Are tax sales still worth it?

[twinn1]

Just wanted to post this topic up for discussion.  Below are a couple of cottages in the Ontario area that I found searching on MLS with a max price of 75K

I am not related to any of the vendors or RE agents, just posting for debate purposes.  There are only a few.  None are on water , none are in high demand areas(except for the last one)

Personally for me, the biggest issue in regards to tax sales is getting the appropiate zoning and permits in place to build.  With the listings below, most of these "cottage/cabins"  need a lot of work but they are already built with septic/well/hydro making it much easier to renovate.   






http://www.realtor.ca/propertyDetails.aspx?propertyId=8310238       65K in Minden---  almost on water

http://www.realtor.ca/propertyDetails.aspx?propertyId=8319893        75K in grey bruce-- ambewl township on chelsey lake/across from water

http://www.realtor.ca/propertyDetails.aspx?propertyId=8250976        cottage on crystal beach in fort erie 69k--few min walk to water

http://www.realtor.ca/propertyDetails.aspx?propertyId=7954731          Lake Scugog  49K

http://www.realtor.ca/propertyDetails.aspx?propertyId=8310239          This is the one that I would have brought but its already sold, 39K in Muskoka lakes.

[netpred]

You raise an excellent point.

With tax sales there are a number of unknown variables so you really need to "steal" a property for it to make sense. Why would anyone pay close to retail with all of the associated risks? Still, people seem to do it all the time. Sometimes they get lucky, but no doubt people get burned as well.

[speedfreeksteve]

I think this is a poor comparison. All of those except one are run down shacks on postage stamp lots. For two of them I would pay more to not have to tear down the run down shacks to put up what I might want to build.

They are also not waterfront, or waterview which puts these in the same category as the thousands of other non-descript lots available.

The Minden one looks OK on the outside for a hunt cabin, but it is unfinished and looks to be no hydro (without a generator), septic or water.

Keep in mind that by the time you at a drilled well, hydro (poles + licensed electrician), septic, building permit, etc. Then you still have over 100k out of pocket on a 540 square foot shack with water access from an unopened road allowance that anyone has access to.

I can understand for arguments sake that they look like a good deal but I wouldn't just look at the price.

This is really digging the bottom of the barrel for a cheap place and I would probably recommend looking further east where you get more for your money.

[Pfm1011]

Are tax sales still worth it?   Simple answer..Some are and some arent.. I  personally have been very very  happy with my purchases and have seen alot of people do better then I .. I have also seen people blow their brains out and pay way over the odds .

This is just like an auction, some people get deals, and some overpay for crap.

[twinn1]

I agree its not a great comparssion, but there is'nt a tax sale database to compare it too.  If someone is in the market for some large acerage then yes, tax sales are a great way to find a bargain.  As for waterfront, how many tax sales in the last year have been on buildable waterfront?  Not that many or else it would never makes it way to a tax sale.  I am not sure about wiether or not all of the examples have well/septic/hydro, I do not have the actual listing sheet from any of the RE agents.

I just posted to generate a discusion, I would'nt purchase any of these lots either, excpet for the one in Muskoka lakes for 39K, but that is sold.

Recently, I have noticed a lot of crazy high (in my opinon) bids on some tax sales.

Most of the time, lots/cottages/cabins/shacks whatever you want to call them that I posted as examples don;t usually sell, or if they do it takes a while.  Those shacks are cash only deal or if your lucky maybe a vendor take back mortgage.  So, even though they are cheap they are not affordable

In many cases it is more affordable for the average person to spend 150K plus on a cottage (4 season/well/septic/hydrp/municpal road) and get it financed by a bank with a substanial downpayment.  In the end its will appreciate and will always offfer at least a chance at some ROI with rentals during the summer season.  

[Frank]

Tax sales are a bit of crap shoot.  I've won a few and done well on them...I've lost on quite a few, and many of them have been to people who have over-paid, and as a result have either not done well, or lost money.  I'm not about to compete with some yoyo who doesn't know what they are doing...if they win, then god bless them, and wish them good luck with it.   

There is no way of telling who will come out of the wood-work as these are open bids and anyone with half a brain can submit a bid.   I may never win another win with this strategy, but I know that if I do then I will be ahead of the game on it. 

I wouldn't even take a second look at any of the examples that you posted, if they were up for tax sale they would likely fetch half of what they are asking on the MLS.

There are exceptions to every rule, and we have seen properties listed on the MLS end up going for more at tax sale...but that's the yoyo factor.

[Dave2]

Twinn:

There is an old saying that "Still waters run deep".  There are tax sale bargains and there are some winners in addition to the garbage and the fool bidders that Frank referred to.  In some tax sales on different properties I have high bidder and at the same sale for a different property I have submitted the lowest bid. 

The smart people keep quiet about their winnings.  The reward is generally achieved after a lot of hard work including after the tax sale while you work to get something back in shape.  I am also willing to wait a little longer then a quick in and out flip. You also have to be patient and some of us have different objectives then others.  For example I am interested on some of the big Northern Ontario acreages that Frank thinks anyone who bids on is nuts.  I have even won a couple but it takes for ever to get the deed because of the Ministry of Northern affairs.  So be it.  On those I am waiting on a long timeline for a payout.

Not all the correspondence on this board is in the public domain.  I have been fortunate enough to be privy to some really interesting private correspondence.  Fishermen or women are not the only people who can talk about the big one that got away.  On this board that talk is below the radar.

Recently I found out by accident that some of the people who monitor this board are some of the biggest professional land buyers in this province.  They are here for a reason.   That convinced me to pay attention here.

The only tax sale data base about big winners is the one done by another tax sale site who are trying to attract more subscribers. 

My boss keeps me in check so I had better do things right or she will remind me more then once about my stupidity. 

Maybe someday the senior board members will write a book.  I am sure it would make interesting reading. 

Dave2 (or also)
 

   

[Frank]

For example I am interested on some of the big Northern Ontario acreages that Frank thinks anyone who bids on is nuts.  . 
My boss keeps me in check so I had better do things right or she will remind me more then once about my stupidity. 
Maybe someday the senior board members will write a book.  I am sure it would make interesting reading. 

Dave2 (or also)
    

Dave Also

Nothing wrong with large northern properties, just not my cup of tea.
My boss also keeps me in check., and will definitely remind me if I pick a loser.
OK, so let's get started on the book....once up a time.
Like you, I am pretty certain that there are some big fish lurking in the shadows.

[speedfreeksteve]

Like you, I am pretty certain that there are some big fish lurking in the shadows.

I can confirm that on one account. Probably the biggest company in selling random Canadian land has emailed me personally twice over some criticism that I've made about them on this board. I also subscribe to their catalog (ok it costs nothing.. just have to re-sign up sometimes), and have for many years, so I'd like to think that I understand their general business model.

In fact I got the newest issue two days ago and just for fun was looking for land comparable in quality and location to some of the ones that I got in tax sales. Not so surprisingly, I found some that were not quite as good but in the same ballpark. The price.. about 3x what I paid, and I think I slightly overpaid on the first one I bought.

As far as the MLS, I've seen the odd gem of a deal on there but all were off the beaten path. Anything in a prime area will sell itself. I still stand by my view that the best deals never make it to the MLS and can often be found by talking and mingling with the "locals" in certain areas.

[twinn1]

I do agree with what you guys are saying.  By the time a really hot property hits MLS, its already been turned down by a few well informed people along the chain, ie. real estate agents/lawyers/ general people in the know.   

I really don;t have access to a database that shows list price vs selling price like most R/E agents so its really tough to get comparables, even more so in remote areas were the sales volume is very low.  I was more a less just trying to generate some discussion.

As for the big fish, I always thought that Frank/Pfm1011/speedfreaksteve et all were as big as they get on here. 


Dave2,  regarding different property types for differnt folks, very good point, a property some us deam as junk could be someone else's treasure.

There are a ton of tax sales coming up soon, yet this board has been very quiet, that tells me there are still some good gems to be had.

So, who is buying the prime real estate in Hamilton tax sale?

[Pfm1011]

As for the big fish, I always thought that Frank/Pfm1011/speedfreaksteve et all were as big as they get on here. 

I don't think any of us are "big"  we just actually do post on here.... There is a ton of lurkers who simply read and never post and I'm sure some are much bigger then any of us..

As per big . one must remember that the largest tax sale purchase doesn't even cover the deposit on some Oakville or Burlington lakeshore  homes.. So big fish in the taxsale game is tiny in the big picture..  sort of like the being fastest golf cart at the Indianapolis 500

So, who is buying the prime real estate in Hamilton tax sale

 Didn't everything but some real junk get redeemed?

There are a ton of tax sales coming up soon, yet this board has been very quiet, that tells me there are still some good gems to be had.

there is a ton coming up. and I hope they just keep coming . but I haven't seen any really gems that havent been redeemed  ( and you are right even if we did, we would be silent) Of course if it is north of  Parry Sound  I dont even look at it

[twinn1]

I was just joking about the Hamilton tax sales.lol

As per Sherriff sales, I'll give you my personal experience for what its worth.

Many years ago I was actively attending the sherrif auctions.  The way it works is that you assume the mortgage on the property, plus whatever it cost you to assume that mortgage at the auction.  ie. mortgage is 200K, auction goes for 50K, your total price is 250K plus legal fees, in most cases the home is occupied and you have to evict the tenant so you are buying the house unseen from the inside.

I was outbid on a few of them but its the same as tax sales, I got know a few of the regualrs at the auctions and in my conversatations with them, most of them did well with the sales, however they all lost money on one or two that they brought.  Lucky for them, the first ones they purchased had been winners so when they lost money on subsequent auctions, they could cover the loss.   I went to a few auctions and the winning bids left myself as well as the other regulars scratching our heads.

The ones I saw were leaving approx 40-60K for profit, not considering RE fees/legal fees and renovation costs, I was figuring that even a cheap reno were I would do 90% of the work would still run me 15K in materials alone, add another 15K-20K in RE/legal fees and that is cutting it too close. 

Same due dilligence applies for research, title/lien search against the property, only other variable is that this houses are occupied 90% of the time, they may even be tenanted out by the owner, making evicting the people a longer and more expensive process.

[Dave2]

take a look at Tay Valley. If not redeemed might be a decent spot for PFM to park his boat. 

Looks like a decent place for a summer gathering at a bid opening.

Dave2

[Dave2]

At the last minute ended up with a business meeting in the big town of Tweed so decided what the hell and I drove the extra hour to Tay Valley (Near Perth) to put in a bid.  Waste of time.  My feeling on this one was that if you wanted to something you were headed to OBM for sure with all attendent expenses.  Locals certainly were not enthusiastic about anythng being constructed on island.  (Can't even construct a storage shed of less then 100 sq. ft. and they were evennot enthusiastic about a deck for a tent.).

Island was a nice property 1.5 acres but is long and narrow and Municpality has a new zoning plan (December 2008) that has not been tested.  require 30 meter setbacks from high water mark which does not give a buildable envelope on island.  While waiting for deposit return heard all about new bald eagle nest right by island, which I am sure conservation authority will be really willing to allow construction to distrupt their nesting.
Needless to say I wasn't even close.  Anyways here are bids.

Winning bid $69 K (non local from Ottawa that no one had ever heard of) (over assessed value)
second bid $48 K
third bid $45 K
2 - 3 bids in Mid 30's range
then tailed off into 20's and teens.

16 - 18 bids. 

One of those that if you could get a building permit would be a nice purchase.  Odds don't look in your favour for this one for a permit. 

Dave2
 

[netpred]

Thanks for the info.

Well I lost this one; not even close.

Everything Dave2 said about zoning etc is true except that it is even worse. The Island is zoned rural or residential (can't remember which). Road frontage is needed for a permit. It is possible to try to rezone to limited service residential which would permit building on a water access property. Just another hurdle.

$69,000??? I don't think that I'll ever win anything. The propblem is that it costs about $200-$250 to bid on each property after paying for searches etc. So if I bid on 4 properties unsuccessfully (which I have), I am out $1000.