I am going to take part in this months tax deed sale.
I've reviewed the results from the last 6 months and the results are all over the place. I see people paying around Zillow estimates (Bad idea in my opinion), I see investors purchasing right around the ARV, but... I also see some great deals that go for 30-50% of the ARV.
I've spent the last few months educating myself on the laws, rules, and processes of tax deed sales and feel like I know the system pretty well. With that being said.... Are their any investors locally that would like to sit down and chat.
Here's how I understand the process:
- Someone does not pay their property taxes
- After a year the county auctions off a tax lien for the back taxes to the person willing to take the lowest rate of return. In Florida the bidding starts at 18%
- After two years if the taxes are not paid the lien holder can file for foreclosure on the property.
- At the auction the starting bid is for the taxes owed on the property.
Of course there is a lot of research in dealing with these types of auctions. There are some liens that survive the tax deed auction.
- City/County (nuisances, etc..)
You need to physically drive the property. Google maps might show you a house that burned down a year ago.
Title chain is also very important. The county MUST notify any lien holder of the upcoming auction.
You are also going to have to quite the title which takes time and money.
You don't need to file a quiet title action to my knowledge. If you hold the property for four years, you can sell and buyer can get a general warranty deed.
@Wayne Brooks can chime in.
BTW--i see an occasional GREAT deal. Saw one right after the hurricane when everyone was sidetracked. I also see people paying stupid money...so results can vary.
John, you are correct that is one option.
But for me to make this scalable I will need to get my capital out as quickly as possible. My hope was to use this in conjunction with the BRRRR strategy. From what I have read is that banks will not let me do a refi unless it has title insurance.
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