My first time hearing about acquiring a tax delinquent property was actually from my tenant. His story is that he works for a construction company that renovates these types of property. He was saying that these properties can be auction off at a ridiculous below market price. I am so new at this. Can someone confirms the validity of these type of deals? How easy is it to buy them? How and why do they exist without the big investors all over them and bidding up value so they become somewhat market value?
It depends on the particular state laws/procedures. They vary widely in what rights you’re actually buying. But here, for a $200k home at tax auctions they go for $160-210k, depending on various things.
It depends on the particular state laws/procedures. They vary widely in what rights you’re actually buying. But here, for a $200k home at tax auctions they go for $160-210k, depending on various things.
They exist, but there is plenty of risk to go with them. You normally can't get inside so you have to do a curbside comp on value (1 risk). They may still have the old owners/tenants inside, so you will be responsible for getting them out (2 risk). They may have liens that are not removed by a tax auction.... local codes will vary but Federal liens will stay (3 risk). Could be condemned or ready to be, totally changes your repair options because it may need to be to current code (4 risk). Sinkhole....hazardous waste disposal site 15 years ago..... nest of some endangered species in the back yard you can't disturb (5 risk) and many more.
People I personally know who play in that realm often times bid and put the 10% down required here, and end up walking away from a couple a year (losing their bid money). May be a loss of 5K to 30K but it ends up being better than trying to salvage when they end up with a full picture of the place. Those same people also tend to put tons of money down on "Quick Draw" lotto games while having lunch at the bar.
@Doanh Mai In theory yes tax sales can be a great way to get deals. Again, in theory, you can buy a property for as little as the taxes owed.
These properties are sold at auction, and right now it is very competitive. Prices for properties are getting bid up to amounts that don't make sense to me.
@Doanh Mai, there are some properties in almost every county that are literally abandoned (the owner and the lien holder(s) have given up all interest in the property). Those few parcels that are Abandoned real estate can be acquired by adverse possession. It takes patience (5 to 20 years), and specialized knowledge, but Adverse Possession can be done with very little cash. https://www.biggerpockets.com/...