Texas Tax Lien Auctions, Deal or No Deal?

[Philip Rodriguez]

Thank you Tom Bukacek for posting this https://www.biggerpockets.com/blogs/1123/8011-the-... a while back.

I'm new to REI and BP and this struck my interest. I'm here it Texas looking to invest in the DFW market. Maybe someone can go into a little more detail about this statement "Texas offers tax deeds with a 6 month right of redemption on non-homestead & nonagricultural real estate and 2 years for homestead and agricultural real estate. However, after a property is sold at a tax deed sale, the owner still gets a 6-month redemption period to buy back the property before you can obtain clear title. If the original property owner comes up with the money before the time is up then the investor does not get the property. However the investor does receive all investment back plus 25%! The penalty fee is the same regardless of how much time has passed since the auction, so the investor can earn a 25 percent profit in two days or two months. This means redemption can still be very lucrative for the investor, even if they don’t get to keep the property."

My question is, when you say "buy back the property" does that mean buy the property back at the price the home was paid at auction or is it the original tax lien owed by that home owner? Plus, depending on the answer, does that 25% reimbursement rate apply to the bid price won at auction or if indeed it is what they originally owed, 25% of that amount?

Any feedback or advice, especially from my fellow Texas investors familiar with this would be really appreciated!  Thanks for sharing with the newbie!