What should I do/not do when buying a tax auction property?

[Kat Hussey]

I'm interested in tax auction houses because they're cheap. However, I read a book about big mistakes to not make in real estate and it talked about not buying tax kittens without knowing a ton about them. But how much should I listen to that advice? I'm a brand new investor.

[Brian Simpson]

I've had and have several in Texas. You need to know what you're buying and what repairs would cost. Seldom will a tax property not need extensive repairs from deferred maintenance. So HVAC/Foundation/Roofing/ Plumbing/Electrical contractors in the area and costs need to be understood well to make good estimates. Homestead exemption status and other exemptions on the property, is important here in TX, but also will it rent and how much? You will probably want to rent it for 12 months and a day to get past the gains taxes. (So its not considered a flip) There are a number of traps for you to get caught in but if you buy right its a good first time strategy.  I try to get the estimates together and add them to my prospect pull comps and get a bottom 1/3 number 70% of that is what I'd like to have in the property in the end ready to rent. 

I can do that in Texas but I haven't seen anything in DFW I could do that with in a while. I buy several every year in Texas, the best markets for this are South. MCALLEN, S A, HOUSTON, etc.