Tax deed investing made simple

For information about tax lien certificates and how much tax lien certificates cost , just click on the links. Want to learn how to profit from bargain real estate investing? Would you like to buy mortgage-free homes for pennies on the dollar? Or earn double-digit interest rates secured by real estate? Property taxes generate the revenue that runs the local government.

The legislature of the state created a tax entity called the county, and the county has a treasurer. The treasurer has the job of levying the taxes and collecting them. What Is Tax Defaulted Property? When the county seizes the property, they just want the money to pay their bills. So they usually sell the property at very close to the back taxes. Additionally, when they sell the property, it has no mortgage on it.

There are over 3, counties across America, and all of these counties will have at least one tax defaulted auction every year. Some counties will even do this every single month. For example, I live in Florida, and I know that in Orlando, which is Orange County , they have an auction about every 10 days or every 2 weeks for whatever properties that they have confiscated. The little auctions are pretty easy because you can go there and watch.

They usually sell just a few properties and only a few bidders will show up. At a big auction, hundreds of bidders will show up. Learning About Tax Liens Tax sale investing is really easy if you show up at the sale and buy the right property. Should you just walk in the door and start buying? Tax Deed Vs. Tax Lien Through no fault of their own, a lot of people unfamiliar with the concept of tax deeds tend to get them confused with tax liens. If for nothing else, the two terms sound similar, but I can assure you their differences are worth noting.

Once a homeowner is delinquent on their taxes, the government authority may choose to either pursue a tax deed or tax lien. In the event the municipality chooses to go the tax lien route, the resulting lien is auctioned off to a subsequent buyer usually an investor , who then becomes entitled to collect the back taxes.

Tax deeds, on the other hand, will have the local government auction the house off once a homeowner proves incapable of paying the back taxes. That way, they can use the proceeds from the sale to recoup the lost taxes. Though not as popular as its rehabbing and wholesaling counterparts, tax deed investing remains a viable and worthwhile endeavor for those that can understand the process. Of course, the viability of this particular exit strategy is directly correlated to the amount of knowledge one has on it.

Those who have dedicated the time and energy to learning the basics of tax deed investing will find it to be an attractive investment option. If for nothing else, tax deed investing awards savvy investors the opportunity to bid directly on a property, not unlike a foreclosure auction.

Perhaps even more importantly, investors have the opportunity to earn interest and penalties over the course of the redemption period. Some states, for that matter, may not offer as much of a grace period the redemption period in which investors may collect interest while the homeowner attempts to pay the back taxes.

Instead, some states see fit to sell off the title the same day as the auction. That means winning bids could land investors a new property in the same day they are placed. It is, therefore, safe to assume each municipality will have its own method for posting said tax deeds.

It is not uncommon to find a lot of smaller counties still offering live auctions, whereas a lot of the larger cities have transitioned over to offering online auctions. Live Auctions: Municipalities without the capabilities to offer online auctions will settle for in-person auctions. Live auctions are, therefore, more common in smaller, rural areas where access to online features is, well, limited.

Online Auctions: Online auctions have taken hold in most parts of the country, and are a lot easier to find with a simple Google search. Each of these sites offers info on tax deed auctions, where to find them and how to participate. Location Tax deed investing follows the same golden rule of real estate investing that every other exit strategy abides by: location, location, location.

Where you intend to invest in tax deeds plays an integral role in the process as a whole. You could even argue that location plays a larger role in tax deed investing than any other form of real estate investing. The process of investing in tax deeds is entirely dependent on the state and municipality you intend to work in. As I already alluded to, each state and local government has their own way of doing things. The state you intend to invest in will largely determine how you start, carry out and conclude the entire process.

In addition to the location of the tax deed auction, the proximity of the home to the investor can also have significant impact on how a deal transpires. And while most tax deeds are carried out sight unseen, you still need to have an idea of what you are bidding on. If you can visit the area in which the tax deed auction is located, you may be able to glean everything you need from the local government.

Try talking to the county treasurer, assessor, recorder and surveyor in order to gain a better picture of the home you intend to buy. These entities will have accurate information that can make your decisions a lot easier. Understand The System Investing in tax deeds is quite a departure from your typical rehab or wholesale, but like every other exit strategy, it can be broken down into a system.

Those that want to take advantage of tax deeds had better study up on the system they will need to navigate to see things through to completion. Only those that know how the tax deed systems works, after all, will be able to capitalize on it. Above all, mind due diligence. Research everything from the size and the age of the property to its current and after repair value. County treasurers, assessors, recorders and surveyors will be able to offer you a lot of useful information on a subject property.

The country treasurer, in particular, will typically be conducting the actual sale and possess a list of the properties going up for auction. Not surprisingly, the county treasurer is a great place to start. Perhaps most importantly, however, the recorder will be able to answer any questions you may have about any liens, claims or judgements the property may have on it.

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