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Although this is a "local" story, may be of interest to FWF members investing in tax liens, etc. --
 
At least two gated golf communities are attempting a workaround to their $1 lot problem, purchasing lots within their gates and building spec homes on them.

Belfair and Berkeley Hall, two Bluffton communities, are using the new strategy in hopes of ending the cycle of lots being sold for $1. If the lot does not sell, and the owner doesn’t pay taxes on it, the property is auctioned off at Beaufort County’s delinquent tax sale for the minimum tax amount.

That property is then up for sale to buyers who are often unaware of the exclusive neighborhoods’ fees and dues. Annual dues are typically between $14,000 and $20,000, depending on the neighborhood. And onetime initiation fees push the price tag up as much as $19,500.

The new owners sometimes default on payments, sending the property back to the tax sale the following year.

Beaufort County treasurer Maria Walls has witnessed many uninformed investors make impulse buys on the lots — located in some of Beaufort County’s premiere neighborhoods — at past tax sales.

Last year, she and some of the gated communities’ leaders led a “buyer-beware” campaign to educate potential buyers about the fees. Belfair and Berkeley Hall ran three-quarter-page advertisements in four issues of The Island Packet leading up to the October tax sale.

Adrian Morris, general manager of Berkeley Hall, said the campaign was effective in reducing the number of people bidding on the lots.

Article continues at: http://digital.olivesoftware.com/Olive/ODN/IslandPacket/shared/S...

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tuphat said:   
Adrian Morris, general manager of Berkeley Hall, said the campaign was effective in reducing the number of people bidding on the lots.

How many people could there have been bidding in the first place, if they were selling for $1?
  

tuphat said:   The new owners sometimes default on payments, sending the property back to the tax sale the following year.

Beaufort County treasurer Maria Walls has witnessed many uninformed investors make impulse buys on the lots

  So what, if the back taxes get paid, who cares if the property goes back to the tax sale the following year.

atikovi said:   
tuphat said:   The new owners sometimes default on payments, sending the property back to the tax sale the following year.

Beaufort County treasurer Maria Walls has witnessed many uninformed investors make impulse buys on the lots

  So what, if the back taxes get paid, who cares if the property goes back to the tax sale the following year.

  
It's HOA on steroids.  They're seeing vacant and probably-neglected lots getting churned annually for next-to-nothing, dragging down comps, and doing nothing productive.

It does make some sense to me for the HOA to buy the lot at the tax sale (they're in a better position to properly advertise it) but, given the nature of the communities in question, I think getting into the business of building spec homes is a mistake.  In the stratum where people are willing to pay $20k HOA dues, I think they'll lose more buyers to design choices (whatever those design choices are) than they would to just having a lot that's not move-in-ready.  Not to mention, they'll be competing directly with existing resale homes in their own neighborhoods.  Available vacant lots in a community aren't great for property values, but just wait and see what a vacant high-six/low-seven-figure house with a motivated seller does...

IMBoring25 said:   
atikovi said:   
tuphat said:   The new owners sometimes default on payments, sending the property back to the tax sale the following year.

Beaufort County treasurer Maria Walls has witnessed many uninformed investors make impulse buys on the lots

  So what, if the back taxes get paid, who cares if the property goes back to the tax sale the following year.

  
It's HOA on steroids.  They're seeing vacant and probably-neglected lots getting churned annually for next-to-nothing, dragging down comps, and doing nothing productive.

It does make some sense to me for the HOA to buy the lot at the tax sale (they're in a better position to properly advertise it) but, given the nature of the communities in question, I think getting into the business of building spec homes is a mistake.  In the stratum where people are willing to pay $20k HOA dues, I think they'll lose more buyers to design choices (whatever those design choices are) than they would to just having a lot that's not move-in-ready.  Not to mention, they'll be competing directly with existing resale homes in their own neighborhoods.  Available vacant lots in a community aren't great for property values, but just wait and see what a vacant high-six/low-seven-figure house with a motivated seller does...

  The other thing is that there's a good chance that HOA dues aren't being collected at the tax sales.

Actually the real issue is that there is nobody paying the dues on those lots, and every time one flips that is another year they won't collect.

Its essentially a mandatory country club enrollment, with the usual fee structures. I am sure that there are plenty of other things you have to pay for as well to use the facilities.



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