Anyone have experience with buying tax sale properties? Here in KC they require a 12 mth challenge period. Title companies won't write title insurance until challenge is over. So, if I can't get title insurance do I just sit on the property for a year? Don't really want to do that due to private investor involvement and don't want to pay interest for a year on the money used to purchase the property. Suggestions? Please and thanks!
Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
5y
@Christine Snyder I'm not familiar with the tax deed sale laws in your state, but they sound similar to the laws in my state (i.e. you own the property after the sale but the owner has up to one year to challenge the validity of the sale).
Also not sure what your plan was initially, but it's for this reason tax deed sale properties often don't make good flip properties (hard to get title insurance right away or without doing quiet title, though there is a company called Tax Title Services that specializes in getting title insurance on tax deed properties much faster than the quiet title process).
Anyway, to answer your question, rather than "just sit on the property", why not rent it out so you at least have rental income coming in? Now, I guess depending on the condition of the house, this may not be a viable option. Because if it's in REALLY poor condition, you may not want to dump a bunch of money into it since - I know in my state (and I'm guessing yours) - if the previous owner was to somehow successfully challenge the validity of the sale, any costs you incurred for IMPROVEMENTS would not be reimbursable. (Other costs, like the purchase price and expenses you incurred that were necessary to MAINTAIN the home, generally would be. At least in my state.)
Lots of risk involved with these types of sales.
Anyway, hope that at least gives you something to think about.
Perhaps @John Underwood will have some other suggestions. I believe he does quiet a lot of these.
Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
5y
You might try finding the prior owner and asking them if they intend on redeeming. If not ask for a deed from them. Check with a local title agent and ask if they're authorized to issue a policy w/o exception for the prior owner's interest if you get a deed.