In 5 Steps to Invest in Tax Deed Sales, Ted Thomas reveals a little-known way to get real estate for pennies on the dollar at tax deed sales and shows you an unconventional strategy to sell property quickly that really works!
Watch the video above or read the summary below:
Today let’s talk about tax deeds and the 5 Steps to Invest in Tax Deed Sales. The topics I’m going to cover are:
- Tax Deed and Tax Lien Properties
- The Steps to Invest in Tax Deeds Are Simple
- Beware, Tax Deed Investing May Sound a Bit Too Simple
- How to Invest in Tax Deeds and Profit
- What to Do With Tax Sale Property
- Quitclaim Deeds on County Auction Property
- Does a Tax Deed Come With a Mortgage?
- Step #1: Get a Tax Sale Properties List
- Step #2: Look at the Minimum Bid on Auction Property
- Step #3: Evaluating Tax Delinquent Property
- Step #4: Have an Exit Strategy Before Buying Tax Deeds
- Step #5: Sell Your Tax Deed Property
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Tax Deed and Tax Lien Properties
I started out with tax lien certificates. I liked them because they were safe and secure. I invested my money with the government, and I could get a check back from the government. It was a predictable way to make quite a bit of money. Then I slowly transitioned to tax deeds…
I transitioned from tax liens to tax deeds, which simply means tax-defaulted properties. When the government wants to sell them, they actually sell you the deed.
I’ve got a lot of information for you today, so let’s talk about the steps to invest in tax deed sales.
Just so you know, I’ve been teaching people for about 25 years. I’ve been doing it myself for about 30 years, and I’ll give you some of those details as we go along today.
The Steps to Invest in Tax Deeds Are Simple
Tax deed sales are available in all 3,000 counties. There are a few more than the 3,000, but every county will sell tax deeds. These are properties that the government has confiscated, and now they want to get rid of them. They usually will sell them at very close to the back taxes.
This is really a simple process, not difficult, but you’re going to have to get educated a bit. I’m not going to recommend that you start tomorrow afternoon, run down to an auction, and start raising your hand to bid.
You don’t want to do that. You want to educate yourself, get a little background, figure out where you are, what you want to do, and so on. I’ll give you some steps to do that today. You might want to write them down as I go along.
This business is the world of the weird. All kinds of different things will happen, but I want you to understand that this is not going to be a difficult thing to do. Everybody’s going to be able to do it.
Beware, Tax Deed Investing May Sound a Bit Too Simple
Just be a little on the cautious side, because it sounds a little bit too easy. If you’re watching late-night television and someone says, “Oh, I just made a half a million dollars from tax deed sales,” just be a little bit cautious and be a little bit disbelieving.
The business has been around for 200 years, and the reason it’s been around so long is it works for all parties involved. In other words, the first party involved is the local government. They want to get rid of the property. But the second party involved is you.
You want to buy these properties at tax deed sales, but you want to buy them right so that you can resell them and make yourself some money. This is a pretty safe and secure business.
I’m an educator. I teach people how to do it. I’m kind of a maverick, but I really have been involved in tax deed sales for quite some time, so I’m going to give you a lot of great background information.
How to Invest in Tax Deeds and Profit
When I say cautious, I don’t mean that I’m negative. I have students that make $10,000, $25,000, $50,000, even $100,000 on one deal. So it’s going to be relatively easy for me to teach you how to make $25,000 and $50,000. Will you do that by next Friday? There’s not a chance. You’re going to have to get educated. This takes a little while.
I have world-class coaches, and I don’t joke when I say that. All of my coaches are 60 plus years old. All of them have been involved in buying and selling tax-defaulted properties and tax liens and tax deeds.
As a group, they have done over 200 purchases and resales of tax-defaulted properties. Think about that. So they’re at tax deed sales regularly. They’re doing it.
Whom do you want to learn from? You want to learn from someone that’s really doing it.
Ask yourself, why are you doing it? What’s your why? Why are you here? Do you want to just make more money? Do you want to learn more about tax liens and deeds? What’s your intention? Do you have some money to get started? If you don’t, you’ll have to attend one of my classes on how to generate some money.
Do you want to buy properties that you’re going to fix up? Do you want to buy properties that you’re going to sell quickly? How are you going to go about selling it? Have you thought about that?
Well, these properties are going to be sold to you at a local government auction. Once the gavel comes down and they hand you the deed, it’s your property. You’re going to not only have to make sure it’s safe and secure, but you’re ultimately going to want to sell that property. So where are you going to do this?
If you live in Pennsylvania, are you going to do it there? Are you going to go to South Carolina? Maybe you’re going to go to California or Washington. Well, we’re going to teach you.
If you join my community, you’ll sure see people doing this, but you need be willing to do a little bit of research. We have daily classes on how to do research in my office. For our regular clients, they can attend those classes. You need to start thinking, are you willing to do research?
What to Do With Tax Sale Property
Let’s talk about some of the steps. What we’re talking about today is tax deed sales. A tax deed is a document that transfers property from the state or the county to you. That’s a deed. They’re going to transfer the deed to you, but it’s because you bought a tax-defaulted property.
Are you going to rehab it? Do you know how to do that? Are you going to do like I do? I don’t want to rehab those properties from time to time. I’ve had to do that, but I prefer to buy it low and then resell it. Let me say that again. I want to buy it low and sell it low.
Why do I do that? Because I looked at Walmart and Target; I look at companies that are like that, and what do they do? They buy it at the right price, and they get rid of it.
If you go look at the parking lot at Target or Costco, what’s going on? Thousands of people are there buying. Why? Because everybody wants a deal.
So I figured out I’m not going to get the highest priced ones. I’m going to get one that I can buy for a good price, then mark it up a little bit, sell it and move on to the next one. If you don’t know how to fix it up, you need to think about that for a little bit.
Quitclaim Deeds on County Auction Property
You’re going to buy these properties more than likely directly from the county. Many times, the county will give you a treasure’s deed, or they’ll give you what they call a quitclaim deed. If they give you a quitclaim deed, you need to read it because they have basically disclaimed any liability on that property.
If you’ve got a property that nobody knows the history on, then you might have to check with the title company to see if you’re going to be able to sell it quickly. It doesn’t mean there’s anything wrong. It just means there’s another little piece of the equation that you have to figure out.
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Does a Tax Deed Come With a Mortgage?
Properties sold at tax deed sales have no mortgage. So let me say that again. Let me elaborate on that. When a county auction takes place, whether it’s on a tax lien certificate or a tax-defaulted property, which is a tax deed, they wipe out the mortgage.
Now you’re saying, “How can they wipe out the mortgage?” Well, they have rights to wipe out the mortgage.
The legislatures tells them, “Look, if the property owner doesn’t pay, see if the mortgagor, or in other words, the banker will pay.” If neither one of those parties will pay, they just wipe out the mortgage, and then they sell it because the local government wants money.
I want you to keep in mind, at tax deed sales, you’re dealing with the government. They have power to do these things. But the beauty of all of that is you can buy properties at tax deed sales without a mortgage. Just think about that. How would you feel if the house you lived in didn’t have a mortgage? You’d feel pretty good about it.
Let me give you some of these steps, and you can write them down if you like. Or you can come back and read the article again. So let’s give you the steps to invest in tax deed sales.
Step #1: Get a Tax Sale Properties List
Step number one is you need to get a list. That list is going to be provided by the county, so you can find out how many tax-defaulted properties they have.
Each state will tell you that they have many counties. These properties auctioned at tax deed sales are always sold at the county or municipality level.
Step #2: Look at the Minimum Bid on Auction Property
Once you have the list, then you want to look and see what’s the minimum bid. There’s no sense in you bidding or even dreaming about million-dollar properties if you don’t have the money.
If there are properties on there that you can buy for a starting bid of $20,000 and it’s worth $100,000, you probably want to go to the sale. But if the starting bid is a million dollars, you can’t go, so don’t waste your time on that one. Look at the ones that you can afford.
In many places, whether you’re in Houston, Texas, or whether you’re in Seattle, Washington, they will have literally hundreds of thousands. I’ve attended auctions in all of these towns, even in Los Angeles, where the auction will take days to do because they have 2,000 properties. So there is going to be plenty for everybody.
This is a business of abundance. They’re never going to run out. This year nationwide, we have somewhere between 2 and 3 million tax-defaulted properties being auctioned at tax deed sales, yet 99% of the people don’t even know what we’re talking about.
The reason they don’t know is because they don’t know how to research the county records, and they don’t even know that all real estate data is public knowledge. Everybody can know. You can look up the properties in Los Angeles, or you can look up the properties in Kansas City and get to know them. And, yes, we have classes on that.
Step #3: Evaluating Tax Delinquent Property
So how are you going to evaluate the property? Well, if you didn’t do anything else, you could walk up and down the street and ask people what’s the value of these houses.
Or could you call a broker, and they could tell you by looking through the multiple listing service? Or could you go to Craigslist? Or eBay? Or there are auction sites that you can look at. My point is there’s plenty of information for everybody.
This is a business that if you’re a do-it-yourselfer, you certainly can do that. Do I recommend it? I would tell you if you want to do it yourself, go ahead, but it’s probably going to take you about two years to learn how to do this. We can do the same in less than a year, and you could be a mini expert on it. But that’s what our business is.
Step #4: Have an Exit Strategy Before Buying Tax Deeds
Let’s talk about step four. And step four is what’s your exit strategy? I always tell people the biggest mistake is that they haven’t looked at the property. But the second biggest mistake, the number two mistake that people make is they have not thought about what they’re going to sell it for.
If you’ll think about what you’re going to sell it for, then you’ll buy it at the right price. Unfortunately, when people buy property at tax deed sales, they hear about an auction that’s good, so they go and raise their hand quickly. They’re going to buy that property. They buy it. They pay too much money, then they find out afterwards they paid too much.
If you can’t sell it now, what are you going to do? You’re going to have to take a loss on the property, and it doesn’t make any sense. At tax deed sales, you always want to make sure that you know what your exit strategy is going to be so you can sell it quickly.
If you’re going to fix it up, that’s a cost. You want to think about that. Holding costs, you’re going to have to pay taxes; you’re going to have to pay insurance. So you need to think about those things. So let’s move on to step number five.
Step #5: Sell Your Tax Deed Property
You own this, folks. Nothing happens until you sell it. You don’t want to hold on to that property. You do not want to hold on because properties will deteriorate. They need paint; they need cleaning; they need the lawns cut. They need the water taken care of. There are a lot of things to take care of. So you want to buy at tax deed sales and then quickly resell.
What we’re really talking about today is buying tax deeds. That means when you buy at county tax deed sales, you buy a tax-defaulted property. The government has already confiscated it. They’ve already seized the property, and they just want to sell it.
Now, why did they want to sell it? They simply don’t want any more property. They can have as much as they want, and they don’t want anymore. Instead, they want the tax dollars. They need the dollars so that they can get paid.
Are you going to hire a broker? You going to put it on Craigslist? You going to put it on eBay? What are you going to do? You need to think about selling it.
What about research? If you don’t know about research, we have classes every week on researching in my office. You can attend those classes, and we have coaches that can teach you. It’s really, really important.
Maybe I didn’t do this thoroughly, so I’m going to say it again now. I have what I call a Walmart strategy. It’s really easy. You could call it your Target store strategy or your Costco strategy. All I learned from those big guys is if I’m going to buy stuff, I want to sell it. What do they do that they’re so successful?
When you go there, their parking lots are always full. Why? Because they buy it low, and they sell it low.
What you’re after in a business is margin. You want some margin. If you could buy a $100,000 property and get it for $20,000 or $30,000, you’ve got a lot of margin.
At these tax-defaulted auctions, you can buy low sometimes 10 cents, 20 cents on the dollar. I’ve seen properties at tax deed sales for even less than that. When you get those properties, there’s no mortgage. So now you’ve got some margin to sell it, and that’s the whole key. That’s what I call my Walmart strategy.
We hope you enjoyed Ted’s lesson, “5 Steps to Invest in Tax Deed Sales”
By following these steps to invest in tax deed sales, you can pick up properties at a deep discount: Get a list, look at the minimum bid, evaluate the property, know your exit strategy, and sell – it all sounds so simple, and it is, but you also have to know what you’re doing.
You don’t want to make a costly mistake or waste time searching for information that could be at your fingertips if you just knew where to look. Ted has been buying at tax deed sales for 30 years and teaching for 25 years, so he can show you.
If you’d like to learn how to reap huge rewards from tax delinquent property investing, Ted Thomas provides full support and complete training with home study courses, Q&A webinars, live tutorials, workshops, web classes, and personal coaching with certified coaches.
Get started today by taking advantage of this Free Gift from Ted. Act now, it costs you nothing and will give you a big head start!
Ted Thomas is America’s Leading Authority on Tax Lien Certificates and Tax Deed Auctions, as well as a publisher and author of more than 30 books. His guidebooks on Real Estate have sold in four corners of the world. He has been teaching people just like you for over 30 years how to buy houses in good neighborhoods for pennies on the dollar. He teaches how to create wealth with minimum risk and easy-to-learn methods.