Tax Deed Properties

[Antonio Bodley]

Are all tax deed properties in bad condition? Are tax deed properties a bad choice for homebuyers looking to make a tax deed property as their residence?

[Brandon Rush]

Hey Tony,

Actually no, many of them are in decent to good condition.  And no, this is not a bad choice for someone looking to make it their primary residence. Based on how it works in your State/Town you will have to consider the following:

* There may be a period in which the current homeowner may be allowed to pay back their taxes. Which means you may not be guaranteed to get the property. Are you ok with that?
* You may have to evict the current home owner(s) after purchase, are you ok with that? There are properties that are sold vacant, so you may luck out and pick one of those up?
* You may have to put up some cash to pay the taxes, just make sure you have that cash ready

I think it's a great idea. Just do not go in thinking it's 100% certain you will be able to owner occupy it. 

Good luck and definitely post to the forums with your results if you decide to pursue this, I am curious myself!

[John Underwood]

Of course not.

The large majority of properties that do not get redeemed are neglected or have been vacant for some time.

I just got deeds to 3 new properties.

2 had been vacant for years. 1 that was owner occupied was in rough shape.

If someone is not paying taxes they are likely not maintaining the property either.

The pretty houses that look nice are almost always redeemed.  So I target ones that are neglected looking.

[Antonio Bodley]

Quote from @Brandon Rush:

Hey Tony,

Actually no, many of them are in decent to good condition.  And no, this is not a bad choice for someone looking to make it their primary residence. Based on how it works in your State/Town you will have to consider the following:

* There may be a period in which the current homeowner may be allowed to pay back their taxes. Which means you may not be guaranteed to get the property. Are you ok with that?
* You may have to evict the current home owner(s) after purchase, are you ok with that? There are properties that are sold vacant, so you may luck out and pick one of those up?
* You may have to put up some cash to pay the taxes, just make sure you have that cash ready

I think it's a great idea. Just do not go in thinking it's 100% certain you will be able to owner occupy it. 

Good luck and definitely post to the forums with your results if you decide to pursue this, I am curious myself!

I have access to a large list of homes specifically for my state and all the counties within my state that are tax liens, tax certificates, and tax deeds. I can also choose if I want the house to be occupied or vacant. I also get to look at a street view of the home and see the full payoff amount before purchasing the house. The houses I am looking at are deed only years past the redemption period, so I do not have to worry about the owners coming to reclaim the property. The vacant deeds I have seen so far based on Google street view looks like they are in poor condition from the outside and in very poor communities. I have the cash to purchase some of the deed properties outright, but I do not have the cash to rehab a house I plan to live in as my primary home. That is like paying full price for a decent home on the market or for sale by owner home.

[Antonio Bodley]

Quote from @John Underwood:

Of course not.

The large majority of properties that do not get redeemed are neglected or have been vacant for some time.

I just got deeds to 3 new properties.

2 had been vacant for years. 1 that was owner occupied was in rough shape.

If someone is not paying taxes they are likely not maintaining the property either.

The pretty houses that look nice are almost always redeemed.  So I target ones that are neglected looking.

I prefer vacant deed properties that are beyond the redemption period. All the vacant homes I see looks like they are in rough shape. I wish I had money to get a full rehab on the place before choosing to buy it as my own.

[Ned Carey]

@Antonio Bodley 
        I prefer vacant deed properties that are beyond the redemption period.

It sounds like you want to buy deeds in the secondary market. If they are past the redemption period I assume you are buying them from an investor who bought it at the auction. It is unlikely you will get any kind of deal in that situation. 

I buy tax liens not deed but I do occasionally get a good property in decent condition. But that is probably 1 in hundred. The numbers in neighborhoods I would want to live would be even smaller.

[Antonio Bodley]

[Antonio Bodley]

Quote from @Ned Carey:

@Antonio Bodley 
        I prefer vacant deed properties that are beyond the redemption period.

It sounds like you want to buy deeds in the secondary market. If they are past the redemption period I assume you are buying them from an investor who bought it at the auction. It is unlikely you will get any kind of deal in that situation. 

I buy tax liens not deed but I do occasionally get a good property in decent condition. But that is probably 1 in hundred. The numbers in neighborhoods I would want to live would be even smaller.

These deeds come straight from the state inventory. All of them are pretty much in bad shape in poor neighborhoods.

[David Krulac]

Much of the above discussion concerns "redemption" and buying property "over the counter" or after passing through the Tax Sale. As my friend @Ned Carey said, Maryland is a Tax Lien state, as all many others.  Around half the states are Tax Lien States and around half are Tax Deeds States.  The laws, rules and regulations are different from state to state and even from county to county.  I've lost track of how many properties that I've bought at Tax Sale, but it is in the hundreds. In PA for example, which is a Tax Deed State, there is NO redemption.  Therefore if you talk about redemption at the Tax Sale, you're not including PA.  And also to get to the equivilant of the "over the counter" sale in PA, the properties must have already been through 2 tax sales with no purchaser.  In general, here at least, properties that make it to the third sale have been picked over TWICE by many buyers, sometimes hundred or thouisands of buyers and have no takers.  I had a conversation with one of the directors of Tax Sale, and she told me that the third sale list was "the dogs of the dogs".  I have written before on Bigger Pockets extensively about Tax Sales, so I won't repeat here all the wild, almost unbeliveable properties on the third picked over Tax Sale. On the other hand I have on occasion made purchases from the picked over list. One of my purchases was 5 adjoining vacant lots for $10 each. Honestly, it was a bunch of work and took time to get rid of that property. 

And another difference here, that is not the same in most other states, is that at the first Tax Sale, all the liens, mortgages, judgements etc, transfer to the Tax Sale buyer.  You are NOT buying the property "free and clear" as some people wrongly think. But, imho, this is the best sale to buy property.  You have to do a full title search, and most people, don't know how to do that, or don't want to pay the price of title searches, or don't even know that you need to do a title search.  At these sales the competition is much less, not the big crowds that are attracted to the "free and clear" sales.  One recent "free and clear" sale that I went to, there were only 76 properties for sale but there was a crowd of over 300 bidders.  I got one property but at least 200 bidders went home empty handed.  At another "free and clear" sale there were maybe 400 bidders for 150 properties, I bought 8 that day and was very pleased, some leaft with nothing.  At the first sale where liens transfer, I've bought a $300,000 house for $30,000 (there were other bidders) and a $160,000 vacation home for $6,500 (there were other bidders)  and I bought a 5 lot subdivision for $4,500 where surprisingly noby else bid even though there were 200 other bidders there.  The sales are unpredictable, the sale list 30 days before the sale is often 10 times larger than the day of sale list.  IOW, 90% of the properties on the sale list a month before the sale are not offered the day of the sale, most;y because the taxes were paid or other reasons.  

[Antonio Bodley]

Quote from @John Underwood:

Of course not.

The large majority of properties that do not get redeemed are neglected or have been vacant for some time.

I just got deeds to 3 new properties.

2 had been vacant for years. 1 that was owner occupied was in rough shape.

If someone is not paying taxes they are likely not maintaining the property either.

The pretty houses that look nice are almost always redeemed.  So I target ones that are neglected looking.

Is it true the buyer of the tax deed property does not get keys to the property once they take possession? If that is true, how do they get inside access to the property?

[Arnie Abramson]

In Texas, you are the owner after you buy it at the auction.  We go to the house and change the locks.

[Will Sifert]

Quote from @Antonio Bodley:

Quote from @Ned Carey:

@Antonio Bodley 
        I prefer vacant deed properties that are beyond the redemption period.

It sounds like you want to buy deeds in the secondary market. If they are past the redemption period I assume you are buying them from an investor who bought it at the auction. It is unlikely you will get any kind of deal in that situation. 

I buy tax liens not deed but I do occasionally get a good property in decent condition. But that is probably 1 in hundred. The numbers in neighborhoods I would want to live would be even smaller.

These deeds come straight from the state inventory. All of them are pretty much in bad shape in poor neighborhoods.

You are looking at the deeds that no one wanted to buy so they went to the state and now the state is trying to sell them. Of course those properties will be in really bad shape. Everyone passed on them at the deed sale and now they are sitting on a list (for years) and no one has purchased it yet.  IF you are looking for something to live in that wont require a lot of work you should be looking to buy at the deed sale, not the list of properties no one bid on.