Hi. At tax deed sales in some counties, it is possible to put a property 'under contract' ( ie pay a percentage of the full auction price - usually 10%) on the day of the auction, then have around 30 days to pay the rest of the amount.
Is there any hope of getting funding (private, hard money?) in the 30 day window if I pay the 'deposit'?
This is assuming a very good deal eg max 50% ARV.
Enquiries I have made so far always come back with 'once you have clear title.....'. Problem is this can take 3 to 6 months, and apart from the deposit I don't have the rest of the money upfront.
I am thinking of advertising some deals I have found in the market place, but I am worried that if I advertise them before I have won them at auction someone else could outbid me, but if I wait until after I have 'won' an auction and got the property, I can be held in contempt of court, face fines etc if I can't come up with the rest of the money in the 30 day time period.
(I hope this doesn't fall under the heading of loan or lender request - this is my first post, and I am just after some general advice and if anyone else has experience of what is / is not possible!)
I can only speak for my state, CA.
In a word, no.
The idea of a forced sale to liquidate an asset, in this case real property in order to satisfy taxes, is based on the requirement of cash or certified funds being tendered.
If that dashes your hopes of buying at auctions (which I discourage because of competitive forces driving prices up and potential for profit down) here's another tact:
Use the list of properties on the tax sale list as a "hit list" to target property owners. You have a much better chance of finding an opportunity and structuring for profit as well as more time to find funding from outside sources, if that's important.
It's all about turning lemons into lemonade.
Every state has their own rules regarding tax deed sales, but the ones I've seen usually require payment in full before you even leave the auction. Though I've seen others that give you a full 24 hours. Not familiar with any that allow a 30 day payment plan. Like @Rick H. said, the idea behind a tax deed sale is to liquidate an asset (and recover the money owed for back taxes in the process).
have thought about the pre tax sale route, but it's not really an option for me, as I am not local to the area I invest in, and tracing owners can be hard - most tax sale properties have been abandoned for a while, for whatever reason. You'd need to find the ones where financial constraints were the cause - bit of a needle in a haystack! Then negotiations etc - too easy to run out of time when lists are often only published a month or so before the sale, so as I said, not suitable for me (I'm not in CA!).
Back to my original question, maybe I should have phrased it 'will anyone finance a tax deed property before the title is cleared?', regardless of how it is acquired?!
Are you trying to buy stuff in St. Kilda's, Bomb Beach, Ringwood, out in Lillydale or up in the Dandenongs?
Ohio! Too expensive in Australia, although I have dome some dual occs and other developments. Rents are too low in relation to purchase price, and I'm not into negative gearing. Hence USA!
Tax deeds in Texas are sold as cash due upon sale. In othe words, no financing available. However there are some steals at times, and do not require tons of money.
Most states are cash up front, but I have come across a few potentially juicy deals that I don't have the cash for. Hence the query about funding (in general!).
I've met ONE self titled 'hard money lender' that will fund the type of hanging deal you are talking about. I work all over California and there are a few auctions where you can pay the registration fee (deposit) and you have a gap to come up with the rest of the money after you are awarded a winning bid. So the possibility is there.
The HML has some restrictions: Loan amount of $30K or less, 90 day term, no points, no interest, split profits 50/50. So instead of signing a mortgage or a Deed of Trust for the funds, he becomes a JV partner.
If that type of deal works for you, send me a message and I'll connect you.
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