New To Tax Sale World

[Jason Jones]

Hello all,

I am brand new to the tax sale world and am looking for any online (free!) tools available that I can read, listen to, watch, etc. that will give me a solid start in educating myself about tax lien and tax deed investing.  Any recommendations on YouTubers, bloggers, podcasters, authors, etc. that I should look into?   Any advice would be very much appreciated!  Thank you!!

[Bruce Lynn]

Read the book the 16% solution. Can't remember if it has info about Texas or not, but even if it doesn't will give you a good general overview of how it works in different states and different systems.

Very few good online free systems or even paid systems I've seen for Texas...and don't fall for the national road shows that come thru town now and then.  They're expensive and worthless and rarely know any real specifics about Texas.  There are some white papers for a few other states you might find online, but never seen much of anything good about Texas on blogs, vlogs, podcasts, etc.

One thing you can do that is free is read the property code section about tax sales.  It's a good general easy to read information source about the way things are supposed to work in Texas.  In general it works the way it is written, but every location seems to put their own twist on things...who to pay, what form of payment, how fast, etc.

Remember in Texas it is a CASH business.  In places like Lubbock I would not expect anything to go for the minimum bid.  This month at the sale I went to for example some land had minimum bid of something like $7000.  Probably worth $150,000, sold for $90,000.  So you need access to $90,000 cash by 12noon in that location.  Since it is land, you'll need to hold on to it probably for 2 years before reselling and pay taxes and insurance for the next 2-3 years.  I would not say that is typical deal, but nice spread on that one if you can hold on to it for lets say 3 years.   

Everyone gets excited about 25-50% interest, but that almost never happens.  I'll bet less than 1-2% redeem, so the interest is pretty much a myth.

Be super careful with what you buy.  KNOW what you are buying, and what your exit strategy is.  SEE in person everything you buy.  NEVER skip this step.  A good example was a 5 acre lot I found out by Lubbock somewhere.  Don't remember the numbers, but they were decent.  It was out in the country somewhere I think West of Lubbock...one of those areas where there are about 10-20 houses at some section corner.  Google street view looked decent, Sat view looked good.  Got there in person and there was probably $150,000 worth of junk to haul off...I mean you'd probably have to pay someone $150,000 to haul off all that stuff.  Cars, buses, trucks, 1000 tires, and just regular junk piled high on pretty much the whole lot.  Stuff most scrapers don't want.  House looked like it had been hit by several tornados.

If you're buying lots, know where you are going to get water/sewer/power and how much that costs.  Some counties might require 1 acre minimum for septic and 5 acres for water well.  So if you buy 1/2 acre lot, what do you do with that?  Parking lot?  Know your zoning and regulations.

Next idea is get the sale list in Lubbock and go to the sale 2-3 times.  I think Lubbock has every month or almost every month.  Get the list, come up with your max bid, and don't go to bid, go to watch.  What do people pay?  Would your max bid have won?  If bids are where you think you can make money, then month 4 get your cash together and start bidding.

Just remember they are easier to buy in many cases than to flip.  Know solid your exit strategy.  Know your lien priority and where you fall in that priority.   For example in Lubbock you may see trashed out 100 year old houses for sale in the oldest part of town.  They could very well have city demo liens on them, or the city may still have a demo lien, but already torn down the house.  Governmental liens typically don't fall off with tax sale, so you get to pay that off probably before you sell.   May sale I attended had a 1950s hospital for sale.  I'm sure that thing is full of asbestos.  You are held responsible for remediation if you buy it.