In Nevada, after you don’t pay your property taxes for three years, the property is deeded to the county treasurer. The treasurer then sells the property at property auction, typically once a year. Properties are sold as-is and you have to pay for the property with cash or a cashiers check that day. You do not receive title insurance, there are no disclosures, and any issues with the property (title, environmental, etc.) will be yours to deal with. To bid at auction, you need to register ahead of time; most counties don’t require a fee to participate, however, Clark County (Las Vegas area) now charges a $1000 registration fee. Nevada has a lot of rural counties that are large in size but have limited population. Elko County (population 50,000) is one of them.
Elko County is in the northeastern corner of the state. It borders Idaho to the North, Utah to the East, and 4 other rural Nevada counties to the South and West. Even though the population is small, Elko is the 4th largest county size-wise in the continental United States. None of the towns in Elko County are particularly well-known; the capital is Elko, West Wendover is the first town on I-80 the Nevada side of the Nevada-Utah border (closest casinos to Salt Lake City), Jackpot is the first town on US-93 on the Nevada-Idaho border (closest casinos to Twin Falls, Idaho), and Wells is located at the intersection of I-80 and US-93. There is a whole lot of remote land in Elko County and the annual tax sale features many parcels that are 10 acres or more.
Before you buy any investment, even ultra-cheap land, you need to consider your exit strategy. In my case, I came across the tax sale aftermarket before I actually realized that the land was first being bought at tax sale. There were a number of rural Nevada properties going up for sale or auction on eBay, on Landwatch, and a number of sellers had websites where you could buy direct like these: 1, 2, 3, where they offered parcels for sale. I also noticed on eBay that rarely ever did a parcel sell for cash? It almost always was sold on a land contract with the owner carrying back almost the entire purchase price. If a buyer wanted title insurance or to use an escrow company, they would have to pay in full for it. Basically what all the sellers were doing was buying land at tax sale for cash, then turning around and selling it for at least double, but on a note (many times 0% interest) spread out over 3-5 years, sometimes longer for higher purchase prices.
Seeing that there was an exit strategy, I started examining the list of parcels and avoided anything with a structure on it and any smaller parcels in subdivisions. There were dozens of different subdivisions with names like Meadow Valley Ranchos, Last Chance Ranch, and Humboldt Acres that were somewhat close to Elko. They typically had 1 or 2 acres of land. I figured that with these, people would care more about utilities, views, where the lot was located in the subdivision, etc. I knew very little about Elko and although I am a broker in Nevada, I did not plan on joining the Elko MLS and discovering the nuances of the market. Instead, I went with the bazooka approach of buying the absolute biggest parcels of land I could find, at the lowest cost. This led me to the Montello area, which is a tiny town of less than 100 people on State Route 233 in Northeastern Nevada. This area offered parcels with 10 to 40 acres. The 10 acre parcels had starting bids at around $700.
I flew from Salt Lake City to Elko on Delta Connection, and booked a hotel room for 1 night. When it was time for the auction, I competed against one of the companies I found online during my research for many of the parcels. Ultimately I ended up buying a few 10 acre parcels for between $1600 and $1900 each. I introduced myself to the competing bidder after the sale, knowing that it is useful to know your neighbor if there were any assemblage opportunities or if a potential buyer contacted one of us and we did not quite have what they were looking for.
A few weeks later, I received the recorded Treasurers Deed, granting me ownership of the properties. At that point I was ready to gather information and list the properties for sale on eBay. Since I had never visited the area, my marketing largely consisted of aerial photography and county maps. I do think the parcels do sell for more money when the listing is better researched and has more photos of the exact parcel and surrounding land. However, it is a trade-off of time and money that I was not ready to take. These parcels are very difficult to find and would require another flight, hotel stays, etc. There is the possibility of your car breaking down or getting stuck in a very remote location. I tried listing parcels in different ways. With an all cash auction, you would be lucky to break even. If you posted a set price, like $99 down and $99 per month for a certain number of months, it sometimes worked and sometimes would expire without a bidder. Either way, you are out the $35 listing fee (there is also a $35 notice fee if the property sells). Another technique I used was offering the property in an auction format starting at $1, but clearly posting that the owner would finance 95 to 100% of the purchase price. That way, someone could bid, for instance, $2000 while only having to put down $100 or so.
The biggest problem I encountered was that the winning bidder would often change their mind (this happens more often than not) and never make a payment. It resulted in me having to list the same property over and over. Another problem is that the market for this land is only so deep. It could take several months of auctions to sell what your inventory because you can’t list a bunch of similar parcels at the same time; it would just drive your bids down or cause properties not to sell. I was able to sell parcels profitably on notes, typically over 2-3 years and at 0% interest. Rather than string the process along, I ended up contacting the other bidder and she actually bought a few of my remaining properties from me.