Nebraska Tax Liens

Nebraska Tax Liens
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If you can get out to Nebraska or live in the state, I would absolutely recommend taking a look at investing in tax liens there.  Since the bidding is normally by lottery or by taking turns, the smaller investor has an equal shot at acquiring liens there.  The interest rate isn’t bad at 14% and the counties are easy to work with.  Plus, they handle the paperwork and redemptions.

Nebraska Tax Lien Sale

Most counties hold their auction on the first Monday of March of every year.  A few weeks prior to the auction, you’ll want to contact the county’s Treasurer’s Office and get the list of delinquent properties that will be listed for sale.  Usually, the volume is pretty low, so you can get thru the list pretty easily and pick a good number of properties that interest you.  You’ll want a decent number to choose from because the auction is a lottery or round-robin style auction.  The county also has the option of a bid-down of ownership in the property.  With the volume of investor interest in the larger counties, these properties are being bid down to 1% of ownership, which in my opinion, isn’t a great option unless you are completely sure the property will redeem.

In the lottery/round-robin types of auctions, you’ll be handed a number and either the tax collector will randomly pick bidder numbers or the auction will go in order of the numbers handed out.  When you’re number is called, you’ll have the option (not the requirement) to purchase the tax lien.  If you don’t want it, they will go to the next bidder and offer the same lien on the property.

Nebraska Tax Lien Redemption Period and Subsequent Taxes

Nebraska has a long redemption period of three years before you can begin foreclosure.  Luckily, you’re earning 14% annually on your investment.

For each tax lien you win, you’ll need to pay a fee (about $10) that is added to the redemption amount of the certificate as an administrative cost.  The Treasurer will mail you a certificate of purchase a couple weeks after the sale which is your receipt.  The original certificate is held by the county and all redemptions will be made thru the county.  You just need to sit back and wait for your check to arrive when the lien redeems (I recommend checking with the county every six months or so just to be sure they didn’t send the check to the wrong address).

In September, you’ll be allowed to purchase the subsequent taxes that have accrued on the property.  These are the taxes that the delinquent taxpayer didn’t pay but were not purchased by you at the sale.  The amount you pay will also earn 14%.  I always recommend planning on paying these taxes from the beginning as it’s an easy way to add to your investment and prevents those taxes from being sold to another investor whom you’ll have to deal with if you foreclose.

Nebraska Tax Lien Foreclosure

After three years have expired, you will need to send official notice to the property owner that you intend to foreclose on the tax lien. You MUST send this notice within six months of the expiration of the redemption period; otherwise, you’re lien will expire.

Let me repeat that in another way…if you don’t begin foreclosure on your tax lien before three years and six months from the date of the sale, you will LOSE YOUR ENTIRE INVESTMENT!

I recommend contacting a Nebraska tax lien attorney who can help you with this process.

Nebraska Tax Lien Investing Summary

Nebraska is a very easy state to buy tax liens in and has a very high redemption rate and interest rate.  The ONLY issue is that it’s tough to fly, drive or train to for most of us.  Plus, the auction is in March, so who wants to spend their February in Nebraska looking at properties? (Except for crazy tax lien investors like ourselves!)

If you’re looking for more tips and strategies to invest in Nebraska tax lien certificates or other auctions, subscribe to my free Tax Lien Investing Newsletter by clicking here.

 

 

 

 

 

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