Two tax sale multifamily properties for $6,200 - Will the gamble pay off?

Well way back in March I bough at tax sale,two multifamily properties at auction.  It's been a very very long wait until now,to get them in my possession.  We are almost there. It's just a case of recording the deed and then that's it, we can finally get inside.

This was something I had never done before and only read about and it threw me completely into the deep end. The problem was I was not a local in the area, had never visited the area and was thousands of miles away when the auction took place.

Why did I do it then you ask? As somebody starting out I have limited funds, I do have four rentals in the UK and now two in the States but my money is tied up. If I can find the ways to get these cheaper deals it means I will be on my way to financial freedom far faster. So it is in trying to find all these possible avenues to great deals that I am investing most of my time in.

Having heard about the sale I downloaded a list of properties.  It was then a case of searching through for multifamily properties, as that was what I wanted. The thinking being of higher returns.

I found a list of the ones I liked and then did my basic due diligence on the net. I narrowed it down to two properties.

It was then a case of going into depth with those two. 

It is vital that you know what you are doing when buying this way, I downloaded the bidding guidelines etc and info packet. From what I could see all debts would be wiped off when the property was bought except sewer liens and weed liens. By looking online I was able to calculate what these would be.  It is important to be sure just what you will be liable for when you get properties this way.  You don't want to find you owe more than they are worth with some liens or debts that will not be wiped.

I then did a title search and looked over that to confirm debt associated with the property,to help me gauge my bidding price.  In the end it seemed there was some confusion in the sale with me and several others who won properties.  When I contacted somebody to ask what debt I had to pay sewer liens etc, I was told these would also be removed. The information in the advice packet made out that these would be payable.  This made a huge difference in the end to my final purchase price.  But again I was lucky and you cannot gamble on things like this happening.

I was lucky in the fact that I had made a connection with a couple of people locally and they said they would check out the properties for me before the auction. Access was not an option and it was just a case of looking from the outside and seeing a few pictures they took. 

The first property looked run down and was not in a great area so was not the main one I was after. The second was run down but  looked like it had more potential. From my search online it seemed that there was also a separate 500sqm home on the lot. The street looked nice and for me it looked like this house could be the ugly duckling on the street.

I set my price on the day of the auction and when the ugly duckling came up I won it for $4600. This went for less then expected and feeling confident I decided that I would go up to 3k for the other property. I got it for $1600.

As you can imagine I was very happy and desperate to see these properties inside. At these prices I thought if they ended up in a terrible state inside I would at least be able to get my money back. 

The process then went on for three month and I managed to put these to the back of my mind. Well almost lol

I had to hire an attorney to do the legal work for me. From what I learned small mistakes can mean you end up loosing the property.  They have to advertise to the current owners and anybody who has an interest in the property so they have a chance to pay off the debt. This means adverts in the paper etc.The day finally came when I should of been able to get control but a clerical error made them drag on another month.

Finally yesterday I heard it's just a case of recording the deed and then they are mine.

I cannot wait to see what condition they are in, it's been driving me mad waiting this long.

It has been a tricky process but one that has tought me a lot. I hopefully will do well out of it but it's tought me new skills and allowed me another avenue to source property from.

So fingers crossed all will be well.

I will let you know how it goes.