How Long Before You Bought Your First Tax Deed?

Question

How Long Before You Bought Your First Tax Deed?... That is, after you learned about them.

And for how much? (If you don't mind me asking.)

From there, when you got the deed, what did you do with the property?

Todd McLochlin · Answer

Hey Rhett, Unfortunately, I'm not familiar at all with states that don't have a redemption period. I would guess that it would be more like an actual foreclosure sale where title is conveyed to the purchaser with no warranties - caveat emptor. Hopefully someone on here knows, I'm curious as well.

Roy Oliphant · Answer

Rhett P.On the thread topic, I read a book on the topic about 10 years before hand but didn't find anything in my county to buy. Finally decided I needed to get serious about it and started attending auctions in other counties. It was about 5 months before I actually bought a property to participate in. Still too early to tell how well we did but if it doesn't get redeemed I expect to exceed 20% ACOC. Most of the non-redeemed properties we do in Texas return over 12% ACOC.

Richard D. · Answer

Rhett P. A much better forum topic! Especially since everyone has a favorite topic that they like to talk about to anyone. That topic is talking about themselves.I worked in a county tax assessors office for two years before I attended my first sale. At my second sale, I bought my first tax deed for $489.00. Yup, that low. I made money immediately from the property when I cleared the debris. Recycling does pay, and can pay well. I then was absolutely clueless on how to market the property. It was not redeemed.In Texas, redemption periods can take up to two years, however this specific property was only eligible for redemption for six months. Also, the buyer may sell the purchased property at anytime after the receive the deed. They must provide a full disclaimer in the quit claim deed they issue to their buyer, that the property is still eligible for redemption and the rate for that redemption. Title insurance is extremely difficult to obtain on a tax deeded property in Texas for at least two years, but not impossible!I managed to sell the property after holding it for a few months for $3250.00. By the time I calculated my expenses in upkeep, closing costs, and extra money I earned from the property, my net was $3100. From that point I have learned a lot about things that affect Real Estate values, locations, and marketability. My biggest dislike is dealing with people who do not understand how an appraisal district is supposed to operate, and the meaning of their values on properties. They more often than not, believe that a property is only worth what they see on the appraisal districts website. But, I can speak with absolute certainty that the appraisal districts make many, many mistakes.

Sam Bagwell · Answer

Be careful and thoroughly vet any out-of-state turnkey providers. I've had to fix several mistakes which would have prevented a successful quiet title action in Georgia. They allege service which was never actually made, don't do a skip-trace on all heirs of estates (there are often estates involved in tax-sales), don't run a bankruptcy check, or attempt to comply with California service/title/foreclosure guidelines rather than Georgia. Often it works fine, but if there are any issues, the whole deal is at risk.

Rhett P. · Answer

What about states that don't have a redemption period? Once you get the deed to a property how long is the process before you can sell it? Do you have to quiet the title or is that just a suggestion?

Todd McLochlin · Answer

Depending on the dollar value of the property, we normally use a vendor out of California to bar the right of redemption, complete service, and issue a title certificate that can be relied upon locally to issue a title policy just as like any other retail transaction. It shouldn’t take 120 days to complete service and advertise for 4 consecutive weeks, they can normally complete the process within 60 days and you haven’t alienated any buyers. If the property is more valuable – subject to all of your definitions of higher value - I would agree with Sam that a quiet title action is the way to go.

Sam Bagwell · Answer

In addition to waiting until the end of the redemption period has passed, and the foreclosure of that redemption right has been properly completed, you still have the last remaining step of quieting title to the property. Unless this final step is completed, most lenders are not willing to lend against the property, vastly decreasing your pool of buyers. So, assume 12 months for the redemption period, plus 120 days or so for the foreclosure, plus another 120-180 days or so for the quiet title.

Todd McLochlin · Answer

Hi Roy,That's both the benefit and drawback of the Georgia process. Once we purchase the tax deed, basically we just sit back for a year and have a beer! If we've done our due diligence correctly, the year isn't bad as long as we are confident we made the right property choice at the right price - its actually kind of nice, as my partner and I both have full time jobs. If we get redeemed, we take the additional 20% and release our interest. If we don't get redeemed, our purchase price on the tax deed should allow us to bar the right of redemption, foreclose, sell, and make a decent profit. We do have the right to protect our investment because we hold an equitable title interest, i.e. - secure the property if its vacant, mow the lawn to avoid liens, etc. We can't legally enter the structure until the foreclosure process has been completed and we have fee simple title - so that's always an interesting day!

Roy Oliphant · Answer

@Todd McLochlinNot to hijack the thread but how do you deal with the possession issue in GA where you get a redeemable ownership interest but no right of possession until the redemption period is over?

Rhett P. · Answer

So are there any states off the top of your head that do not offer redemption after auction is won?