Free (luckily!) Lessons At a Tax Deed Sale

[Stefan K.]

My business partner and I attended one of the local county tax deed sales last month in Florida. We had 3 properties we were interested in, all mobile homes on their own land. I wouldn't say things went well in that we didn't end up as the high bidder on any of the properties, but I would say they went spectacularly as we didn't end up as the high bidder on two of the properties!

The first property we wanted was in a 55+ community and peeking in the window it had newer carpets, nice appliances and was in overall great shape. It came up and I was bidding against one other person all the way to our maximum bid of $11,800 (based on our conservative minimum profit metrics). Then another bidder jumped in and the property went all the way up to $18,000. As a flip that didn't leave enough room for us to be happy but as a rental I think the guy got a good deal.

The second property was on a little dirt side street (or so I thought). It came up and earlier in the day we had decided not to bid because we found out the owner had over $10,000 in back child support and we weren't sure of the rules with child support and tax deed sales. That one went for $1 over the opening bid at around $5,600. Our max bid had been $9,300 before we struck it off our list. After the auction we spoke to a couple of people and found it that child support might not follow the property through the sale. I put in calls to 3 different lawyers to find out the truth and then we spoke to the winning bidder to see if he would be interested in flipping it for a quick buck. He said he'd sell it to us for $9,000, which was below our max bid so I let him know I'm waiting for a call back from my lawyer and got his information. I drove my partner to the property to show him in case that would influence our decision. Turns out I was looking at the wrong property! I thought it was this nice double wide that would have been easy bank but it was a dumpy single wide that would have been better off burned to the ground. My partner said we no longer scout houses on our own - always together. I said we should also take pictures of the house number. Good thing we were worried about the child support. CLOSE CALL! We probably still could have made a little money on this one but it would not have been worth the effort involved. Oh, and none of the 3 lawyers ever called me back.

The third property was in a strange 55+ community where the front half is a park with rental lots and the back half is owned lots. Looked good but had people living in it. The bidding was fast and furious and blew right past our max bid of $6,300. Ended up selling for about $10,000. When the winning bidder said his name I recognized it because someone with that last name owns about 6 houses on the street. Afterwards I spoke to him and it turns out his family owns the rental park side and has been picking up the other lots when they can. On this one the owner had past away so they filed for an abandonment title on the house. Once they owned the house they started renting it out. My thoughts are that the rental income over the couple of years paid for the lot on that day. He said they were going to sell the house for $10,000 - $15,000 and turn the lot into a rental. Smart family but WOW - another CLOSE CALL! We could have bought the lot, stopped over the next weekend and found out he moved the mobile home to another lot in the park since he owned the mobile home.

Free lessons, for sure. But certainly echoes all of the warnings about doing your due dilegence when buying real estate.....or wheelestate.