Best way to get started investing in tax deeds in the state of Texas?

Question

Hey I am new to this and pretty much all forums but I am looking for any information on how best to get started in the tax lien, redeemable deed investing sector? I have looked at several courses including the USTLA Protege course and while I am a little skeptical I realize I need some professional education and mentoring/direction. If anyone has any experience or information on a course or book or person that could help out I would greatly appreciate it.

Bruce Lynn · Answer

For the most part I have not seen a good course that can take you from zero to success.   I would not take any national course for sure.   Arnie probably provides the best education out there available.

I suggest you pick your county or a couple of counties you know well.  Get the list of properties.  Drive them, research them, know the value, know all the details of the property.  If you're buying lots, then you want to know that the lots are not in the flood zone, you want to know the zoning, you want to know if there are utilities or will ever be utilities.

Plan to hold them two years before you can resale.  There can be exceptions, but plan on the two years.

If you're focused on Harris county, it is a whole different animal than almost anywhere in the state.  I think there is a potential for 8 different auctions there based on precinct...almost always on the 1st Tuesday of the month at 10am.  Harris county is pretty much every month....other counties might be less frequently ...every other month, every quarter, 1x a year or every 2 or 3 years depending on how many properties they have to sell.  Harris is a giant county, so they pretty much do every month.

So take your list and research and have your minimum bid noted...go to the sales, but don't bid....watch, record, talk to people.  See what they bid....then you're asking them every question they will answer...why did you bid that much, what are you doing with the property, how long do you plan to hold, do you bid every month, and on and on and on.  Ask them what they think the property is worth.

After the sale compare your bid amounts to what people actually paid....analyze if you were willing to pay what they did.   Then figure out if you want to continue.

If you do, then get your cash together for your bids.....by then you will know how you have to pay in your county....cash, cashier check, or gold tokens.....and how much time you have to pay....normally same day.

Don't skip any of these steps....there are no shortcuts in the tax sale world.

You've probably heard stuff about making 25-50% government guaranteed...but in my experience most people never redeem, so you can pretty much forget about that.

That should give you the bare basics to get started.   In the past there were a couple of people at Harris county that would give some basic training before the sale starts...maybe at 9am.  Ask for classes or training from everyone you meet at the auction.

Don Konipol · Answer

In Texas a property with delinquent property taxes may be sold at auction. The winning bid receives a special warranty deed, hence has ownership of the property.  However, the former owner has a right of redemption of 24 months for a residential homestead or agricultural land or 6 months for anything else.  If redeemed during year 1 the former owner pays the new owner (winning bidder) his cost plus 25%; if redeemed during year 2 he pays cost plus 50%.

Bruce Lynn · Answer

Very accurate.....I think there are only about 20 of these companies in the state....and when you see properties disappear off the list before the sale, could be a loan was made by one of these companies to the delinquent payer to get them removed from the sale.

Roy Oliphant · Answer

Well the OP's question mentioned Tax Liens and Redeemable Deeds in Texas.  While it is mostly understood that Texas is a Tax Deed state and does not sell Tax Liens, there are special regulated loan companies that make loans for people to pay the property taxes.  Those companies are essentially assuming the governments place in the tax judgement and thus are "investing in tax liens in Texas".  They do not get an immediate right of possession or ownership as a deed purchaser would.

The minimum funding requirement and other regulations make this a limited entry business not open to most investors.   So while it is incorrect to say there are no tax liens in Texas, it is almost as incorrect to say you can invest in tax liens in Texas as most people cannot.

Roy Oliphant · Answer

In Texas, to invest in Tax Liens is very complicated and so highly regulated it requires a specialized loan company.  Tax Deeds are sold at the monthly Sherriff's auctions (usually) on the first Tuesday of each month.  Arnie Abramson at TXTAXSALES.COM has the most experience of anyone I have seen.  He has a couple of ways to help people get involved.

Jack Deer · Answer

Sorry, What'd You Say Again?

Dean Covic · Answer

Thank you for this information, I truly appreciate you taking the time to share. I'll definitely follow thru on this, I plan to start attending auctions next month just to familiarize myself with the process. I am prominently looking into Harris County so that information is especially useful! Thank you again!!

Ned Carey · Answer

I suggest going to an auction to see what it is like.  Like Roy said there are lots of complexities to tax sale so do some research into TX law before go you understand potential pitfalls and risks. I don't know anything about TX tax deeds but I have seen Arnie's posts.

Best way to get started investing in tax deeds in the state of Texas?

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