Melvin Kelly bid $1 billion yesterday for legal claim to land he has never seen. The Severn garbage man doesn't know where it is, which doesn't matter because he's unlikely to visit, and he doesn't care if it's a dump.
He'll pay Anne Arundel County the outstanding property taxes on it, then recoup that investment at an interest rate higher than that of any savings account or certificate of deposit when the owner pays the taxes. And the owner almost always pays.
"I've been doing tax properties for quite a few years, and I've never had to pay yet," said Mr. Kelly. "I'm just trying to make a few dollars."
The bids on hundreds of properties climbed by millions of dollars in a matter of seconds at a tax sale in Annapolis yesterday, although no one planned to pay a dime and everyone hoped to make a profit in this real-life Monopoly game.
It was one of many such sales that take place across Maryland every spring. Investors bid millions of dollars to gain legal claim to properties with outstanding tax bills while they wait for the landowners to pay their debts. When the property owners pay, the investors are reimbursed with interest. And they never pay the amount they bid.
The auction gives way to emotion, and pretty soon investors start talking like Donald Trump. Real estate developers, lawyers and land speculators wave their bidding cards in the air, often bidding millions for legal claim to Dogpatch-style lots.
"It's a money investment game," said Nancy Sopko, the county's tax sale clerk. "It's ridiculous how much they bid."
In Anne Arundel, property owners must repay the investors with 18 percent interest. It is among the highest rates in the state, although Baltimore is first at 24 percent. Lawyers also can charge fees for selling back a landowner's debt.
Even if a property owner never pays the debt, investors can walk away and lose only the outstanding taxes they paid, which usually amount to less than $1,000.
For the county, the auction is the best way to make up for derelict taxes in one day. For investors, it is a low-risk business.
Mr. Kelly gone to tax sales for 10 years. Yesterday, he wrote a check to the county for a little more than $400 but expects to reap nearly $500 in six months to two years.
That was modest compared to more seasoned investors. Four investors spent more than $100,000 each.
It was easy to distinguish these professionals from the crowd . Many wore beepers, carried calculators and dabbed at property listings with expensive pens. Some wore gold jewelry and cologne; others were dressed in modest suits and carried briefcases. Most chewed gum.
Unlike the less experienced investors, they didn't tremble as they held up their bidding cards.
"Oh, yeah, there are a lot of familiar faces out there," said Irv Sass, who owns Baltimore Auction Co. and is running tax sales in several counties this spring. "They've got plenty of money to spend over here."
One investor said his bid was "too high -- a lot of zeros."
"You just get caught up in the action," said another, who refused to give his name. "It's been pretty civilized here today, but a couple of weeks ago in Baltimore City, the bids were crazy."
Yesterday's bids seemed outrageous enough. Those who came to buy up the estate of a relative or lay claim to a cheap abandoned property left the auction looking stunned.
"Oh, heavens," said Charlotte Walters of Edgewater. "Some of the bids that came out -- well, I'm still shaking my head."
Ms. Walters came with her daughter, Mary Feo, to watch. They couldn't believe that property liens in the working class community of Woodland Beach were attracting $40 million bids.
"We used to call it 'Hoodlum Beach,' " said Ms. Feo, 30, a bank bookkeeper and the mother of three. "Believe me, the people who own those little houses would love to get $40 million."
Local property owners probably will never know the size of the bids,because the county doesn't have enough money to send out notices to all 1,056 people who owed taxes this year, officials said.
If they knew how much the investors would have to pay to buy their property, most landowners probably would bluff and not pay the taxes. Investors would be left paying the tax bill and in all likelihood would not pay the multimillion-dollar foreclosure cost, county officials said.
But such possibilities did not scare any investors yesterday. Beau Simmons, an Annapolis photographer, said he hoped to invest $100,000 and earn $18,000.
"I only do this one day a year," he said. "But that's pretty good for a day's work."