All Forum Posts by: Richard D.

It is perfectly legal to try and obtain redemption rights, this is usually done through quit claim deeds. There is a gray area in repairing for code compliance and repairing for rehab to sale. It largely depends on the Judge you get as you will end up in court over anything that is not repaired to bring the house up to code.

It is best to find a national title company that can search multiple state records. I have found liens filed in California for properties in the DFW area. Josh hit it on the head about a hierarchy of liens, and notifications. 

There are several attorneys that represent taxing units throughout the state. Smaller taxing authorities may represent themselves for cost reasons. Tom forgot Royalty Interest also has 2 year redemption period. 

@Scott Pigman I am sorry you feel discouraged. There can be several really nice properties that come to the tax sale. Last month Parker County had a property listed as vacant land 4.5 acres, valued at 15,000. It was actually a $381,000 SFH 5 Bed 6 Bath 3 car garage home (Aledo, TX). Tarrant County in the July sale had three homes all assessed @ $150K+, one was a model home that sold for $77K and only needed $5K in repairs (Replace AC and 1 Fence Panel).

I realize that was the past; I just don't like seeing potential investors scared away, because it seems like it is daunting. Especially, if you do your homework and find good representation, you should make money. 

The success rate will hinge largely on location, type of property, and cost of property. If you are looking to just obtain the 25% redemption rate set by the state for properties that are limited to 6 month redemptions. Expect, to only get about 8% (or lower) of the properties you buy redeemed.

If you pay close attention to the type of property, and do research to protect your interests, the percentage does jump up to about 30%-50% on the properties eligible for two year redemption. The turn around time on getting your money back is lengthy at 2 years. But, that $50,000 investment will pay back $75,000 (beats wall street).

But if you are looking to buy and flip, you could see substantial returns. But at the same token, buying to high or the wrong properties will cost you substantially.

There are companies who buy properties and flip them for large profits each month. My last Tax Deeded Property returned 233% ROI. Which is misleading to some degree. My figures are below.

TaxDeed Winning Bid: $489.00 (My Bid May 2013)

Property Clean-up: $450.00 (mowing, trash removal)

Taxes & Insurance: $80.00 (2013 & 2014)

Sale Advertising: $130.00 (Signage, Newspaper Ads, etc)

Filings & Legal Fees: $245.00 (Deed, Lien Releases, Sales Agreement Docs)

Total Costs: $1395 (approx)

Sold for: $3250.00 (August 2014)

That is better than the 25% I would have received if the property was redeemed during the redemption period. It is also better than what I would have received for a comparable lot in other locations. 

I buy in Texas. Like any other investment there are risks. If you are planning on making your money from the redemptions, you will be hard pressed to gain the 20% promised by the  infomercial types.  

What I bank on is the unredeemed properties. The kind that you can fix and flip, or raw land. I avoid properties that have a longer redemption period, without approaching the current owner first. If I am able to contact them, I ask them if the are intending to try and redeem their property. I do explain to them their rights as current owners. If after our conversation they still indicate that they are unable or unwilling to pursue those rights. I will ask for a quit claim deed on the property after the sale. This stops the redemption process and eliminates that period of time (as long as there isn't a mortgage). 

Another great thing about Texas is that the Tax Authority has already foreclosed on the property. You have immediate right to the property. However, this can be tricky if the property is occupied. If there are renters, get them to sign a new lease. If it is vagrant or owner occupied, standard evictions should work.

If the prior owner plans to redeem, I may still go after the property just to get that 25%-50% interest on my money. Depends on how fast I wish to get paid. Sometimes, 6 months or 2 years is a long time to wait to get my money back.

Robert, it depends on the time of year as to what a mortgage company does with the excess payments. If the taxes or insurance is due at the time of your payoff, they would take your escrow and pay the bills one last time, and send you any monies left. If say fo example those bills aren't due until six months after you paid off the mortgage, then they should send you the monies in your escrow account. 

It just largely depends on what your mortgage company's policy is in this area. As, for the time frame of them cutting a check to you, expect 2-4 months before you see the money. Remember mortgage companies have a huge problem with inter-office communication. The mortgage department may take a while to notify the refund department.

@Jean Bolger Taxes are assessed in arrears, however after the first year, mortgage companies estimate taxes and try and collect ahead of time. This is why you see mortgage payments jump $400-$1000 or more on newly built homes in the first couple of years.

Working in a tax office, I see and talk with people who attend these seminars. You can learn a lot more for a whole lot less by just going and talking with the clerks at the assessors office. I've written a few post about the topic.

Just looked at Dallas list, about 15 properties, I would research out of 91 available.

James, Collin County post their list online, and hold the sale in four locations. You must get authorization to bid, and you must be present at the time of sale to participate. The sale is held on the First Tuesday each months written in the Texas Property Tax Code. 

Read the member blogs on the topic, I have a couple of post about the topic. Others who participate in other Texas counties do have post as well. 

If you win, you become instant owner. However depending on the type of property the prior owner may redeem the property. This is why I said it could be a worst case scenario, where you have to sell back the property. You would only gain your money plus 25%. 

Note: do your homework first, it is entirely possible to lose all your money while investing in tax sales. Make sure you fully understand the laws.

James, I don't have a specific book to recommend. I have written a couple of blog post about the subject. Everything that I have written about is from personal experience. Which is the besst way for me to learn. Of course it also helped me a lot working in a Texas Tax Assessors Office in the DFW area for 5 years.

FYI, I got a glimpse at the Tarrant County October list today. There is a $195,000 property available with a starting bid of approximately $13K. If this property isn't withdrawn, It will probably go for about 80K-100K.

There are also several properties for under $20K starting bids that value $60-$100K.  I am seeing higher starting prices at this auction, I may pass on Tarrant County Tax Sale this month. This is in no way to say that there isn't a great deal at the sale. Your $37K can land you some nice properties. 

Collin County has a buildable lot a block from a school, property values are $200K+ once developed. Starting bid is about $7K value is $50K on the raw land. Tommorow I will be looking at the Parker County, Johnson County, & Dallas County listings.  

worst case scenario, you buy some properties, and they get redeemed and you make your money back + 25%.

That's exactly it, use your monthly cash flow to build your income. Cash out the new equity to buy more properties, after a few years you have built more equity in homes that you purchased early on. Which can give you more opportunities. 

If you want to upgrade neighborhood, go ahead. It will just take longer to find great deals. May I suggest, attending Tax auctions, to find good properties for lesser amounts .

I have an owner of a property who's mortgage is at 80% ARV, the numbers don't work for a buy and hold rental, and the property is in too good of shape to spend much on rehab, approx $8K.

My thought is get property under contract for mortgage $110K, less closing and rehab, and sell @ market, which is about $130K. Any suggestions on how to find a qualified buyer quick?