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Arizona Tax Lien

Friday, May 31st, 2013 by admin

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Interest rate: 16%

Bidding type: Bid down the interest

Redemption Period: 3 years

Opening bid: Comprised of the back taxes, penalties, fees and other charges.

Number of counties: 15

Tax Lien auctions in Arizona are held each year in February. Due to the popularity of Arizona there is a fair amount of competition at these auctions.

The bidding for each parcel starts at 16% and the interest is bid down to the investor who is willing to accept the lowest interest rate return for that parcel. Bidding can go all the way down to 0% meaning the investor receives a 0% return on their investment (you don’t want to be involved in any liens that sell at a 0% interest rate!).

There is a 3-year redemption period in Arizona and after the 3-year redemption period has passed you can foreclose on the property. You will need to hire an attorney to handle the foreclosure process for you in Arizona.

One of the weird things about Arizona tax lien investing is that ANYONE can redeem the property, not just the owner. The likelihood of the property being redeemed is around 90-95%. This is good news for investors who just want to get high interest returns on their investments and bad news for investors who want to acquire property.

The County Treasurer maintains a record of all property owners that are delinquent on their taxes and tax lien sale lists can be obtained by contacting the appropriate county treasurer.

Section 42-18121 of the Arizona tax code specifies that the holder of a tax lien certificate be allowed to pay off any subsequent taxes owing on the property. This allows you as an investor the opportunity to invest additional capital in the same property at a higher interest rate.

If you are hoping to foreclose on the property at some point then it is a good idea to make sure you are the only tax lien holder and that you pay off all subsequent tax liens until the redemption period expires. That way you will be the only lienholder when it comes time to foreclose.

We do not recommend you buy any properties where tax liens have been sold off to other investors in earlier years. In Arizona as in a fair amount of other tax lien states, tax liens are all EQUAL PRIORITY. Thus a holder of one tax lien cannot wipe out the holder of another tax lie on the same property. All tax lien holders must be satisfied in the case of foreclosure. Thus, be aware that if you buy an AZ tax lien and another investor also holds a tax lien on the same property from earlier or later years, they will have to be paid out with interest if you want to foreclose on the property.

My thoughts: A lot of the counties in Arizona have gravitated to online tax lien sales. This is GREAT for out of state and out of country investors! If you are looking to invest in tax lien certificates with the hope of obtaining a high interest rate return without a great likelihood of obtaining the underlying property then this may be a good state for you! Keep in mind that tax liens will redeem about 90% of the time and the competition level is stiff at times.

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