All Forum Posts by: Scott Pigman

 Isn't that a controlled substance in Utah where the OP is?

welcome, welcome! I'm moving to the north Austin area myself in a little less than a month. I'll look for you at this Big Daddy's everyone mentions.

Funny thing, you're moving to Kileen and looking to invest in the north Austin area. I'm moving to the north Austin area and thinking about investing in Killeen once I get my feet on the ground. The grass is always greener, I guess. 

As you say, the market down there is pretty competitive. I was hoping to buy a house right away and then it into a rental next year but that doesn't seem to be in the cards.

Good luck with the move!

@Scott C. @Jeff K. 

I realize this is late to the party, but I was talking to my appliance repairman yesterday and he advised me to not buy from the sears scratch'n dent store. According to him a lot of the merchandise there are things that came back on a warranty repair and he's seen a lot of issues with them. That new fridge may actually have already seen a year or two of service and have had a dodgy repair.

Food for thought.  I recalled seeing this discussion after getting his advice and thought I'd pass it along for whatever it's worth.

@Brent Tatum 

Well, I've lived my house for 10 years but I just refinanced so it'll be 30 more years before you could be sure I've paid it off.

@Raj Kumar 

So right now you figure you have $50K in equity in the house which earns you $7K/year. If that's $7K net then you're making 14% on the money you have tied up there. That sounds pretty decent to me, but personally I'd be pretty skittish about staying in an area where the crime rate's rising.

FWIW, the real question isn't, "will this property's value go up?" it's "will this property's value go up higher than the rate of inflation?" That's about impossible to predict. I'm certain that at some point in the future your house will again sell for 2006 prices, but by then starter homes might cost a million dollars.

Thank you, everyone, for the crash course.

I think that although this is on my bucket list of things to try, it's not something I should be pursuing now. For one thing I don't have any experience in estimating repair costs or the resources to recover from a major miscalculation. For another, this isn't something I'd care to do as a full time job; I actually like my day job. My goal in real estate is to buy and hold rental properties. I don't think buying at the tax sale is the best way to go about that, at least when I'm starting out.

I guess that could work, but it seems like a d*** move that won't win you many friends at the REIA meetings.

That's good advice. I've learnt in other areas of my life that the secret to becoming an "expert" is often as simple as being willing to RTFM* 

*Read The Fine Manual

@Josh James

Thank you for the detailed response! If I may, there's a couple of things I'd like to get clarified. 

Hrm, so there's the potential that something like a mortgage lien may not be extinguished if the bank wasn't properly notified? Do you see that happen often?

What steps can you take to find out if there are superior, inextinguishable liens? I'm guessing the county doesn't have much incentive to do much digging. Do you run a title search on properties you're interested in? Or is allowing for that potential something you bake into your maximum bid?

Is the two years because of the redemption period or is it because of a "seasoning" requirement? I see properties listed with a six month exemption period; does that reduce the waiting time to get financing or is that irrelevant? I presume that you're saying that you need title insurance if you want to refinance or sell to conventional buyer.

It seems like the biggest risks are unexpected liens and determining the repair costs when all you can see is what you can see from a drive by. It some ways it seems that bidding on raw land may be preferable. Short of dumping hazardous waste there's less you can do to damage land.

Thank you for the link to the other thread. I had searched for similar threads but didn't find that one.

I'm trying to understand how tax sales work in Texas to see if it's something I want to pursue further. I'll appreciate corrections or confirmations on the things I think I know and answers to the things I don't.

I understand that in Texas you're bidding on the property itself, not a lien on the property. If you win the auction, you own the property, but during the redemption period of six months to two years, the former owner has the right to buy it back from you for your purchase price plus some percentage.

Questions and Concerns

What happens to the original tax bill? Is that cleared when you win the auction or do you now have to pay that on top of your winning bid?

What happens to other liens, like a mortgage?

Does the county evict the previous owners before the sale or could they still be living there? I'd expect them to not be too happy about losing their property.

What rights do you have during the redemption period? It seem that everything you might want to do during that time has a big asterisk next to it, "subject to the original owners not taking back the property."

So the upsides are that you either make a good return on your money or you end up owning the property outright. Right?

The downsides... You overpay, either because you didn't research it well or you let another bidder run your bid up. Previous owners damage the property. You have to tie up your cash until the property's redeemed or you can cash-out refinance. You're responsible for other liens? Anything else I'm missing?

Thank you,

Scott