Hello World! Welcome Friends! Investing in tax sale homes is not rocket science. It is a fairly straightforward process that relies on deadlines, research, having the money available to compete and become a winning bidder, and patience. If you’ve never bought a tax sale home before and haven’t attended a public auction or bid by public tender, know that there is profit in this type of investing once you get the hang of it.
Here is an expert’s guide to tax sale homes.
Understand Why You’re Buying Tax Sale Homes
There are many approaches to tax sale homes and different ways to define success. Define for yourself where your interests lie and what you want your strategy to be. Many people pursue tax sales to reap financial returns rather than buy land or a house.
Research a Tax Sale Home Before Making an Offer
There are many reasons property taxes are not paid, often due to deceased owners, defunct corporations, or complicated ownership situations. There may be multiple liens on the property. Do a title search to determine if there are any interests or liens on the property.
Look Online for More Information
There is a lot to learn online about tax sale homes. This includes the neighborhood, location, market value, and whether stories have been written about it. Search Google, social media, and community groups if you are attached to any.
Liens Aren’t the End for Tax Sale Homes
If there are liens on the property, it does not necessarily mean you cannot bid. It simply means those liens will revert to you upon ownership. You may want to reach out beforehand to arrange or to know what you’ll face when they arrive.
Have the Investment Capital Ready
To acquire a tax-sale home, you need immediate investment capital. There is no waiting for financing or anything of that sort. If it’s not in cash, have it by debit card, certified cheque, or money order prepared and ready to submit if you’re the winning bidder.
Research Multiple Tax Sale Listings
Don’t just research a single tax sale home. Look at a few. Have a plan for where you want to submit bids in case your first pick does not work out and you are outbid. Some auctions or public tenders are highly competitive.
Final Price Will Be Much Higher Than the Minimum Bid
You may look at a property’s assessed value and minimum bid and be shocked at the price! The minimum bid is a starting point. Due to competitive bids, expect to pay much higher for a tax sale property than its minimum.
Public Tender or Public Auction
Most people know how a public auction works. However, many tax sales are done by public tender. In this case, bids are mailed in alongside specific forms that require filling out alongside a money deposit. Ensure you understand the full scope of rules for filling out a bid and getting it in by the deadline.
Some Tax Sale Homes Are Bad Investments
As with any asset class, there are bad tax sale homes that may not be worth bidding on. There may be an issue with zoning, a claim on the property, damage that will be expensive to repair, or something else. It’s not always apparent in the data, either.
Some Tax Sale Homes Are Amazingly Profitable
There are some real gems out there among tax delinquent homes. If you buy the right tax sale home, you can often renovate, resell, and recoup a massive profit. In some cases, even the assessed value of a lot or house as-is can provide profits over what you invested without having to do much.
Begin Work on Your New Tax Sale Home
If you are declared the winning bidder, wait before starting any significant work. If there’s a grace period for the prior homeowner to redeem, you want that to have passed. If the prior homeowner refuses to leave, you will want to pursue the legal route to evict them. Handle any claims or liens against the property before investing more of your funds to improve it.
Don’t Be Frustrated About Having to Walk Away
Many frustrated, empty-handed bidders walk away from tax sales with nothing. That’s their choice. Don’t fall into that trap. In fact, you walk away a winner when you avoid overbidding and bidding above your budget. It’s important to weigh the risks and know when to take action.
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