What's it like investing in tax liens / deeds?

Question

Interested in learning more about the space, considering getting into it myself.
What kind of software do you use to find tax liens / deeds / deals? How much of a headache is it to find these deals and execute, and what processes do you use to solve these headaches? How competitive are the auctions?
Any advice / knowledge here for a noob would be great. Thanks!

Ned Carey · Answer

@Kyle Baskin you use various software and websites to evaluate and do due dillegence on the properties but you do not FIND then with "Software".

Tax liens and deeds are sold primarily online by the county where the property is located. The laws vary tremendously from state to state. Search the county you want to invest and look for their anouncements of live sale or the website where they hold their online auctions.

It is not hard to find these auctions. Real Auction is one company that holds auctions for various counties areound the contry. Grant Street Group is another. But the county website is where I would check first.  I highly recomend you do not buy from third party sites.

Tax sale is highly competitive with much more risk and work than those promoting it would imply. It can be profitable, but it is not risk free nor is it easy to do well.

Ther is a LOT written here about tax sale. I suggest you read through some of the posts here.  Good luck

PS this thread has some tips https://www.biggerpockets.com/forums/70/topics/1129628-tax-l...

John Underwood · Answer

In addition you need a pile of cash to invest in this arena.

To do it correctly it takes a lot of time to d

o the research and drive by potential properties to bid on.

As Ned says get the list directly from the county.

Don Konipol · Answer

A lifetime ago, when the purchase of tax liens, and related certificates was much less competitive, I did invest in them but didn’t spend a whole lot of time at it.  I found that I could buy discounted mortgage loans and lend hard money at greater return with a lot less time invested.My conclusion is that it’s not a part time investors game. The returns on time invested just doesn’t justify it. As a full time career, as it is for @Ned Carey, it could be very lucrative.  But I’m sure Ned would agree that all the hype about how much you can make from tax liens, along with low interest rate alternatives, have made this a much more difficult investment.

Bruce Lynn · Answer

I am at one or two live tax sales every month in Texas.  Yesterday was a bit unusual in a way, but then again not that unusual in others.   This county has the sale 1x a year...mostly vacant lots.  About 100 of them.  At the start I would guess 300 people in the room.  Everything sold, so forget about OTC.  All sold above the minimum bid, which meant every single parcel had multiple bidders.  Most I would say sold at pretty darn close to retail value or maybe just slightly under.

There were definitely people who will get burned on these....they probably bought small lots with no utilities, too small to put septic and well on it.   Some builders were probably able to get some decent lots where they will build new homes.  Saves them some time, and probably some money getting 5 lots in one shot, without having had to make 100 public offers with 100 different buyers to get 5 at the right price.  A couple of people probably got the lot next door to them and can have a nice garden or a corn maze or something fun.   Several were in expensive POA/HOA communities that have 100s of lots for sale, so now they will have the priveledge of paying $1000-$2000 a year HOA/POA fees for that vacant lot, in a neighborhood where they could have probably bought at the same price retail resell in a much better location.  They'll get to pay the stupid tax every year as a reminder.  Often crazy rules in these neighborhoods like you can't put up for sale signs as the developer still selling lots too.  Some people will get messed up as they bought thin lots in mobile home only communities that were designed for single wide, don't allow travel trailers or RVs, doublewide doesn't fit.   Not sure anyone makes single wide any more.  Half the neighborhood is vacant lots due to this.  The other 1/2 is 1978 or older beat up and broken down homes.  I guess they can have bragging rights that they own a piece of Texas now.  Not sure if it includes citizenship rights or not (that's a joke-smile.)

There is money and fun to be had, but it is work, I see plenty of serious buyers there with computers and color coded spreadsheets, big file folders of research, and piles of money.  It's a cash sale, you need to pay same day by 5pm.  It is not a casual business, where you just walk in and easily and instantly make piles of cash.

Will Sifert · Answer

The only people who will tell you that you should be using software to invest in tax sales is the people who are selling the software.

Chris Seveney · Answer

@Kyle Baskin

I looked into it for about 3-4 months and discovered most of the good properties redeem, and the ones left over were bid up by huge players and they left scraps for others

Full disclosure this was online sales and in person could be difficult - but I found the amount of work and time (and money) did not fit me.

John Underwood · Answer

Your right that homeowners should never get behind in their taxes but it happens all the time for various reasons.

They inherit properties and just can't afford the taxes, people die and have no family or the family doesn't bother with going through probate or paying the taxes.

Every property has a story why it's in the tax sale. Most of the properties get redeemed before they are deeded to the investor.

What's it like investing in tax liens / deeds?

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