Nebraska - The Good (Tax Lien) Life

Feb. 28, 2011 - PRLog -- Nebraska is one of our favorite states to buy tax liens for a couple of reasons. The primary reason is you don’t get anywhere as many bidders as in Arizona or Florida and you know the rate will be 14% (accruing daily) rather than bidding down the rate as in those states. A second reason is that a number of counties don’t actually hold a sale – instead the liens are available on a first come, first served basis at the Treasurer’s office.

Interest Rate: The state offers a potential rate that is attractive, being 14% per year. Since the “official” method of bidding is on a “percentage of ownership” basis (the person willing to take the smallest portion of ownership in the property wins the bid) the rate is always 14%. In actuality the “percentage of ownership” bidding rarely is the method used, rather a round robin method is used (See our manual “An Overview of Tax Sales”). This means that you will get a 100% ownership interest and a 14% return. Another benefit has already been mentioned – a number of the smaller counties sell on a first come, first served basis at the Treasurer’s office – so if you are willing to get there early you can have your pick.

The Bidding Method is the percentage of ownership method, meaning the bidder willing to accept the smallest percentage of ownership in the property is the winning bidder. As mentioned above, most counties will offer a round robin method of bidding as an alternative to the percentage of ownership method.

Based on our experience in Nebraska, but not on an actual statistical analysis, it is our feeling that the redemption rate is approximately 95% on all liens sold. It can be assumed that the redemption rate on improved properties is substantially higher and the redemption rate on unimproved properties is somewhat lower.

Subsequent Taxes: Subsequent taxes are very important in Nebraska. If you do not pay the subsequent taxes (the taxes due after you have purchased the lien) they will be offered in the next sale and you may lose your position in the lien. The new buyer has the right to redeem you out. This may not be a bad situation if you have made a mistake and want out, but it will end any chance of getting the property. Keep in mind that paying the subsequent taxes will entail increasing your investment in the property three fold over the next three years.

Important Tips & Warning: If one is going to bid in Nebraska you should become familiar with the Public Land Survey System as explained in our Overview of Tax Sales Manual. This is how the properties are described on the tax sale lists and it is critical that you become familiar with how the system works. Lists for the Nebraska sales are available at www.taxsalelists.com .

One warning we will offer is there are a large number of liens offered for sale each year that are agricultural, unimproved parcels. This is something I would usually steer away from, but if there are crops in the ground or the land is cultivated you might consider it. Nebraska is an agriculture state and these lands can be leased.

If you would like more information about the upcoming Nebraska Tax Sales visit http://discover.taxsalelists.com/your-free-guide-to-nebra... to download out FREE Nebraska Tax Sale Whitepaper.

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