TaxSaleLists.com - Lists and Manuals for Tax Lien and Tax Deed Sales Nationwide

Florida sells more properties at tax sales than any other state in the country. It is estimated that the 2009 lien sales, which are from the middle of May through the 1st of June, will total more than 600,000 properties. In addition, Florida tax sales go one throughout the year in the form of tax deed sales. That's right, Florida has both tax lien sales and tax deed sales. They are unique in that you do not get the property if the tax lien is not paid off. Instead, what you are owed on your tax lien is the mimum bid at the tax deed sale.

Let me give you an example: Lets assume you purchased a $1,000 tax lien at a 12% interest rate. At the end of the redemption period you would be owed about $240 on the tax lien (these figures are approximate). You would apply for a tax deed. You would bring the taxes current (adding about $2,000 to your investment - $1,000 for each year the lien was outstanding) and that total, plus your original lien and some legal expenses and title searches costs would make your total investment about $3,500. This consists of $1,000 for the original lien, $1,000 for the taxes at the end of the first year, $1,000 for the taxes at the end of the redemption period, and $500 (an estimate) for your legal and title costs. All of this is "rolled up" into a new tax lien that is $3,500 and pays you 18% from the day you apply to go to tax deed until the day of the tax deed sale. That can be as much as six months or more, depending on the court calendar.

When they have the deed sale the minimum bid on the property is $3,500 plus the 18% interest you have earned. You can bid, and you don't have to pay the minimum bid because you are owed that amount. The property will be sold to the highest bidder.

Florida has a couple of more interesting quirks. When you bid on the lien at the lien sale, you get the interest rate you bid or a 5% penalty, whichever is greater. That is why, in years past, some properties have sold for an interest rate of as little as 1/4 of 1%.

The reason is as follows. A penalty is not an interest rate. If you had a 5% penalty on a $1,000 lien you would receive $50 on that lien if it redeemed the first day after the tax sale or the last day of the redemption period. When people were bidding a 1/4 of 1% to buy a lien they were betting that the lien would redeem fairly quickly. If it did, for example in 90 days after the sale, they would have made a 20% annualized return on their investment.

• The formula is $50 divided by 90 days times 365 days divided by the investment of $1,000 equals an annualized interest rate of 20.27%

The major problem with Florida tax sales is the number of properties on the sale. You need to know how to eliminate quickly those properties that don't interest you so you don't waste time on them. We explain how to do that as one aspect of our workshop.

The bidding starts at an 18% rate and the person who bids the lowest interest rate gets the property. As I said before, in past years some properties have been bid as low as 1/4 of 1% (if you bid 0% you have just paid somebody's taxes for them and you get nothing). Last year the bidding returned to more normal levels and single family residential properties went between 8% and 14% as a whole.

If you would like to know more, come to our free tax sale webinar, "An Introduction to Tax Sales", you can register by clicking the link below:

Have a great day,

John Lane, CEO

TaxSaleLists.Com llc