The Pima County Tax Lien Sale’s public auction might have wrapped up in February this year, but savvy investors know the game isn’t over yet. Not only can you still purchase tax lien certificates, but you might even get better deals than those who braved the auction. That’s because, while the auction-style format can be exciting, it often leads to a bidding frenzy that significantly impacts your potential profit.
Tax Sales in Arizona use a “reverse auction” process where bid starts at the maximum 16% interest rate and decreasing. Last year’s auction resulted in an average winning bid of just 6% across 3,195 sold tax lien certificates, indicating that many investors likely settled for returns significantly lower than the maximum 16%.
And it gets even wilder! The County Treasurer’s website states that “A 0% bid is acceptable,” suggesting that there were instances where investors have bid down to 0%, potentially losing money after factoring in fees.
There’s a smarter and better strategy: Savvy investors know that Over-the-Counter (OTC) tax liens offer a different path. These unsold tax lien certificates, available throughout the year, provide the full 16% interest rate with no competition.
Ready to unlock those higher returns? This blog post will explore the world of OTC tax liens in Pima County, revealing where to find them, why they often offer better deals than the auction, and the potential risks you must know. We’ll also introduce you to Ted Thomas, a seasoned tax lien expert who can teach you everything you need to know to invest confidently and maximize your profits.
At a Glance: Pima County OTC Tax Liens
- OTC tax liens offer a consistent path to earning the full 16% interest rate allowed in Arizona.
- The 2023 Pima County Tax Lien Sale saw a dramatic increase in OTC lien activity, suggesting that investors are realizing their potential.
- While the auction can be exciting, it often leads to lower returns due to competitive bidding.
- OTC tax liens allow you to invest at your own pace, conduct thorough due diligence, and scale your investments more easily.
- Ted Thomas, a seasoned tax lien expert, can help you navigate the complexities of OTC investing and maximize your profits.
A Quick Refresher: Tax Lien Sales 101
Before we discuss the specifics of OTC liens, let’s recap tax lien sales.
Imagine this: someone in Pima County owns a property, like a house or a piece of land. Every year, they have to pay property taxes to the county. But what happens if they don’t pay their property taxes?
Well, the county doesn’t just let it slide. They need the tax revenue, so, they will put a “tax lien” on the property. A tax lien is a legal claim that says, “You owe us money. This property is on hold until you pay up!”
A tax lien can cause headaches for the property owner:
- They can’t sell the property.
- They can’t get a loan using the property as collateral.
And here’s where it gets interesting for investors like you. The county wants to collect the unpaid property taxes as quickly as possible, so it often holds tax lien sales. At a tax lien sale, investors can buy tax lien certificates representing the owed property taxes. It’s essentially buying the right to collect the tax debt (plus interest) from the property owner by paying their property taxes.
If the homeowner pays their property back taxes (plus interest!), they get to keep their property, and you, as the investor, get your money back plus a tidy profit. But here’s the kicker in Pima County: if the homeowner doesn’t pay up within three years, guess what? As the certificate holder, you might be able to foreclose on the property and become the new owner!
Now, while many investors flock to the excitement of the tax lien auction, there’s another way to get in on the action – and potentially find even better deals.
What are Over-the-Counter (OTC) Tax Liens?
Think of it like this: the Pima County Tax Lien Sale auction is like a big, bustling marketplace. Everyone’s there to snag the best deals, but sometimes, some valuable items get overlooked amidst all the excitement. Those overlooked items? Those are the OTC (Over-the-Counter) tax liens.
When a tax lien certificate doesn’t sell at the auction, it doesn’t just disappear. Instead, the County Treasurer makes those certificates available for purchase throughout the year, allowing patient investors to find potential diamonds in the rough.
In Pima County, these unsold certificates are officially called “State Owned Certificates,” but investors often refer to them as OTC tax liens. Like regular tax lien certificates, buying an OTC tax lien certificate means you’re stepping in to pay the overdue property taxes a homeowner hasn’t paid. In return, you gain the right to collect that property tax debt (plus interest!) from the homeowner.
The OTC Advantage: Snag the Full 16% Interest
As mentioned earlier, the competitive bidding at the Pima County Tax Lien Sale auction can drive down interest rates – sometimes far below Arizona’s legal maximum rate of 16%. The County Treasurer’s website even states that a 0% bid is acceptable, so some investors may have meager returns. However, with OTC tax liens, you can secure that full 16% return, maximizing your profit potential.
And that’s not the only advantage! Since OTC liens are purchased at your own pace, it’s much easier to scale your investing and conduct thorough due diligence. You can browse and buy as many certificates as you want, whenever you want, without the pressure of a live auction. This gives you ample time to research properties carefully and make informed investment decisions.
Here’s a quick recap of the key benefits:
- Maximize Potential Returns: Secure the full 16% interest rate instead of getting caught in a bidding war.
- No Bidding Competition: Browse and purchase certificates at your own pace.
- Easy to Scale: Buy as many or as few certificates as you like, allowing you to grow your investment at your own pace.
- More Time for Due Diligence: Research properties thoroughly before buying to minimize risks and maximize potential profits.
Quick note: In our previous blog about Over-the-Counter tax liens, we mentioned that Arizona is one of our Top 4 Picks of Best Over-the-Counter Tax Lien States.
OTC vs. Auction: The Numbers Tell the Story
Heads up! We’re about to dive into some numbers, but stick with us! It’ll be worth it.
If you’re not a fan of crunching numbers, here’s a quick summary of what you need to know:
- OTC liens are HOT: In 2023, Pima County saw a record-breaking 447 OTC tax lien certificates sold – that’s more than the previous three years combined!
- Auction returns can be unpredictable: At the 2023 auction, only about 19% of parcels secured the maximum 16% interest rate.
- Average auction bids are lower than you might think: For all the tax lien certificates sold at interest rates lower than 16%, the average winning bid was just 4%.
- OTC liens offer a more stable path to high returns: If you want to maximize your profit potential, OTC liens might be the way to go. But don’t wait too long – these opportunities are going fast!
Now, let’s break down the data:
Table 1: Pima County Tax Lien Sales Historical Data.
Source: Pima County Treasurer’s Office, 2023 Tax Lien Sales Annual Counts.
This table shows the results of Pima County’s Tax Lien Sale from 2020 to 2023. While there might seem to be plenty of opportunities to go around – with roughly 70 to 80 parcels available per bidder – the competitive bidding process often impacts the final interest rates. Despite the allure of a potential 16% interest rate, the average winning bid in 2023 was 6% – less than half of what’s possible!
The Auction: High Stakes, Unpredictable Returns
But it’s not all doom and gloom at the auction. Plenty of investors still managed to secure the maximum 16% return. Let’s take a closer look at those numbers.
Table 2: Pima County Tax Lien Statistics.
Source: Pima County Treasurer’s Office, 2023 Tax Lien Sales Annual Counts.
This table breaks down the interest rates from the tax lien sales, including those sold over-the-counter (OTC) throughout the year. We can see how many tax lien certificates were sold at the maximum 16% interest rate each year by looking at the difference between the total number of tax liens sold at the auction (“Liens Sold At Tax Sale” in Table 2) and the number of tax liens sold at less than 16% (“Liens Sold at Tax Sale – Less Than 16%” in Table 2).
Here’s a breakdown of how many tax lien certificates were sold at the maximum 16% interest rate:
- 2020: 388
- 2021: 84
- 2022: 336
- 2023: 619
You may notice the low number sold in 2021. We can likely attribute this to the uncertainty surrounding the pandemic. But things rebounded in 2022, and then in 2023, the number of 16% tax liens sold at the auction soared, almost doubling the previous year!
This is particularly striking when we look back at the data from Table 1. For your convenience, below is a cropped version of Table 1 showing the data from 2021 to 2023:
As you can see, the following data points have remained relatively consistent from 2021 to 2023:
- Number of parcels published
- Total tax lien value published in US dollars
- Total liens sold
- Total tax lien value sold in US dollars
- Number of bidders
So why the sudden surge in 16% bids? Investors are becoming more competitive, realizing the potential profits from tax liens.
However, those 619 parcels sold at the maximum rate in 2023 only account for about 19% of the total liens sold at the auction. And if we remove those 16% bids from the equation, the average winning bid drops to just 4%! As you can see, while it’s possible to snag a great deal at the auction, consistency isn’t guaranteed – especially when competition is getting more intense every year.
The Rise of OTC: A More Reliable Path?
Now, let’s shift our focus to OTC liens. To calculate the number of OTC liens sold each year, we subtract the number of liens sold at the auction (“Liens Sold At Tax Sale” in Table 2) from the total number of liens sold throughout the year (“Liens Sold All Year” in Table 2). Here’s what we found:
- 2020: 168 OTC liens sold
- 2021: 142 OTC liens sold
- 2022: 71 OTC liens sold
- 2023: 447 OTC liens sold
That’s a whopping 447 OTC tax lien certificates sold in 2023 – a dramatic increase from previous years! To put that into perspective, that’s more than the combined number of OTC tax liens sold from 2020 to 2022. And remember, these OTC tax liens typically come with the full 16% interest rate, offering a more predictable path to higher returns.
It’s clear that investors are starting to realize the potential of OTC liens. Since these certificates are sold on a first-come, first-served basis, if you hesitate, you might miss out on the best deals.
Where to Find Your OTC Tax Lien Gem?
Discover how to locate profitable over-the-counter tax lien opportunities, including an inspiring real-life example of a $10,000 investment turning into a $4 million windfall.
Pima County’s Official Tax Certificate Sale Site
The Pima County Treasurer uses an online platform hosted by RealAuction.com to manage both the annual tax lien auction and the ongoing sale of State Owned Certificates (OTC liens).
- Click here to browse and purchase available OTC Liens.
- Click here to register as a bidder for future auctions (or OTC purchases).
A Real-Life OTC Gem: From $10k to $4 Million?
Let’s examine a real-life example to better understand the potential hidden within OTC liens. The property was offered at the Pima County Tax Lien Sale auction in February 2024 but didn’t sell, making it available as an OTC tax lien—but that could change in the future!
Source: Pima County Official Tax Certificate Sale Site, Preview Items for Sale.
As you can see from the image, this opportunity is intriguing for a couple of reasons:
- Assessed Value: A whopping $4,923,350
- Tax Lien Certificate Amount: Just $10,048.61
It’s doubtful that the property owner would let a multi-million-dollar asset slip away over a relatively small tax debt. This means you have a solid chance of earning the full 16% interest on your investment. But if the homeowner doesn’t redeem the lien, you could potentially foreclose on the property and become the owner – turning a $10,000 investment into a potential $4 million windfall!
While those potential returns are exciting, it’s important to remember that, like any investment, OTC tax liens come with their risks. Before jumping in and buying certificates, let’s look at the potential downsides you need to be aware of.
OTC Tax Liens Took Off in 2023: Are Investors Overlooking the Risks?
Remember that dramatic increase in OTC tax lien sales in 2023? We can’t ignore it. Something is definitely happening in the world of tax lien investing.
Let’s revisit our breakdown of OTC liens sold each year:
- 2020: 168 OTC liens sold
- 2021: 142 OTC liens sold
- 2022: 71 OTC liens sold
- 2023: 447 OTC liens sold
That’s a HUGE jump – as mentioned earlier, more than the combined number of OTC liens sold from 2020 to 2022! While it’s exciting to see more investors catching on to the potential of OTC liens, it’s also crucial to ask: Are they fully aware of the risks?
Proceed with Caution: The Potential Risks of OTC Liens
Over-the-Counter tax liens often require a higher level of due diligence than other investment opportunities. Think of it this way: these are the tax liens that didn’t sell at the auction. There might be reasons why other investors decided to pass on these properties.
Here are some key risks to keep in mind when evaluating OTC tax liens:
- Property Condition: The property might be in poor condition, requiring costly repairs before you can sell it or earn rental income.
- Hidden Liens: Other liens on the property might take priority over your tax lien, potentially reducing your return or even leading to a loss.
- Redemption: While the homeowner failing to redeem the lien could lead to you acquiring the property, you must wait three years. This also means your investment is illiquid or stuck for that three-year period.
Navigating the Risks: Knowledge is Power
So, were investors overlooking the risks of these OTC tax liens in 2023? Not necessarily. The good news is that investors are becoming increasingly knowledgeable about OTC liens. With the abundance of online tools and resources and the rise of online auctions, it’s easier than ever to conduct thorough due diligence from anywhere in the world. You can research properties, analyze neighborhoods, and identify potential red flags without ever having to set foot in Pima County (this is not recommended for new investors).
This increased accessibility and knowledge likely contributed to the recent surge in OTC lien activity – investors are more confident in their ability to navigate the risks and reap the rewards.
Feeling Overwhelmed? Start Small with $20 Tax Liens
We get it – OTC tax liens can feel intimidating, especially given the potential risks involved. But what if you could dip your toes in the water, gain valuable experience, and test different strategies– all for just $20?
Source: Pima County Official Tax Certificate Sale Site, Preview Items for Sale.
The $20 tax lien certificates in the image above are leftovers from the February 2024 tax sale auction in Pima County. As of writing, they are still available for purchase as OTC liens, but that could change, so don’t wait too long!
Now, let’s be realistic: 16% interest on $20 will not make you rich, and when you factor in the fees associated with OTC liens, you’ll probably not see a huge profit (or any profit at all!). But that’s not the point here.
Think of these $20 certificates as your “tax lien training wheels.” It’s a low-risk way to get familiar with the process and practice your due diligence skills. And if you’re extremely lucky, the homeowner might not redeem the lien, and you could have a chance to foreclose on the property after three years.
Here are some of the key benefits of starting with $20 tax liens:
- Experience the process firsthand: You’ll see how to buy an OTC tax lien certificate, track its status, and have a solid process.
- Conduct your due diligence: Even with a $20 investment, you can practice researching properties and analyzing potential risks.
- Test different strategies: See what works best for you. It’s all about trial and errors until you find a system that works for you!
You can start with these $20 tax lien certificates anytime. Just register on the Pima County Official Tax Certificate Sale Site.
Skip the Years of Trial and Error with Ted Thomas
You’ve seen the potential of OTC tax liens. You’ve learned about the risks involved. And you might even be ready to dip your toes in with those $20 certificates. But what if you could bypass the learning curve and get straight to the good stuff – those high-return, low-risk OTC gems?
That’s where Ted Thomas comes in.
Ted is a seasoned tax lien expert with over three decades of experience. He’s seen it all, done it all, and, most importantly, helped countless investors like you find success in the world of OTC tax liens.
Ted Thomas’s proven strategies can help you:
- Master Due Diligence: Learn how to thoroughly research properties, identify potential red flags, and avoid those hidden risks that can lead to losses.
- Develop Winning Bidding Strategies (If You Choose to Go the Auction Route): Even in the competitive auction environment, Ted can teach you how to secure those high-interest deals.
- Navigate the Post-Auction Game: Understand the steps to secure your investment, maximize your returns, and potentially even foreclose on properties to become the owner.
Imagine having the knowledge and confidence to navigate the complex world of OTC tax liens easily. Ted Thomas can be your guide, saving you years of trial and error and putting you on the fast track to profitable tax lien investing.
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, web 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.
Frequently Asked Questions
How do I access the list of tax-delinquent properties for sale in Pima County?
You can access a list of tax-delinquent properties by registering on the Pima County Treasurer’s Office website. Once registered, you can access and purchase all available tax liens.
What are the upcoming tax lien sale dates in Pima County?
The Pima County Treasurer’s Office typically holds the annual tax lien sale during the last week of February. However, it’s always best to check the Pima County Treasurer’s Office webpage frequently for the most up-to-date information and any changes to the schedule.
How can I purchase tax liens in Pima County?
Register on the Pima County Treasurer’s Office website to purchase tax liens. After registering, you can research properties and make purchases directly online.
Ready to Dive into the World of OTC Tax Liens?
As you’ve seen, the Pima County Tax Lien Sale offers exciting opportunities for real estate investors – but it’s the savvy investors who understand the power of OTC liens who are likely to reap the rewards. While the auction can be a tempting gamble, OTC liens provide a more consistent path to those coveted 16% interest rates, allowing you to scale your investing at your own pace and conduct thorough due diligence before committing your hard-earned money.
Remember, knowledge is power in the world of tax lien investing. The more you learn, the better equipped you’ll be to navigate the risks, spot those hidden opportunities, and turn OTC tax liens into a profitable part of your investment portfolio.
Skip the Learning Curve with Ted Thomas
Ready to unlock the secrets of profitable OTC tax lien investing without years of costly mistakes?
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.
