Mitch Goldstein | Coach Mitch | August 3rd, 2007Control board action criticized
Called costly to Erie County
The state-appointed control board is supposed to help Erie County save money. But by taking a hard line on a new county contract, the board appears to have cost the government $7 million to $10 million.
A company was willing to pay $36.3 million for the right to collect and keep the overdue property tax payments that the county’s staff has been unable to collect, plus the interest penalties allowed by law.
The Fiscal Stability Authority, however, found flaws – chiefly in the fact the county had received only two offers – one from American Tax Funding of Jupiter, Fla., the other from the New Jersey company, Xspand.
“There [are] companies that are begging to bid on this contract,”Baynes said in May when he and other control board directors forced county officials to seek more offers.
Though they cast a wider net, county officials by last week’s deadline received just two new offers. One came from Xspand, the other from American Tax Funding.
Xspand isn’t saying why it changed its offer, but when county officials sliced open its envelope, they found Xspand lowered its offer to Erie County by $10 million.
American Tax Funding offered more than Xspand but still fell $7 million shy of the $36 million Xspand offered earlier this year.
That’s why county officials are calling this the control board’s $7 million to $10 million blunder.
With Xspand, the county would net roughly $26 million. With ATF, which didn’t change its total offer significantly, the county would net roughly $29 million. Both are a long way from $36 million.
Poloncarz says he dislikes both deals and might not recommend either to the Legislature. It might make more sense, he said, to soup up the county’s in-house tax-collection effort by hiring more people.
He said potential bidders might have been scared off because Xspand had an edge; it has done business with Erie County for years and had inspected the roughly 8,000 properties with at least one tax lien placed on them.
See the full story:http://www.buffalonews.com/cityregion/story/127346.html
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Coach Mitch’s REFLECTIONS
Nice, very nice. (that was said sarcastically)
How is it that these private companies can somehow collect monies and make a handsome profit but the county cannot? This is the case all over the country.
There are several major companies that exist to offer a taxing jurisdiction a significant lump sum of cash – today. The investing company’s get the opportunity to make a significant rate of return via the legal ability to pursue the tax delinquent for the overdue tax monies and if not successful, foreclose on the property.
The lump sum that is offered may be significant, but it certainly is much less than what the investing company expects to recover, through collection efforts or through foreclosure and resale.
This is an investment. As with any investment, the value goes up or down with the market. Erie County values are down and interest rates are up. Both factors mitigated against Erie County getting the $36MM it was offered previously.
The biggest factor is that Xspand had inspected many of the 8000 properties and knows what to expect.
Isn’t this interesting. What is the first rule when investing in tax delinquent real estate? Only deal with highly motivated, even desperate sellers. Well, Erie County apparently qualifies. It wants and needs cash – today.
What is the second rule when investing in tax delinquent real estate? Make sure that you do your due diligence. You must inspect the property and the situation surrounding the property. Xspand had done the inspections.
Your opportunity!
You now know that there are 8,000 properties in Erie County that are ripe for you to investigate. You can get the data base, do searches to segregate property, do marketing to find sellers and then negotiate and close a transaction.
We all know that we make our money going into a transaction. There is no better deal than a tax delinquent deal.
In this county there are 8,000 potential deals waiting for you – and that is just one county. There are 3332 counties in the US.
Foreclosure investors -eat your heart out!
See Coach Mitch’s “Ridiculously Simple System…” ™ for details.
Go for it,
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