Tax deeds investing
Good morning BP,
I am new to the investing world. I have done some research and listened to a lot of podcasts.
I am wanting to start my real estate investing with tax deeds.
Has anyone here done them?
What would be the best first step?
What resources are there for tax deeds?
Thank you for your help and input!
@Anthony McNeil, first identify which state you are going to invest in. The tax sale process will vary quite a bit between different states.
Also realize that its not a simple, clean, or risk free process and that it isn't set up to make it easy for the lay person to invest that way. So, its not an easy place for new comers to start.
For example, in some places a certain tax sale may be referred to as the "free and clear" sale but that can be a misnomer making people think that all liens are wiped away. For example, in my state voluntary liens like mortgages are wiped away as are municipal utility liens, but other liens persist. IRS tax liens are not wiped away. A VERY common lien not wiped away are estate taxes. Often a property is inherited but the estate is never handled. Estate taxes are owed, but the property just goes to tax sale. To clear the title the taxes need to be paid!
So, there are a LOT of things that can affect title. There can also be issues getting title insurance afterwards even if the title search is clean. You may need to wait a year to be able to do that.
It can be a messy, tedious, technical process. So, you need to dig into the dirty details of how your state's process works.
Also, its difficult to evaluate the property as access is usually not available before bidding. Plus it may not be economically feasible to pay for title searches prior to bidding because you might need to do 10-20 searches for each property you actually win at auction.
Thank you for this information. I did know that there were going to be other liens that most likely would have to be paid as well. I know everyone is trying to figure out the quick easy way, and I know that there isn't one. It will take time and energy to build it. I am trying to figure out a way to start that would be easiest for me in my current situation.
So how did you start your investments?
How would you recommend someone start?
Quote from @Anthony McNeil:
Thank you for this information. I did know that there were going to be other liens that most likely would have to be paid as well. I know everyone is trying to figure out the quick easy way, and I know that there isn't one. It will take time and energy to build it. I am trying to figure out a way to start that would be easiest for me in my current situation.
So how did you start your investments?
How would you recommend someone start?
Identify where you have a competitive advantage. A contractor has technical skill. A lawyer knows law and maybe some business. An accountant financial and analysis. Maybe you are local to the market you are investing in so you are boots on the ground. Maybe you have more cash to deploy than others.
So, take stock of yourself and your capabilities and advantages and craft a strategy that takes advantage of those! Without knowing you its hard for me to give really specific advice that is on point.
However, I'll give you an idea that might help you generate more ideas. A tax sale is a "distressed sale" and that is good! Any distressed situation is a potential opportunity for a deal. Physical distress, financial distress, legal distress, etc.... Why do you need to wait until an event like a tax sale where this distressed property is advertised to EVERYONE?!? Why not hunt down these distressed owners prior to an event like this and find ways to make deals work? Less competition and more opportunity to do some due diligence when buying the property.
Those are some great ideas to think about. Thank you very much for your input. I like the idea of finding them before they get to the point of being in a real distressed situation. Last night on one of the podcasts I listened to on BP the gest was talking about that. He would call the county tax office and ask for a list of properties that were late on their taxes.
I guess I need to do some research now and find out where I want to start investing, and start narrowing down my research to that area, as you already said.
What kind of investing do you do?