Funding for Tax deed properties 'under contract'

[Deborah Tuck]

hi. I invest in tax deed properties in Ohio, which has a slightly unusual system in that if you 'win' a property at auction, you only have to pay a deposit on the day (usually around 10%), and the full amount is not due until the sale is confirmed by the court (ohio is a judicial state), which is usually a few weeks later.

This is sort of like having a property 'under contract', when you would normally go off and try to get funding for the rehab / a buyer etc. Problem is, you have no legal right to enter the property until until after the full amount of the bid is paid, and this risk of 'potential unknowns' makes getting even hard money virtually impossible, no matter how good the deal is.

I always allow for an absolute maximum cost total rehab in my figures on any property I bid on (and always check the property externally), and there's still plenty of 'meat on the bone'. No real problem refinancing at 50% ltv after the purchase either, but just cant find a way around that original 'deposit', as it were. Obviously genuine 'private money' would work, but so far I haven't been able to access any.

I am going crazy, as time after time I see great deals go begging - e.g. Several times I could have secured a property with a 15k deposit on the day (which I had), against a winning bid of 150k on a property less than 15 years old with an MLS and local realtor assessed fmv of over 300k (even the county tax assessor agreed!), but was unable to take advantage of the opportunity due to the problem of funding the extra $135k due a few weeks later. Yes, these deals were at the top end of the range, but there are many to be had with an easy 40k plus profit, even allowing for a worst case rehab.

As this section is called 'creative financing', I was wondering if anyone had some thoughts as to a potential way around the problem? If you do, just think, you would also be providing a community service, helping counties provide schools, police etc, once these houses are again paying their way!!!

Deborah Tuck