Three Strategies for the Florida Tax Certificate Auction

Three Strategies for the Florida Tax Certificate Auction

With the Florida tax certificate auctions about to kick off, I wanted to discuss three strategies to employ that should get you higher risk-adjusted rates.

First, the tax certificates on the best properties in the auction usually are picked up by larger institutional buyers and the minimum bid.  This means that the bid all the way down to a .25%.  By statute, the certificate holder will earn the larger of the 5% penalty (earned from the day you purchase the certificate) or the bid rate.  So, these institutions are able to accept the 5% rate and they are betting that the majority of the liens they buy will redeem in less than a year.

If you’re looking to earn more than 5% yourself, you’ll need to bid on properties that these larger players don’t bid or or bid higher rates on.  I’ll discuss three possible strategies that will give you an advantage over these buyers and possibly earn you up to 18% on your investment.

You can also find a much more detailed discussion about strategies and FL tax lien certificate investing from my new E-Book exclusively on Kindle: A Beginner’s Guide to Investing in Florida Tax Lien Certificates 

Top 10 Questions about the 2015 Florida Tax Lien Certificate Auction

Top 10 Questions about the 2015 Florida Tax Lien Certificate Auction

With the 2015 Florida Tax Lien Certificate auctions coming up shortly, I’ve compiled a list of most frequently asked questions from my newsletter subscribers about the Florida tax certificate auction. If you haven’t subscribed yet, click here! Florida hosts the largest tax lien auctions in the United States and it’s easy for just about anyone to get involved in since most of the auctions are online.

Top 10 FAQs about the 2015 Florida Tax Auction

1. How does the penalty and interest rate work?

Bidding starts at 18% and works in .25% increments until the lowest bidder is reached.  If there is a tie, then the winner is chosen at random.

You’ll actually earn the higher of 5% of the tax amount (the penalty) or the total accrued interest at your bid rate.

So, if you win a bid at 12% and the lien redeems in the first month, you’ll earn your 5% penalty.  If the lien redeems in the seventh month, you’ll earn your accrued interest (which is 7%) and the penalty drops out.

2. What are the typical rates that the liens sell for at the tax auction?

The Florida tax lien certificate auctions are very competitive.  There are lots of banks and funds bidding on these liens such that all of the decent property are bid down to a .25% (thus, they are counting on earning the 5% penalty and the lien redeeming quickly).

Commercial properties and viable land parcels tend to be bid down to between 6-12%.  Risky properties will go in the mid to high teens.  If you win a bid at the max rate of 18%, you probably did a poor job in your due diligence.

3. What is proxy bidding?

In the internet tax auctions, you can put your minimum acceptable bid in.  The system will automatically compare your bid to all of the other bids in the batch.  If you’re the lowest bidder, you’ll win the bid at .25% below the next highest bidder.  Thus, if you bid 5% and someone else bids 7%, you’ll win the bid at 6.75%.

4. When can I file for a tax deed application?

Two years after the taxes are due (typically, 22 months after the sale), you can file for the tax deed application also known as a TDA. Thus, you can file in April, two years after the year of the sale.

5. Can I contact the property owner or go on the property?

No, Florida statutes explicitly state that you cannot contact the owner of the property within 2 years of April 1st of the year of the sale.  Also, you have no possessory rights on the property until you have a deed issued.

6. What is a clerk sale?

If the tax certificate does not redeem after you file the tax deed application and the county clerk has made all of their required notices, the clerk will auction off the property publicly to the highest bidder above the total delinquent tax amount.  If the property is not purchased at this clerk sale, then the tax certificate holder will be issued a tax deed to the property (unless it’s a homestead property, see next).

7. What is the lands available list?

If a homestead property does not sell at the clerk sale, the tax certificate holder has the option to send it to a second sale.  If it does not sell then, the tax certificate holder has the right to purchase the property at half the assessed market value minus their investment.  If the certificate holder chooses not to purchase the property, it goes onto the county lands available list where it is available to the public for half the assessed value.

8. What liens are ahead of the tax certificate?

Municipal liens and fines are ahead of the certificate.  Also, a new law passed recently allows HOA fees to not be eliminated upon issuance of a tax deed.

9. Can I really compete against the corporate buyers?

It’s very tough nowadays to get a good rate–gone are the days when you could win liens on decent properties in the teens or high single digits.  Plus, the corporate entities put hundreds of online bidders into the mix so that they have a better chance at winning any ties.

10. Where can I find out more information on the auction?

Here, of course!

You can, however, find decent rates on commercial properties, some land parcels and the more rural counties where there is less competition.  Or, you can just be content with earning the 5% penalty on good properties–it’s better than what you can earn at the bank!


The ONLY Five States Where You Should Buy Tax Lien Certificates

The ONLY Five States Where You Should Buy Tax Lien Certificates

I get the questions all the time…what are the best states to buy tax lien certificates in?  Like all real estate investments, the natural answer to this is to only buy delinquent tax certificates in areas that you know best—your local market or areas you have other real estate investments in.  However, the explosion of online auctions and wealth of due diligence information on the web has now given us the ability to invest in just about any state that sells tax liens.  I’m not limiting my buying to just Arizona and Colorado which are near me, I now can buy anywhere in the nation.

So, now, there is competition among states for investors—what separates them are their statutes governing tax lien investing (do they favor the investor or the taxpayer?) and the ease of buying the liens (are the auctions online and is the assessor’s information up-to-date?).  Feel free to post your comments and reasons why you think I’m wrong, but below are the only states I feel you need to invest in.

Florida Tax Lien Certificates

Florida tax lien certificates should be at the top of everyone’s list for many reasons: the ease of buying liens at the online auctions, the laws and processing of tax payments are very investor friendly and the online information from assessment data to tax data is very current and accurate compared to other states.  Florida sets the bar for all the other states that sell their property taxes and will set the trend going in the future.  The main downside that there is a lot of competition out there the bring rates down quite a bit—but with Florida being the largest tax lien certificate market out there, you can usually find a niche to buy at higher rates. You can also find out more about Florida tax lien certificates in my Kindle e-book called: A Beginner’s Guide to Investing in Florida Tax Lien Certificates.


Links to 2013 Florida Delinquent Tax Auctions

Links to 2013 Florida Delinquent Tax Auctions

Looking for county information and auction sites for the 2013 Florida Tax Certificate auctions?  Click the links in blue to be taken directly to the county auction information site:

Alachua County             Tax Sale Information   

Baker County                Tax Sale Information 

Bay County                   Tax Sale Information 

Bradford County            Tax Sale Information  

Brevard County             Tax Sale Information  

Broward County            Tax Sale Information 

Calhoun County           Tax Sale Information 

Charlotte County           Tax Sale Information  

Citrus County                Tax Sale Information  


Three Tax Lien Investing Strategies for the 2012 Florida Delinquent Tax Auction

Three Tax Lien Investing Strategies for the 2012 Florida Delinquent Tax Auction

Continuing on from my previous post on how to prepare for the 2012 Florida delinquent tax auction this June, I mentioned the selecting a strategy prior to the Florida tax auction should be one of the first steps you take.  Some investors may just be interested in only a few properties, but if you’re serious about getting into this market, you’ll need to have a large number of properties ready to bid on.

Preparing for the 2012 Florida Tax Lien Auction

Preparing for the 2012 Florida Tax Lien Auction

It’s never too early to start to prepare for the biggest tax lien auction in the U.S. — Florida.  The 2012 Florida tax lien auction is the largest by volume with almost $2 Billion in tax liens available for tax lien investors to purchase.  It’s also the easiest state to buy liens in, for anyone.  Most of the counties are online through a couple online tax auction houses.