Tax Deeds in Texas

[Margaret Lewis]

I am interested in investing in Texas, specifically Tax Deeds and distressed properties.  Can anyone provide any insight has to the success  rate of investing in Texas? 

[Richard D.]

The success rate will hinge largely on location, type of property, and cost of property. If you are looking to just obtain the 25% redemption rate set by the state for properties that are limited to 6 month redemptions. Expect, to only get about 8% (or lower) of the properties you buy redeemed.

If you pay close attention to the type of property, and do research to protect your interests, the percentage does jump up to about 30%-50% on the properties eligible for two year redemption. The turn around time on getting your money back is lengthy at 2 years. But, that $50,000 investment will pay back $75,000 (beats wall street).

But if you are looking to buy and flip, you could see substantial returns. But at the same token, buying to high or the wrong properties will cost you substantially.

There are companies who buy properties and flip them for large profits each month. My last Tax Deeded Property returned 233% ROI. Which is misleading to some degree. My figures are below.

TaxDeed Winning Bid: $489.00 (My Bid May 2013)

Property Clean-up: $450.00 (mowing, trash removal)

Taxes & Insurance: $80.00 (2013 & 2014)

Sale Advertising: $130.00 (Signage, Newspaper Ads, etc)

Filings & Legal Fees: $245.00 (Deed, Lien Releases, Sales Agreement Docs)

Total Costs: $1395 (approx)

Sold for: $3250.00 (August 2014)

That is better than the 25% I would have received if the property was redeemed during the redemption period. It is also better than what I would have received for a comparable lot in other locations. 

[Morris Lucas]

@Richard D

What kinda property sold for $3250? Was it a vacant lot or something?

If so, what would make u buy a piece of land vs a house? I would be afraid no one would want it unless i already had a buyer!

[Lance Wakefield]

@Richard D. I am looking at trying things out at the tax auction. What is the best way to find the lists? Do I have to go through each one for each county? Is there frequently vacant lots on the lists? Thanks for help!

[Richard D.]

I specialize in vacant lots purchased at tax auction for several reasons @Morris Lucas. They are inexpensive, they usually come with mineral rights (big plus in Texas), they typically have short redemption periods, low rehab costs, and sell quickly at the right price; they also have large ROI. Seldom, do I hold a property more than 18 months. If I have it more than 9 months, I have it priced too high.

Keep in mind, I do my homework extensively on the properties I am trying to buy at auction. I look for liens that will be removed or that may stay, ownership history, platting, zoning, exit strategies, cost & profit analyses, and above all else; I physically look over the property. My lowest ROI to date has been only 77%.

I have multiple exit strategies, usually with buyers in mind. Sometimes, ok frequently with vacant lots, plans don't always pan out. That's why I say multiple strategies. I have several contacts in new home construction, architecture, land developers and community organizers who help me locate buyers and sellers. I had one C/O bring me a lady with four duplexes, that I wholesaled for $18k each. Low income neighborhood, yes, huge returns, not really, but it was all cash; net for me was $10k. The current owner rents for 650 per unit and is happy. My buyers are also my bird dogs as well.

@Lance Wakefield since you are in Collin County, if you plan on attending the Collin county sale; check with the Collin County Sheriff for property listings. They hold their sale in four different locations, and have each locations sales listed separately online. Any other locations, check with the tax assessor collector. Dallas County is John Aims office, his sales are organized by the Linebarger law firm. Avoid Kaufman county, that's good ol'boy country there. I don't get a lot of calls for Denton County, Tarrant County the list is online now at both the attorneys Perdue website, and Linebarger.

If you have any other questions, just Email me.

[Joe S.]

Quote from @Richard D.:

I specialize in vacant lots purchased at tax auction for several reasons @Morris Lucas. They are inexpensive, they usually come with mineral rights (big plus in Texas), they typically have short redemption periods, low rehab costs, and sell quickly at the right price; they also have large ROI. Seldom, do I hold a property more than 18 months. If I have it more than 9 months, I have it priced too high.

Keep in mind, I do my homework extensively on the properties I am trying to buy at auction. I look for liens that will be removed or that may stay, ownership history, platting, zoning, exit strategies, cost & profit analyses, and above all else; I physically look over the property. My lowest ROI to date has been only 77%.

I have multiple exit strategies, usually with buyers in mind. Sometimes, ok frequently with vacant lots, plans don't always pan out. That's why I say multiple strategies. I have several contacts in new home construction, architecture, land developers and community organizers who help me locate buyers and sellers. I had one C/O bring me a lady with four duplexes, that I wholesaled for $18k each. Low income neighborhood, yes, huge returns, not really, but it was all cash; net for me was $10k. The current owner rents for 650 per unit and is happy. My buyers are also my bird dogs as well.

@Lance Wakefield since you are in Collin County, if you plan on attending the Collin county sale; check with the Collin County Sheriff for property listings. They hold their sale in four different locations, and have each locations sales listed separately online. Any other locations, check with the tax assessor collector. Dallas County is John Aims office, his sales are organized by the Linebarger law firm. Avoid Kaufman county, that's good ol'boy country there. I don't get a lot of calls for Denton County, Tarrant County the list is online now at both the attorneys Perdue website, and Linebarger.

If you have any other questions, just Email me.

 Are you still buying tax deeds in Texas?