Taxes Tools

If you’ve recently attended a tax sale with the hopes of buying tax properties for just the delinquent taxes owed, you probably left empty-handed. Many people research properties and show up at the tax sale without realizing they stand next to no chance of getting their desired properties. Large companies with teams of lawyers and full-time researchers attend these sales and buy up all the good properties– and because they have more money, they can afford to make a smaller return on their money. You’re virtually guaranteed to be outbid, every time.

The truth is, buying tax properties at tax sale is probably the worst way for the average investor to buy tax property. Even if you are successful in bidding, in most states you won’t be able to take possession of the property for at least a year. This is because the tax commissioner or other tax authority generally gives the delinquent owner a year or more to resolve their tax issue. In some states, you have to wait as long as five years before you get the deed or can foreclose!

It’s disheartening, but you’ll be happy to know there is a much simpler way to buy tax properties, without ever attending a tax sale– by purchasing these properties directly from the delinquent owner, just before they are about to lose the property permanently.

The first thing you’ll want to do is compile a list of tax properties in your area. You can usually get a list like this from the county holding the tax sale. If you’re a more advanced investor, you can also compile your own list. Next, you’ll want to research these properties, to narrow down the list to ones you’re most interested in purchasing. This usually entails deciding what you’d like your profit margin to be, and deciding which properties will be your best investments.

After this, you’ll want to research the owners to find contact information. Often, they no longer live in the property, and may be difficult to find. Once you’ve gotten their information, you’ll need to call them, and make a deal with them to purchase their property directly. The best time to call them is just before they’re about to lose their property for good– when they’ve got nothing to lose by selling to you.

Once you’ve got a deal to purchase their property, there’s lots you can do with it. In some states, you can purchase it yourself, not pay the taxes, and then collect the excess funds from the bidding at tax sale; you can try to find a buyer, do a “double closing” and let them handle the tax issue; or, you can pay the delinquent taxes yourself, and rent it out, rehab it, sell it for top dollar, or even live in it.