Texas Tax Sales. Where to start?

Question

Hello!

I have been researching and learning more and more about tax sales as I am interested in acquiring a relatively cheap land as my first real estate invesment. Before I jump on this adventure, I want to make sure I have the adequate knowledge to avoid as many mistakes as possible as a beginner. If you have purchased any type of property from a tax sale (Texas preferably), what advice would you give to someone starting out? Is there any resources you recommend for me to review? Thank you in advance!

Henry Clark · Answer

Spend some time googling Texas tax sales and read.      Do some leg work.

Then come back and do a post on the process.

Roy Oliphant · Answer

Hi Randi,

Texas is a Tax Deed state so Tax Liens are not available here.  Also, Redemptions in Texas are rare and should not be the primary focus of investing.  Texas law does allow for recovering limited expenditures in addition to the amount paid at the auction, additional taxes paid and the Redemption Penalty.  These additional expenditures are limited by statute and MAY include repairs but do not include "upgrades".  Determining whether something is a repair or an upgrade can be very nuanced and goes beyond a general answer as it will depend on the specific situation and often will need a lawyer's input. (I am not one and thus can only discuss my experience.)

If you have a specific situation, please let me know the details and I can compare it to my experiences.

Roy Oliphant · Answer

Hello Mohammad,

Tax Sale investing can be rewarding but you are right to want to investigate the potential pitfalls first. The Bigger Pockets community is a great place for information.  However, you need to ask a more specific question as any focused investing has many basics and nuances that cannot be answered in a post.

I have worked with Arnie at TxTaxSales(.)com for several years.  He is the most knowledgeable person I have found regarding tax sales in Texas.  There is a lot of information on his site and he has an investor support program that may be of interest.

Good luck in you journey.

Roy Oliphant · Answer

Sometimes the rules allow for SOME repairs based on the intended use.  It is very much an "it depends" situation.  If the property is owner occupied, the redemption time may be affected.  Also, elderly have certain rights for tax deferral in Texas that may affect when a property is sold.  Don't hesitate to reach out if you would like to discuss specifics.

Randi Yager · Answer

I personally do not have experience with this situation but I am aware of someone who was looking into purchasing a property from a tax sale. She wants to buy a particular home that is going to be sold for taxes.  Her intent is to fix up the home, which as many years of deferred maintenance, and rent it out. This would include repairs and updating since the home was built in the 1050's. I cautioned her about the redemption period but I wasn't sure how much of her expenses she would be able to recover here in Texas.  It is very unlikely that this older couple would be able to redeem the property and especially if they had to reimburse her for the repairs.

Randi Yager · Answer

I have a question more than a reply.  Since I am new to Texas I would like to know the norm of purchasing a property form Tax Lien Foreclosure and the Redemption Period. If you purchase a property this way and the owner redeems the property do you add your rehab costs to the costs of the property or do they just redeem it per the codes. I know the law says you'll have to pay the amount the purchaser bid for the property, the amount of the deed recording fee, the amount the purchaser paid for taxes, penalties, interest, and costs on the property. Does the costs on the property include the repairs and upgrades to the property?

Texas Tax Sales. Where to start?

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