Real Estate Investor · Cebu, Philippines · Member since 2008 · 297 posts · 5 votes
Has anyone had much luck on the court house steps? It seams very hard to get a deal that way. There is a new infomercial on tv talking about buying a house foe $ 250. oo and blah blah blah.
I dont see how this can happen. If a homeowner owes a bunch of back taxes he also owes a bunch of money to the bank rendering the deal obsoleate.
Tax Lien Sales- You purchase at the auction, and the previous owner has a redemption period (set amount of time they have to redeem the property) if they pay the back taxes. If the owner pays the tax lien you acquired you'll receive a certain interest rate on the money you paid for the tax lien depending on what state you're in. Because all states offer different interest rates. If the owner doesn't pay after the given redemption period you then can acquire the deed to the property.
Tax Deed Sales- You purchase at the auction, but instead of having a redemption period you own the property right away as soon as the county gives you the deed. Depending on what county you purchase in some offer their properties free and clear of any liens whatsoever except for federal liens such as IRS. Then some counties don't guarantee anything. So one of the most important things you can do to protect yourself from big surprises to order a title report on the property to find out what liens are on the property.
Travis, here are some more Tax Sale Tips for you regarding your question(s).
Unless, there are very few people attending the sale at the Courthouse Steps, sales are very competitive; however, here is an inside Tip: Depending on your State--you can contact local municipalities (cities, etc.) to inquire about their upcoming Tax Sales. The difference is simply that there MAYBE less competition there since most people attend the more commonly known "County Tax Sales". Regardless, expect a little competitive bidding.
Infomercial: I like to consider them an introduction to the subject matter; however, once you decide to pursue the area of interest it is important to get the truth about what interest you at best. This may take a while since it requires sifting through sometimes a great deal of information, but it will be worth your time. Note: Always review the Statutes (laws) first and foremost.
Back Taxes: Not all properties have a mortgage attached it. You can do a simple title search at the county courthouse to determine if a property has mortgages, liens, etc. (not to take the place of a complete Title Search). Also, for example, know that there are Tax Sales conducted in which you can purchase properties, subject to NO-REDEMPTION PERIOD. Property types will vary of course.
Finally, Yes Tax Sales Do Work. Some Investors are more interested in Earning Interest on their Money while others are more interested in getting their hands on a Property that they can sell right away--as some of the Infomercials suggest. In essence, it may help if you decide on a strategy that you feel or believe will ultimately help you to meet your goals: select a state(s) and concentrate on capitalizing on Tax Sales in those respective areas. There are thousands of opportunities---really.
Well, you should have a printed list of all the tax deliquent properties, and have a checklist of the ones that look like possible deals. Look at the title at the courthouse of those that look like possible deals. Then yes do drive by's if you can, but don't let it take to much of your time!!!
Thanks Dan. I'm not sure why I didn't think of that...but Orange County actually has the properties listed w/pictures, pretty impressive. Unfortunately none of these properties are what I would consider "deals" at the minimum bid price.
Any suggestions on counties where the margins are a bit better?
Margins are more important to me than aesthetics. I mentioned Orange County because I live there, so it seemed like a logical place to start, but if there are other counties that are better for this type of investment, I'm definitely all ears.
Jake, This is what my partner & I do.....we buy in San Bernardino & Riverside Counties for the largest profit margins. We buy from the "court house" steps (after all the research is done.) Beautiful profit margins.....
Has anyone had much luck on the court house steps?
Many if not most tax sales are not done on the courthouse steps. More and more are being done online. Some are done in bundles and sometimes sealed bids. Live auctions for counties that have a significant number are often done in rooms that will hold a lot of people.
It seams very hard to get a deal that way. There is a new infomercial on tv talking about buying a house foe $ 250. oo and blah blah blah.
I dont see how this can happen. If a homeowner owes a bunch of back taxes he also owes a bunch of money to the bank rendering the deal obsoleate.
In many if not most areas the mortgage or other debt against the property is wiped out at a tax deed sale or a tax lien foreclosure.
[b]Tax liens vs. tax deeds
This usually varies by state law, some states sell deeds some sell liens.
With a tax deed sale you are getting a deed at the sale. You become the new owner of the property. But contrary to what Shelby said, in some areas the owner has a right of redemption for a period after the sale.
With a tax lien, you only have a lien holders interest in the property. The owner has the right of redemption but you must foreclose if they don't pay.
The advantage of a tax deed is if they do not pay the property is yours without further action, with a tax lien you must foreclose if they do not pay.
The devil is in the details. I can give you very detailed info about how it works in Maryland but it could be very different where you are.
Yes it can be quite profitable but it is not near as easy as the late night TV guys make it sound.