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Highlands Today

Speculating In A Down Market

Jasmina Meyer/Highlands Today

James E. Hill demonstrates on a residential zoning property, which is currently on the market near County RD 29, how he measures and visual surveys sites with a land measuring device on Wednesday in Lake Placid.

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By Gary Pinnell | Highlands Today

Published: March 30, 2008

LAKE PLACID — Most businesses make money in the good times, and flounder when the economy sours. Others realize bad times are good opportunities, too.

James Hill, a real estate broker, picks up vacant lots cheaply in bad times, and sells them when the economy is prospering.

If property owners are unable to pay their taxes, the Highlands County Tax Collector's office sells tax certificates.

"We're probably going to do 500 in April and 500 in May," said Lynn Marine, tax manager.

A bidder can offer to pay the taxes on a delinquent property. Bidding starts at 18 percent, and goes down in interest rates until a certificate is sold.

If the property owner doesn't repay the holder of a tax certificate within two years, a sale of the property can be forced. The new owner holds a tax deed.

That's where Hill comes in. When vacant lots are sold for back taxes, Hill attends tax deed sales at the Clerk of Court's office and bids on them, sometimes for investors.

Caveat Emptor

But before bidding, Hill goes to the lot. Properties are posted on the clerk's Web site. Using maps, legal descriptions, lot numbers and a measuring wheel, he determines if there's a street.

"If there is a road, it increases the value tremendously," Hill said.

Then he looks for elevation. "If it sits up high, that means we can get in there with a bulldozer and level it," Hill said.

Third, he hopes the lot will be close to existing homes.

"If there are five other houses around it, that's a prime lot," Hill said.

Fourth, he looks for lots which have the same owner.

The owner of a tax deed must sue for quiet title before the land can be sold, Hill said. "It takes from 60 days to six months to get a clean title."

And just as importantly, attorneys charge $1,500 to $2,000 for a quiet title search, Hill said, so one suit against one landowner with several lots is more cost effective.

But investing in tax deeds is a enterprise only for careful, patient investors.

"They have to do their homework," said Lynn Marine, tax manager in the tax collector's office. For instance, there may be mortgages or liens on the property.

Hill goes even farther.

"You need to hire a Realtor or a consultant," he advised. Zoning changes, subdivision rules, the latest environmental information, and some education about the history of the lot may be necessary information to investors.

His fee is $200 plus the right to market the lot, on which he gets a 10 percent commission.

If a tax deed investor pays $4,000 for a Sun'N Lake of Lake Placid lot, he may need to hold it for three years or more, but he can expect to sell it for $8,000 or better, Hill said.

Three to five years ago, when the real estate market was hot, 50 to 100 bidders came to Highlands County Clerk of Courts auctions.

"Some of them were offering more than was owed on the property," said Bob Germaine, senior director of court services.

Hill said he's already sold 40 lots. "More than anyone else this year."

Last year, he turned 196 lots, along with a few houses and commercial properties.

But, said Hill, speculators may have to sit on their investments for two or three years.

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