A 2016 Update: Maricopa County Treasurer

Tricia Covert

Editor, Arizona Journal of Real Estate & Business

A new year is here which means preparation for the annual tax lien auction scheduled for February 10, 2016 is underway. The auction expects an average of 1,200 people looking to invest in tax lien parcels as a result of delinquent payments from Arizona property owners to participate this coming year.

I recently talked to Hos Hoskins, Maricopa County Treasurer, regarding the 2016 tax lien process and the benefits it has for interested investors. As County Treasurer, Hos oversees the management of property taxes in Maricopa County. His team does everything from answer questions from the general public, mail out notices, create investment portfolios for the state and run the online tax lien auction. Hos was very gracious to provide an update for this year’s auction.

Charles ‘Hos’ Hoskins

Hos, what type of volume does the County Treasurer’s office deal with each year in property tax collection?
The County Treasurer’s Office collects and distributes about $10.5 billion each year that involves about 3.5 million transactions. We also receive nearly 200,000 phone calls, letters, emails, or visits from property owners. In addition, we manage an investment portfolio of about $3.5 million.
What is the main cause of delinquent tax payments in Maricopa County?
About 60% of delinquent taxes are due to people not having the money to pay their taxes. The other 40% is due to an incorrect mailing address due to a change in ownership or mortgage payoff.

What is the primary decision that needs to be made when an investor bids on a tax lien?
You’re loaning your money to the property owner to pay their taxes in exchange for a first place foreclosable lien. The main decision you have to make is what rate of return you are willing to accept for that loan – the maximum interest is 16%. About 1,200 other bidders may also want that lien, so you have to be prepared.

What is the value for an investor to buy a tax lien property in your opinion?
A tax lien investment is a pretty safe bet. The foreclosure rate – where ownership actually transfers to the investor, is less than one percent. If you buy 200 liens, chances are you will take ownership of one of those liens. When an investor purchases a tax lien, they’re in first place – their position is superior to other liens on that property. You’re going to get your money back with a pretty decent rate of interest, plus a chance to own the property.

Who is in the investment pool of people for Maricopa County?
There have been a number of investors who have been doing it for years and new investors join in all the time from all over the world. Usually, they’re individuals. However, last year, we had two companies that bought about $5 million worth of tax liens and they bid it at 2%-3% interest.

Would you say it’s lucrative for most of the investors?
Yes, a lot of investors do it full-time. I knew of a teacher who started this process with $500. After about 8 years, she quit her job and started investing full-time.

You have a 99% chance you’re going to get your money back with interest. The risk is extremely low as long as you don’t just buy using certain criteria. For example: I’m going to bid a 5% interest rate for all liens from $700 and below, you will get in trouble. Doing your research and knowing what you’re bidding on is important.
Is there a lot of administrative work when you purchase a tax lien parcel?
Most of the time you never have to even talk to the property owner – you just hold the liens. You have to wait 3 years to foreclose on the property. Then, if there is a foreclosure, you have to go through a regular eviction process.

What’s the best way to get the tax lien property list for the February 2016 online auction?
The list is available online at www.treasurer.maricopa.gov or on a CD. It’s categorized by parcel number and by areas in Maricopa County. Tax liens on the list are always from two years prior, so this year it will be for properties from 2014. We also list it in the Phoenix Business Gazette. The auction website (bidmaricopa.com) will be available the week of January 18.

If you’re interested in learning more about Arizona tax liens, attend our seminar on Friday, January 29th from 9:00am to 12:30pm. Hos Hoskins will be our special guest along with other expert speakers.