Can you make money with tax deed investing

Tax Liens & Mortgage Notes
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Can you make money with tax deed investing

Cartus Aikens
Rental Property Investor · Greensboro, NC · Member since 2017 · 32 posts · 8 votes

I just found out about tax deed investing and want some information about buying homes for tax owed.

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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
6y

Well I own about 19 properties that I bought as a tax liens and now they are all rentals. Because I bought them cheap at tax sales I have no mortgages on them.

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  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    6y

    Well I own about 19 properties that I bought as a tax liens and now they are all rentals. Because I bought them cheap at tax sales I have no mortgages on them.

    26Reply
  • Linda Vu Nguyen
    Member since 2020 · 6 posts · 18 votes
    6y

    Hi @John Underwood. Could you share if you were able to verify if there were other liens or indebtedness prior to your purchase of the tax lien? I’m looking to start investing in tax deeds as well but it wasn’t clear on how due diligence works for these properties. 

    Appreciate any guidance you can provide. 
    Linda 

    16Reply
  • Joanne Eriaku
    Realtor · NY · Member since 2020 · 167 posts · 169 votes
    6y

    @Cartus Aikens, yes you can, and no, not every single time but yes you can make money. I havent bought any myself but I have a friend in CT who is knee deep in Tax deed investing. 

    1Reply
  • Cartus Aikens
    OP
    Rental Property Investor · Greensboro, NC · Member since 2017 · 32 posts · 8 votes
    6y

    @John Underwood Hi John,When you go to the tax deed reg.online and you look for liens on one property how do you know what to look for? I have tried but I don’t know what I’m looking at or for.I noticed their is a lot of abbreviations like

    P of A

    DT

    SAT

    Deed

    Cancel D of T and so on ,what does all this mean and should I be even looking at this when looking for liens?

    0Reply
  • Cartus Aikens
    OP
    Rental Property Investor · Greensboro, NC · Member since 2017 · 32 posts · 8 votes
    6y

    @Linda Vu Nguyen Hey Linda, I’m thinking about just hiring someone on Fiverr to do a title search for liens on the properties I’m interested in.Any thoughts?

    0Reply
  • Cartus Aikens
    OP
    Rental Property Investor · Greensboro, NC · Member since 2017 · 32 posts · 8 votes
    6y

    @John Underwood Have you brought any tax dees? We have a sale coming up this Thursday. I’m going to attend and see how the process works and try to network a little.

    1Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    6y
    Originally posted by @Linda Vu Nguyen:

    Hi @John Underwood. Could you share if you were able to verify if there were other liens or indebtedness prior to your purchase of the tax lien? I’m looking to start investing in tax deeds as well but it wasn’t clear on how due diligence works for these properties. 

    Appreciate any guidance you can provide. 
    Linda 

     I dont bother, most of these including mortgages are wiped out when tax deed issued as long as county does proper notifications.

    3Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    6y
    Originally posted by @Cartus Aikens:

    @John Underwood Have you brought any tax dees? We have a sale coming up this Thursday. I’m going to attend and see how the process works and try to network a little

    Directly buying the Tax deed has been at almost retail price from what I have seen.

    1Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    6y
    Originally posted by @Cartus Aikens:

    @John Underwood Hi John,When you go to the tax deed reg.online and you look for liens on one property how do you know what to look for? I have tried but I don’t know what I’m looking at or for.I noticed their is a lot of abbreviations like

    P of A

    DT

    SAT

    Deed

    Cancel D of T and so on ,what does all this mean and should I be even looking at this when looking for liens?

     I don't recognize any of these abbreviations.

    0Reply
  • Cartus Aikens
    OP
    Rental Property Investor · Greensboro, NC · Member since 2017 · 32 posts · 8 votes
    6y

    @Ned Carey So in order to clear the title you have to file a Quite Claim?

    0Reply
  • Ron Flatt Jr
    Investor · Hillsboro, TX · Member since 2016 · 14 posts · 20 votes
    6y

    Hey guys.  My dad has been doing this tax deeds in TX for awhile now and I help from time to time.  Most liens are wiped with the tax lien because they are supposed to notify everyone.  Our problem in Texas is you can not get title insurance on it for 2 years.  So no refinancing for awhile.  I am trying to get a group together to look at some that are happening on July 7 here in TX.  

    6Reply
  • Quincy Hall
    Rental Property Investor · Chattanooga, TN · Member since 2020 · 15 posts · 20 votes
    6y

    @Cartus Aikens I been looking at the property tax auction also. The starting bid of a property is the amount of taxes owed. I know here in TN that once you win a property the prior owner has a year to pay the taxes. Therefore you can not rehab or rebuild on that property until the year is up. Another advantage of this is that if the old owner decides to pay the taxes and reclaim their property they have to repay you the price you paid for it plus 1% intrest for each month from the time you purchased it.

    10Reply
  • Peter Walther
    Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
    6y
    Originally posted by @Cartus Aikens:

    @John Underwood Hi John,When you go to the tax deed reg.online and you look for liens on one property how do you know what to look for? I have tried but I don’t know what I’m looking at or for.I noticed their is a lot of abbreviations like

    P of A  Power of Attorney

    DT       deed of Trust

    SAT      Satisfaction

    Deed    Deed

    Cancel D of T Cancelation of Deed of Trust 

    and so on ,what does all this mean and should I be even looking at this when looking for liens?

    Searching and examining title requires knowledge & experience.  A tax deed eliminates most but not all interests of properly notified parties.  Title underwriters generally will not insure interests based on a tax deed without a quiet title suit against interested parties because of the difficulties in confirming proper service on interested parties.  Courts are loathed to allow someone to lose title to real property for failure to pay property taxes and will readily set aside tax deeds for cause.  Each states laws and procedures for tax deed sales are different and you need to understand the process.  I'm not an attorney and this is not legal advice. just one man's opinion.

    3Reply
  • Brian Ploszay
    Investor · Chicago, IL · Member since 2009 · 1k+ posts · 1k+ votes
    6y

    In my market, tax lien buyers make the majority of their money on interest rates / penalty fees they receive when someone redeems.  A good chunk of the properties that do not redeem are very inferior properties.  You can argue that the property is worth less than the back taxes.

    There are properties that no one wants to bid on at the tax lien sale.  Every two years, these leftovers are then auctioned off at something called a scavenger sale.  The previous owners almost never redeem these properties.

    4Reply
  • Peter Walther
    Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
    6y
    Originally posted by @Cartus Aikens:

    @Ned Carey So in order to clear the title you have to file a Quite Claim?

    Quiet title action

    1Reply
  • Peter Walther
    Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
    6y
    Originally posted by @John Underwood:
    Originally posted by @Linda Vu Nguyen:

    Hi @John Underwood. Could you share if you were able to verify if there were other liens or indebtedness prior to your purchase of the tax lien? I’m looking to start investing in tax deeds as well but it wasn’t clear on how due diligence works for these properties. 

    Appreciate any guidance you can provide. 
    Linda 

     I dont bother, most of these including mortgages are wiped out when tax deed issued as long as county does proper notifications.

    Nobody ever writes about restrictions, reservations and easements of record surviving a tax deed sale.  Nothing can ruin your day like finding out there's an easement for ingress and egress running through the middle of the property.  No wonder the former owner stopped paying the taxes.

    3Reply
  • Peter Walther
    Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
    6y

    Florida Statute 

    197.572 Certain easements survive tax sales and deeds.—(1) When any lands are sold for the nonpayment of taxes, or any tax certificate is issued thereon by a governmental unit or agency or pursuant to any tax lien foreclosure proceeding, the title to the lands shall continue to be subject to any easement:(a) For conservation purposes as provided in s. 704.06 or for telephone, telegraph, pipeline, power transmission, or other public service purpose.(b) That supports improvements that may be constructed above the lands.(c) For the purposes of drainage or of ingress and egress to and from other land.(d) For base buffering encroachment lands acquired through a fee simple or less-than-fee simple acquisition under s. 288.980(2)(b).(2) An easement described in subsection (1) and the rights of the owner of the easement shall survive and be enforceable after the execution, delivery, and recording of a tax deed, a master’s deed, or a clerk’s certificate of title pursuant to foreclosure of a tax deed, tax certificate, or tax lien, to the same extent as though the land had been conveyed by voluntary deed. The easement must be evidenced by written instrument recorded in the office of the clerk of the circuit court in the county where such land is located before the recording of such tax deed or master’s deed, or, if not recorded, an easement for a public service purpose must be evidenced by wires, poles, or other visible occupation, an easement for drainage must be evidenced by a waterway, water bed, or other visible occupation, and an easement for the purpose of ingress and egress must be evidenced by a road or other visible occupation to be entitled to the benefit of this section; however, this shall apply only to tax deeds issued after the effective date of this act.


    197.573 Survival of restrictions and covenants after tax sale.—(1) When a deed or other recorded instrument in the chain of title contains restrictions and covenants running with the land, as hereinafter defined and limited, the restrictions and covenants shall survive and be enforceable after the issuance of a tax deed or master’s deed, or a clerk’s certificate of title upon foreclosure of a tax deed, tax certificate, or tax lien, to the same extent that it would be enforceable against a voluntary grantee of the owner of the title immediately before the delivery of the tax deed, master’s deed, or clerk’s certificate of title.

    2Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    6y

    I have cleared a tax deed on my own without an attorney or Quiet Title.

    I keep most of my properties as rentals.

    I am in the middle of 2 Quiet Titles right now for houses I couldn't readily clear on my own.

    I have been doing this for over 10 years and have successfully converted tax deed properties into rentals. I don't need title insurance to rent the house I now own.

    I primarily buy houses. That way I don't have to worry that something would prohibit me from having a house on the property, it is already there and I own it once the deed is titled to my LLC.

    There will not be an ingress running through the middle of my house.

    I also do not have to foreclose on  tax deed or tax lien. If property is not redeemed I get a deed in the mail.

    8Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y
    Originally posted by @John Underwood:

    I have cleared a tax deed on my own without an attorney or Quiet Title.

    I keep most of my properties as rentals.

    I am in the middle of 2 Quiet Titles right now for houses I couldn't readily clear on my own.

    I have been doing this for over 10 years and have successfully converted tax deed properties into rentals. I don't need title insurance to rent the house I now own.

    I primarily buy houses. That way I don't have to worry that something would prohibit me from having a house on the property, it is already there and I own it once the deed is titled to my LLC.

    There will not be an ingress running through the middle of my house.

    I also do not have to foreclose on  tax deed or tax lien. If property is not redeemed I get a deed in the mail.

    REally like this play for assets that are inexpensive.. and your paying cash.. risk is minimal to nill and as long as your play is simply rent and keep very long term.. its a genius move.. most folks are so worried that you have little to no competition..  !!!!

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    5Reply
  • Braydin Mehnert
    Lender · Bristol, TN · Member since 2020 · 21 posts · 16 votes
    6y

    @Linda Vu Nguyen in most States the tax lien takes a first position over other liens. For example a mortgage would get superseded by your tax liens. Because of this if it gets to the point of you being able to foreclose with your tax lien if there are other liens they will likely pay you off. Said another way, unless the property has no other liens it is unlikely they will let you take it for such a small cost.

    2Reply
  • Cartus Aikens
    OP
    Rental Property Investor · Greensboro, NC · Member since 2017 · 32 posts · 8 votes
    6y

    @Ron Flatt Jr Texas is a tax lien state or Tax deed state?

    0Reply
  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    6y

    Money can be made with any type of real estate strategy.

    2Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    6y
    Originally posted by @Cartus Aikens:

    @Ron Flatt Jr Texas is a tax lien state or Tax deed state?

     Texas is a Tax lien state I believe.

    It also has only a 6 month redemption time  frame and pays a 25% penalty making it one of the best states to invest in.

    2Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    6y
    Originally posted by @Ian Walsh:

    Money can be made with any type of real estate strategy.

     Yes of course. But some are much better than others. I have made 3 digit returns on tax lien properties with minimal work.

    2Reply
  • Ron Flatt Jr
    Investor · Hillsboro, TX · Member since 2016 · 14 posts · 20 votes
    6y

    @Cartus Aikens Texas is a Tax Deed State.  You buy the property and they send you a deed.  There is a 6 month redemption period on anything that is not a homestead or agricultural.  Homesteads and agricultural (5 acres or more) have a 2 year redemption.  If they redeem it you get a 25% return in the first year. And I believe it jumps to 50% in the second year.

    5Reply
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