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Posted over 9 years ago

Making Money, Starting With $1000.00 or Less

Want to earn fast cash but have less than a $1000.00 saved? It is possible in real estate! You must first learn to think outside the box, and act fast. Hesitation can be your worst enemy when you are trying to earn fast cash. My first property I ever bought, I paid $489.00 for it cash at a tax auction. I was hesitant about selling it for as much as I had comped it for ($6000.00) So, I sold for half of what it comped for ($3000.00). This is how I stumbled my way into this niche form of real estate flipping. Dealing in raw land. Funny thing was I learned later that I paid $389.00 to much for the property. Had I waited 3 months it would have been possible for me to buy the land for $100.00 or less.

Often vacant land in Tarrant county has sold for as little as $100.00 or less in the past. When property is placed for tax foreclosure auction on the county courthouse steps for delinquent taxes, and there is no bid, the property is struck off the listing and sold (actually given) to a taxing unit. In Tarrant County, Texas, the largest taxing unit outside of the county units is the city of Fort Worth.

Fort Worth, accepts these properties as is, and sells them the same way. They have options on how they can sell the properties. Often they sell nicer properties through private sale, like a normal property owner does. However, several properties remain on their books for long periods of time. When this happens, they begin to offer the properties at sealed bid auctions. Prices are determined by who does or does not submit a bid.

This becomes important for you. As the property goes through several of these bidding cycles, the city and other authorities begin to determine that they need to lower the minimum bid. For example, the June/July 2013 auction had properties where the minimum bid was as low as $25.00. (Remember past figures do not guarantee future minimum bids as with any sale.)

May Auction Results: City of Fort Worth May Auction Results

Look at 3005 Chestnut, sold for $551.17. That was the lowest-highest bid property that sold during this auction. These bids must be approved by the City Council, and can be rejected, as two bids were during this sale. This may happen for various reasons. But note, that the bid for $551.17 was actually accepted.

Smaller cities in Texas do not have the luxury of auctioning off a large inventory of property, often they depend on the collection attorneys to assist them in the resale. As a case study, I will share a current offer I have made to purchase to a smaller Tarrant County City. 

Case Study:

I currently have an offer put in place for a city council to vote on a property offer of $250.00. The city has owned the property for over 15 years, and has never received an offer on the property. The county appraisal district has it valued at $1800.00 The market value of the 1/5 acre lot is approximately $7500.00. If I do obtain the property, I will be accepting an offer in excess of $2500.00 on the lot in about 30-90 days from the date I receive the deed.

This is when doing your homework, and having multiple exit strategies will pay off. If I cannot sell the property ( as conditions may apply to the purchase) for fast cash, I will develop the property and sell it in about 9 months to a year for a gross profit of $30,000+. This is due to a contingency of developing the property into a small 4-2-2 and selling it around $200K.

You might ask why I don't wait for the 1 year and $30,000 plus return on investment? Simple, If I complete one flip a month for $3000.00 per flip profit, after 12 months I have made $36,000. That's a 20% higher return on my investment. Please note, I flip more than one property per month on average using my methods, they do not all net $3000.00. The $3000.00 profit is my minimum goal on $1000,00 investment, but I have accepted less to earn more over the longer term.

Keys for success while doing the fast flips.

1. Think outside the box on finding properties, there is much more than the MLS, agents, and brokers.

2. Do not hesitate, act fast. I think had I not bought my first property, I would have never found my niche.

3. Do your homework, this is key!

4. Have multiple exit strategies when you make an offer. Having multiple buyers lined up helps here big time. 



Comments (8)

  1. Hi Richard,

    I enjoyed reading your case study, nice job.

    How many deals a month could you consummate  if you worked full time at this?

    Cheers

    Dane


  2. Richard, I enjoyed reading your blog posts and website. It's clear to me that you know your stuff when it comes to Texas Tax Sales and if I decide to purchase land in TX, I will avail myself of your services.

    John Walsh, Boston, MA


    1. Thank you for the vote of confidence.


  3. You can go and try and if lucky, no one else will bid, however bidding usually gets up closer to the value of the property vs $100. Not saying it can't be done, it does happen, though not as frequent as we all would like. Good luck!


  4. I'm doing both. The city of Fort Worth held a sealed bid sale today. The lowest priced properties ($125) were withdrawn. But there were still several listed at $1000 or less.

    @Jeremy Peters you will need to contact the attorneys for the cities in Collin County.


  5. @Richard D. 

    First of, great blog! Second, I'm a bit confused, are you still buying these properties from the "court house steps" or are you dealing with someone at the city of Fort Worth? 


    1. I buy from several sources. Courthouse steps are still my favorite option.


  6. Do you know how the tax sales are handled by cities in Collin County?