What’s Wrong With Tax Deed Investing?

You may have heard that tax deed investing is a great way to purchase properties for back taxes. But here are some reasons why it doesn’t always work out that way.

First of all these tax sales can be competitive. Although bidding for tax sale properties may start at the back taxes owed, most residential properties are bid up at the sale, sometimes close to market value. Then what makes it even more difficult for the average person to buy a home at a tax sale is that in most counties is, you need to pay for your winning bids in full on the day of the tax sale or the day after the tax sale. That means that you have to have all of your cash on the day of the sale. You do not have time to get financing. So what is a tax deed investor to do? Is it still possible to buy tax sale properties for pennies on dollar?

There are ways that you can purchase tax sale properties for pennies on the dollar, but not buy going to the tax sale. You can avoid the competition at the tax deed auction by contacting the owners of delinquent tax properties before they are sold in the tax sale. You can find vacant properties that are on the tax sale list that have out of state owners and contact the owners of these properties. You want to look for property owners who have already decided, for whatever reason that they no longer want the property, and are prepared to let their property go to the tax sale. You can ask them if they will deed the property to you, for a small consideration. This is how you can pick up vacant properties for less than what they would sell for at the tax sale.

But why would someone just hand over a quitclaim deed to their property to you? There are many reasons why a person would do this. Here are just 3 that I can think of:

  • Divorce or other life changes
  • Job loss
  • Relocation to another area of the country

It is important to check for other liens on the property before you do this because since you are purchasing the property directly from the owner, you are responsible for any liens, judgments, or mortgages on property. So check that out first.

Did you know that there is a little known secret about tax deeds that you can do in some states that will let you cash in on tax deed properties without going to the tax sale? You can find out all about it in my free Tax Foreclosure Fortunes mini-course. Get your copy at www.TaxForeclosureFortunes.com.

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