If you’re looking to invest in real estate indirectly, Missouri’s tax liens present an untapped investment opportunity, particularly due to the state’s residency requirements that limit competition. You’re stepping into a market less saturated, and ripe for picking. Understanding Missouri’s tax lien market is important, as it focuses on residential lots in sought-after vacation spots, offering a profit potential that’s hard to find elsewhere.
The redemption process in Missouri is lined with investor protection, allowing you to manage your risks. Familiarizing yourself with the ins and outs of this process will help you protect your investments, and turn them into profitable assets.
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Key Takeaways
- Missouri operates as a tax lien state.
- With less competition, Missouri’s tax lien market emerges as an attractive opportunity for property investors.
- Your investments are guaranteed by law and backed by real estate, ensuring stability.
- The possibility of acquiring the property after the redemption period adds further value to Missouri’s tax lien market as an investment opportunity.
- Expert mentors like Ted Thomas provide insights and training that will help you navigate the market confidently.
Understanding Tax Liens in Missouri
What is a Tax Lien
A tax lien represents a legal claim by the government against the property of a delinquent taxpayer. In Missouri, if property taxes remain unpaid, the local government may place a tax lien on the property. This ensures that the unpaid property tax must be settled before the property can be sold or refinanced. When you invest in a tax lien, you’re paying the unpaid property taxes on behalf of the owner. In return, you collect the amount of the certificate you purchased plus interest.
The interest rate in Missouri starts at 10% . While this rate may not be as high as Iowa’s impressive 24%, the advantage lies in the lack of competition—you won’t need to outbid anyone, thus preserving your profit margins.
Is Missouri a Tax Lien or Tax Deed State
Missouri operates as a tax lien state, excluding Jackson County and St. Louis City. When you purchase a tax lien, you are issued a Tax Lien Certificate or Certificate of Purchase, not a property deed. This certificate, however, holds the potential for property ownership after a redemption period—one year for Missouri—provided the property owner has not repaid their property taxes.
Failing to do so, you may apply to convert your certificate into a Collector’s Deed, officially transferring the property to your name. The Department of Revenue or local tax authority handles the administration of these processes. The circuit court may become involved if legal action is required. Remember that throughout this process, you must provide proper notice to the property owner and file a report or affidavit showing that you are compliant with the requirements of the tax lien purchase.
What Tax Lien Investors Need to Know
As a tax lien investor in Missouri, it’s essential you know where to find properties with delinquent taxes and the specific dates for tax lien auctions. These auctions offer the possibility to acquire property for 20 to 50 cents on the dollar. After the redemption period, you can earn 10% interest on your investment.
Here are some additional points to keep in mind:
- Be aware of the redemption period. This is the time frame during which the property owner can repay the taxes and any penalties and interest, and redeem the property. The redemption period in Missouri is typically one year.
- You are responsible for giving notice to the property owner of your tax lien. Missouri statute sets out the notice requirements.
- You will likely need to pay some upfront costs associated with the tax lien sale, such as advertising fees and recording fees.
Tax lien investing can be a complex process, so it’s important to do your research and understand the risks involved before you get started.
Where to Find Tax Delinquent Properties
To locate tax-delinquent properties, you should monitor publications in newspapers that circulate within the county. The county collector is required to advertise a list of these delinquent lands and lots. The ads run for three consecutive weeks, once a week, ending at least fifteen days before the scheduled auction. These publications will not only list the properties but will also detail the amount of taxes owed, and fees due on each property for each year.
Properties with an assessed value of $1,500 or less might have a separate listing. Get in touch with the local county courthouse or the county collector’s office for more details.
Tax Lien Auction Date
Your opportunity to participate in a tax lien auction occurs on the fourth Monday of August annually, with sales commencing at 10 a.m. For 2024, the auction is set to start on August 26. These sales take place at or near the courthouse and can take several days. It’s also possible for the auction to be conducted electronically, which allows for online bidding.
Before bidding on any property, be sure to do your due diligence and check these properties. No one is going to pay for the property tax of a burnt house.
Advantages of Investing in Tax Liens in Missouri
Low Competition
What makes Missouri’s tax liens investing market is the remarkably low competition. In 2020, around 600 properties were set for the annual sale in Franklin County. The Missourian newspaper reports that “County Collector Doug Trentmann will be happy if 40 of the properties sell”. Not even 10% of the properties are expected to sell. This means that you have the chance to snag multiple tax lien certificates.
However, you better act fast. According to Emissourian, Franklin County sold 86 properties in 2021, 82 properties in 2022, and 86 properties in 2023. The surge in property sales (doubling during the pandemic) has shown no signs of slowing down. This trend shows that investors have started to notice Missouri as a tax lien investing hotspot and your window to start is narrowing. Don’t miss your chance to capitalize on this unique investment opportunity before it becomes common knowledge.
Secured Returns Backed by Real Estate
Tax lien investing offers the advantage of secured returns backed by real estate. This means you’re not just investing in a fundamental concept; you’re backing your money with a real house or land.
This element of security makes your investment less volatile compared to other markets. You’re stepping into a position where, if things go south, there’s still something of value that comes with your investment.
This setup increases the profit potential, making secured investments in Missouri tax liens an attractive proposition. You’re not just chasing returns; you’re doing so with a safety net.
Potential of Acquiring the Property
Finally, Missouri tax lien investing holds the potential for you to acquire property if the owner fails to clear their unpaid property taxes after a one-year redemption period. The properties you could own range from vacant lots, which can be resold or developed, to homes that may be rented out for a continuous stream of income. The possibility of acquiring property for 20 to 50 cents on the dollar with no mortgage is a unique and compelling aspect of tax lien investing.
How Can You Participate in the Auction and Start Investing
To start investing in tax liens in Missouri, you’ll need to meet certain eligibility requirements before you can join an auction. Here, you’ll discover the necessary qualifications to become a tax lien investor in Missouri.
Purchaser Eligibility
First, you must be a resident of Missouri or agree to certain conditions if you are a nonresident. If you’re currently delinquent on tax payments on property that isn’t up for sale, you cannot participate.
Here’s what you need to do as a non-resident:
- Sign an affidavit confirming that you are not delinquent on taxes for properties not being auctioned.
- If you’re a nonresident, file a consent agreement to the local court’s jurisdiction.
- Appoint a local resident as your agent, acknowledging that service of process to your agent will grant jurisdiction to the court concerning any matters related to the tax sale.
Source: Revisor of Missouri
Remember, the appointed agent will receive the tax lien certificate after the auction sale, and the property will be conveyed to this agent on your behalf. While it may seem complex at first glance, taking advantage of this will allow you to profit from this untapped market.
Conclusion
To sum up, Missouri’s tax lien landscape offers a profitable path for those looking to venture into a less-traveled area of investment. By taking advantage of the legal logistics that limit competition, you’re setting yourself up for success in a sphere that’s rich in both history and opportunity.
Frequently Asked Questions
What Is a Collector’s Deed In Missouri?
If the property owner fails to pay the unpaid property taxes within the redemption period of one year, the Certificate of Purchase holder may apply to convert their tax lien certificate into a Collector’s Deed, officially transferring the property to their name.
Is Missouri a Tax Deed State?
No, Missouri isn’t a tax deed state; it primarily focuses on tax lien sales.
How do I find a tax lien property in Missouri?
Detailed listings become available about one month before the annual tax sale in August. Check the county’s local newspapers and the county website.
What is the redemption period for tax liens in Missouri?
In most cases, the redemption period in Missouri is one year from the date of the tax sale.
How can investors purchase tax liens in Missouri?
Investors interested in purchasing tax liens must register with the County Collector’s Office. Registration is free and should be completed well before the auction date to ensure eligibility. Once registered, investors can participate in the county auctions—held on the fourth Monday of August—and bid on tax-delinquent properties.
Ted Thomas: Your Missouri Tax Lien Investing Mentor
Exploring Missouri’s tax lien investment terrain becomes much simpler with Ted Thomas leading you every step of the way. With his extensive background as the leading authority in tax lien certificates and tax deed investing, Ted brings a wealth of knowledge to this investment niche.
If you’d like to know more about tax-defaulted real estate investing, Ted Thomas provides full support and complete training with home study courses, Q&A webinars, live tutorials, workshops, virtual classes, personal coaching with certified coaches, and an interactive map and auction calendar research tool that allows you to visit each county online to find the details about upcoming auctions.
Start your money-making journey by attending Ted’s 7-hour foundational training. Book your seat today to attend the Retire Rich From Home Virtual Workshop.
Want to earn massive income from bargain real estate investing? Would you like to buy mortgage-free properties for pennies on the dollar? Or earn double-digit interest rates secured by real estate? Then get started today by clicking the button below and get your FREE Insiders Report.
