they will hold an auction and you can purchase in several states the tax lien, which means you know have paid the taxes for the seller as an investor and you have a couple of options. You can try to get the property redeemed. You can contact the person who owns the property. You only own the tax lien now, you don’t own the property. You can contact the person who does own the property and say, “Look, you got to pay me the taxes. I just paid your taxes, pal. You got to pay me back plus the certain number of interest [crosstalk 00:06:54]-
JilL DeWit: Percentage [crosstalk 00:06:54]-
Steven Butala: “And fees or I’m going to foreclose on you.” In my case, in my experience, 99.99 times I can’t actually think of a time when a seller actually said, if I can ever get ahold of him any way, a seller says, “Yeah. You know what? I do want to keep [crosstalk 00:07:13]-
JilL DeWit: “I still want it.”
Steven Butala: “This property.”
JilL DeWit: Exactly. It’s usually, “I stopped paying for a reason, buddy.”
Steven Butala: What ends up happening is we foreclose on it and it’s a judicial foreclosure process that involves a lawsuit and a judge and it’s very, very, very, very statutory and it’s outlined in the statutes in the state and it’s very specific about timeframes and posting things on the internet or the newspaper, at which time you do all this stuff. Usually takes about 1500 to $3,000 per property if you use an attorney. We are now able to do it ourselves because we learned how easy it was from an attorney. You own the property. You own it.
Steven Butala: The great news here is that the back taxes in the western part of the country on properties are very low. Taxes, it’s not so much the case in the Northeast, but you can purchase properties… we have one right now we’re foreclosing on. 60 acres in Graham County that by the time we’re done with everything, we will have… a total cost of ownership will be less than a thousand dollars and that property is worth a lot, probably 50 to $80,000 wholesale. This can be and is very, very lucrative. It takes a large, long learning curve, but it’s very possible.
JilL DeWit: Would you recommend someone if they listen to this and they really said, “This has got my name all over it”, would you recommend they just start reading up? How would they get [crosstalk 00:08:43]-
Steven Butala: Yeah.
JilL DeWit: How would they get rolling?
Steven Butala: Two things. That’s great question. There’s always one or two books that outline this process and they’re very state specific. Cody was talking about North Carolina earlier. We do a lot of foreclosures in Arizona. Find like the Bible so to speak that somebody has written about that state specifically, and then call contact… if you just Google like, “How of foreclose on a tax lien in North Carolina”, immediately one or two or three or four attorneys are going to pop right up, and then I would soak them for as much free information as possible. Then, once you do understand this process, on the first one or two… Am I talking too much?
JilL DeWit: No, I love it. No, just usually you’re so calm. That’s okay, happens to us and I think it’s great. It’s totally cool.
Steven Butala: The first one or two or three properties that you foreclose on, hire somebody, and then you’re going to hire a law firm and somewhere in the dark corner of this law firm is a brand new paralegal who they hate or they’re hazing because they’re brand new. Get to know that person as well as you can.
JilL DeWit: What do they look like, Jack?
Steven Butala: They have a suit on that was probably from Goodwill, they drink way too much coffee.
JilL DeWit: Do they eat doughnuts?
Steven Butala: No, they don’t eat doughnuts. There’s still just [crosstalk 00:10:07]-
JilL DeWit: It’s like Skittles on their desk or what?
Steven Butala: They’re still traumatized from law school, or they’re going to law school at night, could care less about your tax lien foreclosure transaction.
JilL DeWit: They know how to do it.
Steven Butala: Hold on a second, because this is the person you’re going to hire because they can’t stand working [crosstalk 00:10:22] at this law firm [crosstalk 00:10:22]-
JilL DeWit: I want to know what to look for. I want to make sure I’m picking a good one, and you’re helping me right now.
Steven Butala: I guarantee it, they can’t stand working at this law firm, so after doing a couple of deals with you because you’re cool and you have a lot of money and you make money in real estate, you just hire that person to do all your foreclosures.
JilL DeWit: That’s awesome.
Steven Butala: Or, at least you really understand the process from them by really closely watching what they’re doing. When you’re done with the first one or two deals, you’re going to say, “That’s it? That’s all it takes to foreclose on a tax lien? Wow, this is going to be my new career.”
JilL DeWit: Another question. I’m brand new in real estate. Is it something I could start with here or [crosstalk 00:10:59]-
Steven Butala: No.
JilL DeWit: “Would I be nuts?” Thank you.
Steven Butala: You’d be nuts to start with this.
JilL DeWit: Where would I start?
Steven Butala: We would start with the how Land Academy does it, which you can describe.
JilL DeWit: Well [crosstalk 00:11:07]-
Steven Butala: Where would you start?
JilL DeWit: I’m asking you the question, I mean [crosstalk 00:11:10]-
Steven Butala: No, what I would do is [crosstalk 00:11:11] I would send out mail, like most of our members do. I would send out a blind offering [crosstalk 00:11:16]-
JilL DeWit: Learn how do some [crosstalk 00:11:17] real transactions [crosstalk 00:11:18] easy way, understand the process.
Steven Butala: This is Master’s degree if not PhD-level real estate investing, this [crosstalk 00:11:24]-
JilL DeWit: Well, sometimes [crosstalk 00:11:25] these come up, too, by the way. The main thing for me right now with this show is making all aware of what’s available and what’s out there-
Steven Butala: That’s right, Jill.
JilL DeWit: Because there’s going to be a time in your land flipping career that something like this is going to come up and you’re going to go, “I know what to do with this”, or at least you know what it is and you can make a decision, “Do I really want to go down that path because I listened and I know what’s involved. I’m not sure I want to do that now. I might push that one aside.” You might go, “You know what? This guy has so many properties and they’re all in that same situation. This is what I’m doing. I’m going to do this for the next half of the year because I see what profit is here. That’s going to be my thing.” I love it.
Steven Butala: Exactly.
JilL DeWit: Thank you.
Steven Butala: It’s very, very profitable. The learning curve, it’s going to take you at least six months before you start to look through the tax lien lists. The county has tax lien lists accumulated, or you can buy them at an auction, and that’s probably beyond the scope of this podcast [crosstalk 00:12:21]-
JilL DeWit: Show.
Steven Butala: Episode, but there’s lot of opportunity. Just to learn, you’re probably six months just to learn, even if you’re a very advanced real estate investor.
JilL DeWit: Thank you.
Steven Butala: Hey, we know your time is valuable. Thanks for spending some of it with us today. Join us next time for an episode called Are Land Acquisitions Seasonal?
JilL DeWit: Are they affected by the weather? Are they affected by the holidays? Are they affected by school starting?
Steven Butala: Yes.
JilL DeWit: We’ll talk all about that.
Steven Butala: Or snow.
JilL DeWit: Or snow, exactly, and we answer your questions posted on our online community found at landinvestors.com. It is free.
Steven Butala: You are not alone in your real estate ambition.
JilL DeWit: I have an announcement from my team. If you are looking for a property… It’s interesting, is I’m training a new person this week, well, this several weeks by the way, I have a new transaction coordinator. The first time I sat here down and talked about property, she… most people think of properties, all properties have an address. Well, if you’re in this business, and especially if you do land, most land does not have an address. You have a legal description, it’s like you can just pop that into Google and it will just show up. Can’t do it. You got to find another way, but even with an APN, you can’t just pop that in and it pop up, but with ParcelFact it can.
JilL DeWit: My little announcement is check out ParcelFact 2.0. It is just parcelfact.com, and 2.0 the version is now running and it is phenomenal, so check it out. It was really cool showing my new assistant, my new transaction coordinator Sheila, she was floored with what was in there [crosstalk 00:13:59]-
Steven Butala: That’s great.
JilL DeWit: Oh yeah, it was great. She was really shocked at how much information is at our fingertips and I said, “Just sit tight. Give my team a day or two, they’ll get you all set up and into all of these different tools.” I said, “It’s a little weird when you can go talk to your Mom like, ‘Hey, Mom, I looked up the house and did you know this?'”, all the facts that you know about it. It’s really kind of cool, though. Anyway, so check it all out. It’s really it’s about do your due diligence. It’s, “Do I want to buy this property?” It’s kind of all right there. Get eyes on the property. “Do I want to buy the property? Am I talking to the right person?” Maps, GPS coordinates-
Steven Butala: There’s 150 million properties [crosstalk 00:14:35]-
JilL DeWit: It’s shocking.
Steven Butala: In this country and 99% of them are in there. Who owns them, what their assessed value is, a tremendous number of [crosstalk 00:14:44]-
JilL DeWit: What they paid for them [crosstalk 00:14:44]-
Steven Butala: Statistics. It’s [crosstalk 00:14:45]-
JilL DeWit: It’s great [crosstalk 00:14:47]-
Steven Butala: And you click your way around and click on every single one of them and it’s all the same price.
JilL DeWit: It’s awesome. Exactly. Wherever you’re watching, wherever you’re listening, please subscribe and rate us there. We are Steve and Jill [crosstalk 00:14:58]-
Steven Butala: We are Steve and Jill. Information-
JilL DeWit: And inspiration-
Steven Butala: To buy undervalued property.
If you have any questions or comments, please feel free to email me directly at steven@BuWit.com.
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