Over The Counter Tax Liens – Best Rates, Zero Competition!

What are Over-the-Counter Tax Liens

When they are not sold at auction, you can purchase over-the-counter tax lien certificates directly from the county or state. These certificates are an investment in which you buy the right to collect unpaid property taxes (with interest) directly from a municipal government.

When you purchase an OTC tax lien certificate, you are essentially stepping in to pay the property taxes the homeowner owes. In return, you gain the right to collect the property tax debt plus interest. You also have a chance of owning the property if the homeowner fails to pay back their property taxes within the redemption period.

Why Did They Not Sell at the Auction?

There are various reasons why over-the-counter tax liens weren’t sold at the auction. Here are the common ones:

• Supply and Demand: Sometimes, more tax liens are on offer than investors present at the auction, particularly in some regions of the Midwest and the South.
  
  • Take Florida as an example. In one of our recent blogs, we discussed how Florida has “over a million tax lien certificates to fit different budgets.“
• Investor Limitations: Investors may have exhausted their funds on the first set of bids and don’t have the extra capacity to bid on additional tax liens. 
• Property Considerations: Certain properties might be unappealing to investors due to location, property conditions, or building restrictions that diminish their value or potential profitability.
• Auction Excitement: In the heat of the moment, some tax liens may initially attract bids, but if the winning bidder fails to pay in full within a set period, the tax lien returns to the county’s possession. 

Most over-the-counter tax liens are missed opportunities due to overbidding, lack of bidders, or insufficient capital. You will be rewarded with significant gains if you are prepared to do your due diligence when considering OTC tax liens.

How to Find Over-the-Counter Tax Liens

Finding over-the-counter tax liens starts with understanding the local terminology since it varies by state. You’ll need to know the specific terms used in your area to search and inquire about these investment opportunities effectively.

To get started, you should:

1. Contact the County Office: Call the county office to inquire about tax liens that remained unsold post-auction. It’s helpful to ask for the “list of properties” or “tax lien list” to clarify your intent.
2. Be prepared for different terms that might refer to the same list:
   
   • Surplus lands list
   • Scavenger list
   • Leftover list
3. If you encounter any confusion with the staff, politely ask to speak with the county treasurer. As elected officials, treasurers are generally responsive to potential investors and voters.
4. Remember, these OTC tax liens are available not because of their inferior quality but often because of lower attendance at auctions. There are a variety of valuable tax liens just waiting to be discovered.

Additionally, you can:

• Check Online: Some counties offer their OTC lists online. This could be through their official websites or on other platforms.
• Visit the National Association of Counties Website: This can provide additional resources or direct you to the appropriate local agencies.
• Visit in Person: Sometimes, the direct approach yields the best results. A personal visit to the county office can lead to the most updated information regarding OTC tax liens.

Benefits of Over-the-Counter Tax Lien Investing

Tax lien investing offers a unique opportunity for investors to earn high returns by purchasing delinquent property taxes. These liens are secured by the property itself, offering a level of protection for your investment. While there are risks involved, tax lien investing can be a compelling option for those seeking alternative investment strategies. Let’s delve into the specific benefits of over-the-counter tax lien investing.

1. No Competition

One of the most compelling benefits of over-the-counter tax lien investing is the absence of competition. Without the pressure of bidding wars, you get the following benefits:

• Streamlined Investment Strategies: Without competition, you can execute your investing strategies at your own pace.
• Accurate Risk Assessment: You can take your time evaluating potential investments, ensuring a thorough understanding of the possible risks and challenges involved.
• Control Over Selection: Choose from available tax liens based on your criteria rather than the urgency to outbid others.

2. Get the State’s Maximum Returns

You won’t need to cut your margins since you won’t need to outbid anyone. Investing in OTC tax liens means you’re generally entitled to earn interest at the statutory maximum rate, which can be as high as 24%.

3. Invest Anytime

The convenience of OTC tax lien investing lies in its non-restrictive timetable. Unlike auction-based tax liens that follow a strict schedule, OTC investments can be made at any point, giving you the flexibility to invest when it’s right.

If you’ve read this far, you deserve to learn a Ted Thomas Insider secret. While it is true that you can invest at any time, the best time to invest in over-the-counter tax lien certificates however, is immediately after the auction. Just allow a few days or weeks for the county to update its OTC tax liens list.

Suppose you’re wondering why; remember that some investors bite off more than they can chew. It is common for excited investors to overbid and then fail to follow through on paying for their bids. The tax lien certificates then end up on the county’s unsold tax liens list. 

4. You Can Buy as Many as You Want

Your investment scale is entirely in your hands; you can purchase a single over-the-counter tax lien or expand your portfolio to include dozens. The OTC tax lien market can also accommodate investors looking to operate on a larger scale, turning tax lien investing into a considerable business operation if desired.

I had one student, he’s now actually a coach, and he didn’t even sell one. He had a lot of money, so he just kept buying every time he’d go in. And I would say, “Buy and learn to sell.”

Drawback of Investing in Over-the-Counter Tax Liens

Over-the-counter (OTC) tax liens often require a higher level of due diligence than other investment opportunities. Because these tax liens did not sell at auction, they might have underlying issues that initially deterred other investors. Uncover and understand these issues, determine unpaid property tax values, and assess if the returns are worth the risk.

How to Invest in Over-the-Counter Tax Liens

Unlike tax lien auctions, which can be competitive and fast-paced, over-the-counter transactions offer a more measured approach to acquiring tax liens. Here’s a breakdown of the general steps involved:

List of Available Liens

Investing in over-the-counter tax liens begins with securing a list of available OTC tax liens. The list can typically be found on the county website or by contacting the county office, such as the treasurer or tax collector.

Due Diligence

Once you have the list, it’s crucial to research each tax lien certificate. You’ll want to know details like:

• Property’s market value
• Outstanding property tax debt
• Date added to the list (recent is better)
• Location
• Property type
• Property condition
• Other liens in the property

Payment

Next, make the first move and contact the county to express interest in specific tax liens. 

After choosing, you must submit your payment, which often includes completing specific documentation. The requirements may vary by state and county.

Finally, claim your tax lien certificate. This document is the tangible proof of your investment.

Remember, this is just an outline to guide you since requirements vary by state, and local regulations are an added layer to this process.