Buying Tax Lien Property?

This place is real diverse so I thought I would see what kind of advice you guys would have for this situation.
I just found out that my neighbor’s lot is going up for auction at the County’s Public Tax Auction. It looks as if he hasnt paid any property taxes in almost 10 years. I share a 40’ property line with his lot.

His lot is a huge disaster. He was a stucco guy for years, so it is almost .25 acres of old pumps, scaffolding, wire, buckets, hoses, planks, etc. The only “residence” on it is a beat to hell 1970s single wide that is uninhabitable. I am sure he has drained hydraulic fluid, motor oils, other chemicals all over his lot.

I have known him since 3rd grade, and have worked on various jobsites with him. About 2 years ago he said fawk it as he was over $100k behind in his child support payments. So now he is a homeless bum the next town over. I would not be surprised if at the end he started cooking meth in the trailer. I can deal with evicting him if he came back.

So, with all that said it has a $10k minimum bid. Not a desirable lot, not rentable, probably $3k in dump fees, have to demo a whole trailer, likely toxic chemicals throughout the lot. But I have mad construction skills, trucks and trailers, all required tools other than heavy equipment.

I am hoping that all the negatives keep any developers or landlords away from bidding on it. It really is only on my radar cause it is next door. Last years tax assesment put the property at $40k and the structure at $7k. Any rule of thumb on purchase price for liens(like 50% of appraised)?

I will contact a local Title Co tomorrow about a title search. I read that the current owner has a year to dispute the sale. I plan on cleaning it up and sitting on the lot for about 2 years and then build a shop. It is zoned residential, but I should be able to get a variance as there is a large private shop 3 lots down that has logging trucks in and out all day. If not I might build a house and moveinto it and rent out my existing.

I have heard that insurance might be difficult since I will only have a tax deed initially. Any ideas on if I should get an umbrella policy to protect myself during this whole process?

Any ideas or thoughts? I have bought and sold a few homes but never through an auction, nor through a govt entity.

Edit- I have funding to purchase it, so I would not need to worry about lender requirements.

 

I have no idea how it works, so I can't help, but it sounds like a great opportunity. I would love to be able to have a double lot.
Good luck. I hope it works out for you.

 

Thats what I am thinking too. If it sells for even $30k, I would be kicking myself a couple years from now. I mean how often can you double your lot in an existing town.

 

You will be liable for toxic waste clean up, but that probably won't be enforced until you try to sell the lot

 

True. It hasnt been labeled that by anyone, but I would have to disclose it, if it truley has toxic waste there.

 

I havent been in the house, so no real idea on him cooking meth. He is more of a heroin type junkie, but I know meth can make $ quickly, so who knows. I am currently just assuming worse case scenarios.

 

No opinion on the tax sale portion of your narrative.

But, be careful on the

We bought a foreclosed gas station a decade ago. Leaking underground storage tanks. Cost of removal was a few thousand dollars. Cost to remediate the site, state and county inspections, permits, 12 month monitoring, etc. was tens of thousand of dollars. It was a never ending cluster.

From my understanding, your state kind of likes regulations and enforcement of non-compliance more than mine. I'd do plenty of pre-purchase due diligence before bidding.

 

Tax sales vary wildly by state so what I know of Ohio means nothing in California.
Walk the lot and check it closely.
Double what you think clean up will cost, it's always something and it's always more expensive than planned.
Set a realistic price to bid up to and stick to it.

 

Can you contact the county/city commissioners and find out if anyone has bid on it? Only thing you can do on a closed bid is give a bid of what you think its worth and hope someone doesnt out bid you. But if you are the only bidder that would also help...

Ive been trying to get a lot next to my hunting lot for a number of years that the county seized due to back taxes. But here they go for market value vs paying off the back taxes. The commissioners did tell me they would sell it but it was too expensive at the time for the 5 acres. I havent looked into it for a number of years now.

 

Being in the legal field the only question I have is how will you use the property?

Each state is different but if you really feel toxic waste has been dumped on the property... if you purchase it and build a property lets say and rent ir or sell it... you may be held liable if a tenant or next owner finds out about the dump.

So if the goals are using it as an investment property check up on local envirnmental laws.

EPA and state fines can bankrupt people.

 

I have a adult kid that has expressed interest in buying in my neighborhood, so if I were to sell it it would be to him and we would build a small house on it. Most likely I would sit on it and then build a shop and hopefully not have to sell it unless I have a big life changing financial catastrophy.

Here is a pic of it from behind my current shop to show how bad it really is. The rest of the neighborhood looks nothing like this so my neighbors would be pleased to have it cleaned up.

 

Here we have to sign up for an online auction, just like ebay. I put $5k deposit down and then put in my highest bid over the minimum. Then I have 3 days to pay with wire or cashiers check.

 

Oh

My

 

Lol, exactly. I dont think i will have any competing bids. And I would LOVE to not have this lot next door to me in this condition.

 

Would be nice to know if there were other bidders, too bad you couldnt find out somehow...

 

you have at least $40 in scrap metal there ...

 

I grew up on this block and my childhood home was built here in mid 70s. That trailer has been there since before then. So everything else came after it and now is my chance to snag it before some slum lord picks it up and throws some tweakers in it

 

I am very familiar with our local metal scrap guys as I have to scrap cars all the time so they will be happy to see me. I am going to try and sell all the scaffolding that is stacked right outside my pic.

 

My dad did this years ago to his neighbors house in buffalo ny bought via auction. He seriously bought and tore down the house because the city wouldn’t let him build a garage and the other property had a 3 car garage. At the end of the day it was cheaper for my dad then just building the garage. And the neighbors were happy a shitty property was out of the neighborhood. It was alway great as a kid to have a huge yard in a city

 

Since it's not known to the authorities and you plan to keep it for yourself or family just keep that on the DL. Then you don't have to worry about it unless you ever get rid of it. Unless by then the proverbial grass has grown over it...

What are you buying though? Are you buying the tax debt? So then you'll have to foreclose on the property? Or is that already happening and you're bidding on the property itself?
CA only takes action after 5 years of tax delinquencies but you mentioned unpaid taxes for 10 years so make sure you're not buying the lot subject to another tax lien that would have priority over your interest