Tax Lien & Tax Deed investing
Member since 2024 · 5 posts · 1 vote
As someone new to tax lien and deed investing, I've been studying up to get the hang of it. Now, I'm looking for some guidance or advice, especially from folks who've done it in Texas, especially in Houston. If there's anyone out there like me who wants to team up or plan a trip to the Houston auction, let's connect! It could be a great way to learn and explore together.
What guidance or advice do you need/want?
Some quick tips I recommend.
First 2-3 auctions...go to watch and observe. Don't go to bid.
Know 100% what you are bidding on...don't get caught up in auction fever. I've seen so many people buy landlocked properties, partial ownership, worthless strips, land in flood zone, wrong house, and so many other pitfalls.
When you are actually ready to bid,maybe 3-4th auction. Make sure you have seen every single property BEFORE you bid. Don't skip this step. You may get what you want, but you often learn a ton when you actually drive the property. People think they can use the internet to skip this step. Don't do that. I've seen beautiful homes on google street view, only to drive it and see the house gone and fresh dirt. Talk with the neighbors and find the house burned down and then the lot cleared. Internet research will bid based on the house being there. Also seen the opposite where decent lot, decent price, looked clean, but when I got there must have been $100,000 in cleanup needed with all kind of trash and junk on that lot.
I've never been to Harris county auction, but from what I understand they have multiple auctions and maybe even different locations depending on the precinct, so know where to go if you can.
At one time there was a lady that would offer orientations at Harris county maybe 1 hour before the auction starts.
When you are ready to bid, know how to pay. Some places are cash, some no cash, only cashiers checks or money orders. Some want it paid to you, some want it paid to them, some to constable, some to sheriff, some to the law firm, some to the appraisal district.
Payment normally due same day...so nearly impossible to get loans for these.
What guidance or advice do you need/want?
Some quick tips I recommend.
First 2-3 auctions...go to watch and observe. Don't go to bid.
Know 100% what you are bidding on...don't get caught up in auction fever. I've seen so many people buy landlocked properties, partial ownership, worthless strips, land in flood zone, wrong house, and so many other pitfalls.
When you are actually ready to bid,maybe 3-4th auction. Make sure you have seen every single property BEFORE you bid. Don't skip this step. You may get what you want, but you often learn a ton when you actually drive the property. People think they can use the internet to skip this step. Don't do that. I've seen beautiful homes on google street view, only to drive it and see the house gone and fresh dirt. Talk with the neighbors and find the house burned down and then the lot cleared. Internet research will bid based on the house being there. Also seen the opposite where decent lot, decent price, looked clean, but when I got there must have been $100,000 in cleanup needed with all kind of trash and junk on that lot.
I've never been to Harris county auction, but from what I understand they have multiple auctions and maybe even different locations depending on the precinct, so know where to go if you can.
At one time there was a lady that would offer orientations at Harris county maybe 1 hour before the auction starts.
When you are ready to bid, know how to pay. Some places are cash, some no cash, only cashiers checks or money orders. Some want it paid to you, some want it paid to them, some to constable, some to sheriff, some to the law firm, some to the appraisal district.
Payment normally due same day...so nearly impossible to get loans for these.
@Gabriel Turmero, I'm also new to tax lien investing. I hope things go well for you in Houston. How soon are the tax lien sales in Houston?
@Bruce Lynn, thanks for the pointers; very helpful. Quick question, do you perform any title searched before bidding on tax-lien certificates, or do you wait until the certificate is potentially not redeemed for several years?
I'n Texas we are essentially only a tax deed state. I do title search as best I can myself. Very little here goes to sale and sale completed with a mortgage. It is pretty common to have IRS liens and government liens like mowing, demo, nuisance, etc. The government liens do not get wiped out.
There is a redemption and challenge period and that is essentially two years even if they tell you six months. That means we really have to plan to hold the property for two years before reselling.
@Bruce Lynn Thanks for the info. I didn't realize there was a challenge period that could last up to two years. Is the challenge period a state statute?
@Bruce Lynn Thanks for the info. I didn't realize there was a challenge period that could last up to two years. Is the challenge period a state statute?
Must be in the law somewhere, as most title companies will not issue title insurance for 2 years, even on the non-homesteaded properties. So the 6 month/2year redemption period doesn't really matter in some ways. There can be exceptions, but I would think they are rare, like maybe the property was in LLC, LLC is inactive, owner of the LLC has passed, owner had no heirs and you can prove all that...then, maybe you could convince a title company there is no chance of a court challenge or chance of redemption. However I would guess all those examples get rare and more rare rare as you add them up. The real end result is to think you will hold the properties for two years. Also may not matter if it is in the statutes or not. There is a famous case in San Francisco a few years ago where a local couple bought the HOA property like sidewalks and streets, in an expensive neighborhood. All they had to find was a sympathetic court to hear the case and the sale was rescinded. Probably doesn't happen often, but because it can happen, tough to get tile insurance before the 2 year period ends.
Is it possible someone could buy without title insurance, sure. Probably can't get a loan to do that though. Lenders will want title insurance. So then you are only looking for cash buyers. You also need to inform them of the redemption period and probably put that in your contract. Check with your attorney about that. Then when you do that, why would they want to buy at more than your purchase price? Possible, but not probable.
Hi, I'm new here to BP and a new investor. I just attended a seminar today and bought a course from the Saen Higgins "Tax Lien Method" group. At the seminar I discussed Texas with a gentleman who states to have purchased tax deeds there and he informed me of the two year hold but stated I could put renters into the property for that time. Can you confirm if this is correct?
Also, as I am in CA, it would be impractical to be "boots on the ground" for an extended length of time to visit properties and attend numerous auctions in person. How realistic is it (or not) to do tax lien/deed investing remotely? I have a 3 day rescission period for the course 🤦♀️
Thanks in advance!
#1 You can put a renter in a property. I suggest month to month, or having your attorney write in some kind of phrase about the redemption period, in case the previous owner redeems. I would think if you put a renter in a property and then the owner redeems you would be responsible for getting the tenant out. The probability of this is probably pretty low for a lot of reasons.
#2. Very few properties at Texas sales are rent ready. I mean like 1 in 1000 or maybe less than that. I normally advise buyers you don't want to rehab to get rent ready before the 2 year issue is resolved, because the previous owner would not need to pay you for the updates/upgrades/reno. They're only required to repay you for health, safety, preservation of the property....fixing broken windows, roof leaks, locks, etc.
#3. I'd say 90% of the sales here are in person sales, pay the same day or even same minute of the sale in some cases. (In Dallas county for example, the minute after you win the bid, you move to the front of the courtroom and run your cash thru the bill counter with the deputy or ran that auction, while the next auction continues. So you have to have your $10,000-$100,000-$300,000 in cash right then right there....whatever your winning bid was.) I think for those sales you realistically need to be there in person and have your cash/payment ready. Unless you have someone very very very trusted to bid and handle your cash. Maybe a relative, like your kids, husband, best friend. The way I read the law is you must be the bidder/buyer in person and some places do check ID. Some places will allow 3rd party bidders, but that is kind of hit and miss. I think it has just been a year since some counties allow online bidding. So far it is more of a test in my opinion. I've seen very few offer this. Some say they will never do it as they really want people to know and see and be responsible for what they bid on. So jury is still out as to if more or less counties will move to online bidding. At least one has hybrid. The crap lots they can't sell, they'll put online. The good properties if there are such things, like rentable houses in that county are still in person auctions.
#4 There are people who fly in....one great investor from Brazil comes fairly frequently...I've met bidders from CA and WA that fly in. I'm not sure it is worth it to fly in, spend 2-3-4 days in a hotel, rent a car to view properties, buy food, etc. Sometimes you get lucky, but then again sometimes your best laid plans get sunk. You're all excited about certain properties and they get pulled/paid/delayed and not available for sale on auction day. Then if you are going to rehab, probably need to be back to manage that in some way. Possible, but risky to do it all long distance.
#5 For the most part all our auctions are on the same day...1st Tuesday of the month. We call it Super Tuesday....most people probably have to pick their auction. The real die hards like me may get lucky and be able to squeeze in 2...most like probably 80% of the auctions are at 10am. If you're super lucky maybe same attorney will do two in a day, one at 10am and then to a second nearby county at 2pm. If that is the case and there are good properties at both auctions and you are fast, drive fast, and get a good dice roll you can hit two auctions. Maybe you could hit a 3rd online, but all that is a lot to squeeze in I think. I'm pretty sure I've never done 3 in one day.
#6. I think in Texas right now and for about the last 10 years it is not a good idea to try it remotely. I think you need to personally see every single property you bid on. People think they can do it all online and for me there is just so much risk doing that. I can't tell you how many times I've gone to the property and it is gone, or you figure out something is wrong, maybe the legal description, or the address, or there is $100,000 worth of junk there you need to haul off that was not in the pictures, or that cool commercial building, that when you get there has the faint words that you can now make out to be a former dry cleaner, or gas stations, or lead smelter, or oil change shop or something like that. They just can't wait for you to buy it and then you are responsible to EPA for environmental cleanup. Not all that shows up in google street view or sat view.
There are probably exceptions to all of this above, but that's kind of the standard. There are people who tell me they've bought remotely, for example some chance you can buy crap properties OTC that did not sell 1st time around. Just depends on your risk tolerance.
If you are in CA...my thought would be to buy in CA or AZ or NV. I don't know anything about sales there or opportunity or how the sales work. I know nothing but Texas and that's enough. I know nothing about the course you purchased. From all the road shows that have come thru and I attended the first free 2-3 hour presentation, I could tell those presenters knew nothing about Texas, were flat out lying about their knowledge, and weren't going to teach the right info about Texas. I also see that in many national guru videos about Texas. Often/Normally they're just flat out wrong. I would not know if they are accurate about other states or not, because I don't know about other states. One thing I can say also is if they mentioned the 25-50% penalty more than maybe once, they're full of crap. While that is the law, nobody redeems....I'll bet 1% redeem, so I would just count on never getting that.
Hey Bruce, thanks for sharing your knowledge!
I've been researching this off and on for a few years. I like the idea of 25 to 50% penalty, but you say people hardly ever redeem, so then what happens? You get the property?
I am more interested in earning good returns more than receiving the property. Would tax liens be a better vehicle for that?
Thanks!
-Cameron