Anybody ever participate in a county tax sale? Paging I Love Bama

I've talked to a few guys in my office about it too.

One guy owns a couple lots in a residential subdivision. He also purchased some commercial properties that were paid off almost immediately.
Basically he said some downsides were:
It took the county 3 months to pay get him his money back after the taxes were paid off (3 months after tax sale). So even though he got 1% return a month for the 3 months it took a total of six months and he only got 3% return.

You can obviously get fricked if you spend a good amount of money to pay taxes/lawyer on a property that has some environmental problems or something of that sort.

He purchased a very large sum tax bill (huge commercial property) hoping it'd be immediately paid off.. he ended up having to pay the 2nd year as well which was another 75k cash (number may be incorrect can't remember exactly)

I should also add that your money is tied up until conclusion - which can vary.

I Love Bama should have some experience in this. Hopefully he shows up.

True, but if your looking at it as investment, and you intended to leave the $ there for a long time it can work out not being liquid.

I have some friend and some clients that do these from time to time, usually on a small scale (maybe 1-2 a year).

I also have a client that is part of a partnership that does nothing but these, it's 5 guys and they do about 20 per year.

I've seen two times where they actually ended with property - both times it was residential lots that were only worth a few thousand. By the time they paid the attorney they didn't get too great of a deal and they are having trouble selling the lot.

Most of the time, the property is redeemed a few days before the end of the period. So it's a nice financial gain, but, it is pretty much cash tied up.

Lauderdale is the one I went to

I've done in La for several years now. It is online done by third party now so larger institutional money comes in. In La, you get immediate 5% interest paid on your money if it is redeemed. an addition 1% each month extra so year would be 12% plus the 5% for 17% total. To end up with the property you have to pay taxes 3 years running without it being redeemed and then go through courts etc. I've never ended up with any. I love it when it gets redeemed a week after the auction and I get 5% and all my money right back.

If you can't afford to have your investment tied up for years then stay away. You can't just take your money back out if you need in a couple years if property owners haven't redeemed. And you will be putting more in each year in hopes you can end up with the property.

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So once you win that first auction, do you have right of first refusal to buy the following years taxes on that property?

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In Louisiana, if its not redeemed by the next tax due date, you get the tax bill directly. If you don't pay it, it goes back up for sale.

Oh it's very true. If you don't want to fart around with the long redemption periods hoping the guy doesn't make payment then invest in secondary tax liens which are ready to be foreclosed on. Get it then flip or keep as rental.