Investing in Arkansas Tax Sales: Everything You Need to Know to Get Started

Investing in tax deeds in Arkansas presents a lucrative opportunity to acquire real estate at a fraction of its market value. Arkansas offers a unique system for handling tax deed auctions, which is attractive to investors looking to diversify their real estate portfolios. This guide will walk you through the steps, requirements, and essential information to make informed decisions about tax deed investing in Arkansas. Whether you are a beginner or a seasoned investor, understanding the nuances of the state’s system can open doors to profitable ventures.

In Arkansas, properties become tax-defaulted when owners fail to pay their property taxes for two years. Counties then auction off these properties through tax deed sales. The state manages these auctions, with each of Arkansas’s 75 counties having its own taxing jurisdiction.

Understanding the Arkansas Tax System

Tax Management:

• It is managed by the state legislature and individual counties, each of which has its jurisdiction.

Property Tax Collection:

• Property taxes are enforced and collected by the counties.

Tax Defaulted Property:

• Properties are considered tax defaulted after two years of unpaid property taxes.

Auction Management:

• Counties can organize tax deed auctions, and there’s a trend toward regionalizing these auctions.

Arkansas Tax Deed Auctions
Tax deed auctions in Arkansas are usually held in person, with no online bidding option currently available. Each county is responsible for managing its auctions, but some counties might regionalize their auctions to streamline the process. Investors should check the Arkansas Commissioner of State Lands website for auction details, including catalogues, past results, and post-auction sales lists.

How Does the Auction Process Work in Arkansas?

Arkansas uses a “premium bid” system where the highest bidder wins the property. Bids start at the total owed taxes plus interest and any applicable fees. You must make payments immediately after the auction, and failing to do so could result in penalties or loss of the bid.

Key Points:

• Bids start at the amount of back taxes plus interest and fees.

• The premium bid system favours the highest bidder.

• Payments are due immediately after the auction.

Redemption and Litigation Period

Redemption Period
After selling a property at auction, Arkansas provides a 30-day redemption period during which the original owner can reclaim the property by paying the owed taxes and penalties. This redemption period offers an added layer of protection for both the owner and the investor.

Litigation Period
In addition to the redemption period, Arkansas tax sales have a 90-day litigation period. This is the time when parties must resolve any legal disputes over the property. It’s essential for investors to understand this period before proceeding with property improvements or sales.

In-Person Auctions: No Online Bidding

Currently, Arkansas does not offer online auctions for tax deed sales. The county holds all auctions in person, which can limit the number of bidders and reduce competition. This setup may benefit investors who are local or willing to travel.

Key Points:

• The county holds the auctions in person only.
• There is no online bidding system.
• You must be physically present to participate.

Arkansas Over-the-Counter Tax Deed Sales

Properties that don’t sell during an auction become available for purchase over the counter. These properties are often sold at the minimum bid amount, making them a great opportunity for investors who prefer to avoid bidding wars.

Advantages:

• Purchase at the minimum bid.

• Less competition compared to auctions.

• A convenient option for investors looking for bargains.

Number of Counties and Regional Auctions

Arkansas has 75 counties, each responsible for organizing its tax deed auctions. Some counties, however, are moving toward regionalizing their auctions to streamline the process. Investors should stay informed by visiting the Arkansas Commissioner of State Lands website for the most up-to-date auction schedules.

Why Arkansas is Ideal for Tax Deed Investors?

So, why invest in Arkansas Tax Deeds? Arkansas’s tax deed system is investor-friendly, with manageable risks and the potential for high returns. The absence of an online auction system may deter some, but for those willing to attend in person, it can mean less competition. The diverse types of properties available, coupled with the state’s economic stability and growth potential, make Arkansas an excellent choice for tax deed investment.

Investing in Arkansas tax deeds can be attractive for several reasons:

Potential for High Returns:

• You can acquire properties at significantly reduced prices, offering the potential for substantial profits if the properties are later sold or developed.

Manageable Risks:

• The 30-day redemption period allows some protection, as property owners have a short window to reclaim their property by paying back the owed taxes. Additionally, due diligence can minimize risks, such as outstanding liens or property issues.

Variety of Property Types:

• Auctions include a range of properties, from single-family homes and residential lots to commercial buildings and open land. Around 20% of properties sold at auction are land, making it a good option for those interested in land investment.

Over-the-Counter Opportunities:

• Properties that do not sell at auction can be purchased over the counter, often at the minimum bid amount, eliminating competition.

No Online Auction Hassle:

• With in-person auctions only, there’s no need to worry about online bidding wars, though this also requires physical attendance.

Fun Facts About Arkansas

Population: As of 2023, Arkansas has a population of approximately 3 million people.

State History: Arkansas became the 25th state of the United States on June 15, 1836.

Property Tax History: Arkansas has a unique history of property tax collection, managed primarily at the county level.

Known for: Arkansas is famous for its natural beauty, including Hot Springs National Park and the Ozark Mountains.

Attractions and Economic Highlights

• Popular Attractions: Arkansas boasts various attractions, including parks like the Buffalo National River, cultural sites, and historic landmarks.

• Transportation Infrastructure: The state has a well-developed network of highways, railroads, and regional airports, facilitating easy access to different parts of the state.

• Economic Development: Key sectors in Arkansas include agriculture, manufacturing, and, increasingly, technology. This diversification helps stabilize the state’s economy, making it more attractive for long-term investments.

Pro Tips for Arkansas Tax Deed Investors

Due Diligence:
Always research a property thoroughly before bidding. This includes checking for any outstanding liens or property conditions that could affect its value.

Check County Records:
Look into additional obligations like improvement district taxes or city liens that might remain on the property after purchase.

Focus on High-Value Properties:
Narrow down your list to properties that meet your investment goals. Low-value properties may not provide the returns you seek.

Consider Over-the-Counter Sales:
If competition is not your preference, explore over-the-counter options where you can secure properties at a lower cost.

What You Need to Know About Arkansas Tax Deed Sale?

Q: What is the redemption period for Arkansas tax deeds?
A: Arkansas has a 30-day redemption period after the tax deed sale, during which the previous owner or an interested party can reclaim the property.

Q: Can I purchase tax deeds in Arkansas online?
A: No, currently, Arkansas does not offer online tax deed auctions. You must attend in person.

Q: What payment methods are accepted at Arkansas tax deed auctions?
A: Payments can be made via credit card, cashier’s check, money order, debit card, or personal/business check.

Q: Are there any liens that remain after purchasing a tax deed?
A: Some liens, like those from improvement districts or the IRS, may remain on the property. It’s essential to check county records before bidding.

Interested in exploring Arkansas tax deed investment opportunities? Learn more or book a consultation today to start your journey into real estate investing. Whether you’re a local or an international investor, Arkansas offers a wealth of opportunities.

Sign up or log in to view the full content.