A lot of my followers love to hear some of my nightmare stories, and I love to tell them as I feel they definitely can teach which mistakes not to make.
So here is one of those stories:
When I first started investing, I did not have very much capital so my first investment properties were Tax Lien Foreclosures purchased in Bibb County, Georgia, in the City of Macon. At the time, I did not really know how to research Tax Lien Foreclosures properly and had literally no idea what I was buying and how to go about finding out. I figured once I buy it, I will figure out where it is, who owns it, and what kind of property it even is and what I can do with it. In any case I would learn the process. It was my ‘learn-by-doing’ approach.
Don’t do what I did!
Although I do advocate that approach for many learning tasks, it did cost too much in this case.
One of the properties I bought was a commercial building located just across an ‘imaginary’ street line, which divided the ‘good’ part of town and the ‘bad’ part. Up until I looked at the property right AFTER my purchase, I did not know this imaginary line existed, and that it was actually quite un-imaginary, but very real. My property was on the wrong side, about 100 yards. I never drove out to check it before I purchased it, nor did I think 100 yards is a big deal and it still can be considered a ‘good’ area, right? Wrong.
I had very big dreams for this property: In any other town, or other part of THIS town, this building was ideal for a 2 story coffee house, with a library corner, couches, and even several loft-style living quarters on the second floor. I paid roughly $4,000 for this property, it was a 2-story brick building from the 50’s, formerly a convenience store and now boarded up and mostly inhabited by bird nests on the second floor. ‘But it has so much potential,’ so I thought.
Soon after purchasing this property’s tax lien, I started receiving notices from the city that it was ‘uninhabitable’ and a risk for passers-by who could be hit by ‘falling rocks.’ Obviously the city officials were just waiting for a new ‘owner’ who would be scared enough by the notices to remove the property/ tear it down, so they wouldn’t have to do it. I didn’t want to, nor did I have the $30K to tear it down. So henceforth a paper battle started in which I stated my reasons to keep the building alive until I could afford to remodel it, and the city emphasized that it is an eyesore, and dangerous and needs to come down immediately. This went on for quite some time.
After a few months of back and forth, and even ‘breaking’ through one of the boarded up windows to look inside (it was in a horrible state, to the point that I almost cried), I had to come up with a solution for this building because the new tax bills were now becoming due, in my name. I guess the city wanted to collect their taxes if they couldn’t tear the place down forcefully.
In this case I had to just cut my losses and I signed a Quit Claim Deed to the original owners and filed it at the courthouse registering the new owners as the old ones. In the process I lost my entire investment ($4K, postage and mailing fees with the city, and a lot of aggravation). However, this was the only way to get rid of a dumpy property in a bad area and no longer be responsible for the taxes.
Don’t do this! Research Tax Lien Foreclosures you are looking to buy, drive to the courthouse and look at the records, drive to the property, talk to people, investigate the neighborhood, and talk to anyone and everyone from the county/ city where you are looking to buy BEFORE you buy. Don’t do what I did!
Until next time: Happy Investing,
Julia M(oney) Spencer, Real Estate Advisor, Investor, and Enthusiast