Tax Delinquent Properties

2 Replies

Good Evening BP Community! 

I was doing some research on different ways to find off market deals and came across the idea of buying tax delinquent properties. I did some research and found the list from different parts of my state. Now I am trying to put a plan together to start acquiring properties that make sense. I am trying to achieve the following: Find Mulits to buy and hold as the market is ridiculous here (RI) for multis, or possibly flip.

When I direct mail, and get a call, what types of questions should I be asking?  

How do I know something is good deal? 

Once I find a good deal, What is the best way to purchase? Hard money? HELOC?

Thanks so much for the help!

@Lissette Deleon contacting tax delinquent properties is definitely a good strategy when looking for off-market deals. 

I also suggest using the public record to try and determine how much the property owner owes on the property and if there is room for you to buy at a discount. Vetting your leads by doing some homework can help save you from an awkward conversation with a property owner who owes way A LOT on a property that you were hoping to buy at a discount. 

In order to know if something truly is a good deal, you have to know your market.  What are comparable properties selling for?  How much is the property worth when it is at its highest and best renovated use?

It can get a bit trickier when and if you are only looking at multi family properties. In my market, especially in the high rent areas, a multi family property can be worth more then the true "market value" because of the upside of rental income.  Simply put, the property is very desirable because it has great cash flow.   On the other hand, there is niche and limited market for selling multi family units.  The main buyers for these types of properties are other landlords/investors.  This means that if someone does decide to put one of their units on the market, it very well could sit there for a while. 

I would target properties that look a bit run down, and the property is not upkept. This could be a sign of a "tired and defeated landlord" that may be willing to sell and unload the property at a discount just to get rid of the burden. 

When we market off-market deals, we advertise as buying for CASH (so for you this could be your private money or your HELOC). We also will make comments like: tired of being a landlord?, no fees, no repairs, and fast closing.

My seller lead sheet checklist for when I receive calls back is as follows: 

Name, phone #, email,  preferred method of communication, address, description of property (beds, baths, sq), overall condition, amount owed, reason for sale, how soon are you looking to sell, etc. 

Since you are specifically looking at multiple units, I would also ask about rental history- are the units fully rented, rents collected, etc. 

Hope this helps!

Good Luck and feel free to reach out to me with any questions 

@Lissette Deleon

When I direct mail, and get a call, what types of questions should I be asking? 

Ask open ended questions about their situation. You want to find if they are motivated to sell.  @Michael Quarles has written a lot of good stuff here about what to say to sellers. You might want to follow him or do a search. 

How do I know something is good deal?

That is a key skill. You need to know how to evaluate deals. If you don't know how to recognize a good deal you are taking a big risk when you buy.  There are two parts to this

  1. You need to know how to run the numbers. There are some basic formulas you can learn here on BP
  2. You need to know your market so you know what numbers to plug into the formulas. 

Learning your market means going out and looking at lots of deals. It is especially valuable if you can get to look at other investors deals and ask them about their numbers. 

Once I find a good deal, What is the best way to purchase? Hard money? HELOC?

That depends on your personal financial position. Talk to lots of lenders of different types and see what your options are.

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