Is Tax Deed Investing a Good Idea?
Is buying a tax deed property worth the investment? When it comes to real estate investing, you want to understand the rewards and the risks.
Whether you are new to tax liens and tax deeds or have been investing in them for a while, understanding tax deed properties, which are also called tax-defaulted properties, is crucial to your financial success.
A knowledgeable investor can earn lucrative profits from tax deed investing, and buying a tax deed property is certainly worth the investment as we will explain.
You may watch the video above, or if you prefer, read the transcript below.
What Is A Tax-Defaulted Property?
When a property goes into “default,” it usually means the property owner has not made their property tax payment and fallen behind. When this occurs, the property owner risks the home ultimately being seized by the county and sold at a public auction to recoup the delinquent back taxes.
Roughly half of the states sell tax deed properties and advertise them on county websites and in the local newspaper.
At the auction, the county will sell the deed to the property. Therefore, when you bid, you are bidding to buy the actual property.
The Benefits of Buying a Tax Deed Property
Buying and selling tax deed properties is a high profit business for entrepreneurial investors.
Bidding on tax-defaulted properties begins at the back taxes, which can be 10 cents, 20 cents or 30 cents on the dollar of the tax assessed value of the property, and the property is sold without a mortgage to the highest bidder.
The profit margin can by quite high on a tax-defaulted property purchased by a knowledgeable investor.
When you can purchase real estate mortgage free for pennies on the dollar and sell for any price you want, you can generate massive cash flow.
The Risks of Buying Tax Deed Properties
Before investing in a property, make sure you know and understand what you are getting into.
Some properties are slightly used and abused; some are in good condition, and some are in an extremely poor condition. The latter are not worth your investment.
Make sure you look at the property to determine the condition of your future investment. When you are buying a tax deed property, you never want to purchase anything without having boots on the ground first.
Remember, tax deeds are usually sold during a live auction, which means you will not be the only one bidding on the property. Make sure you have an exit strategy before you place your bid.
Don’t just buy or invest in tax-defaulted properties because you have the money. Take your time and do your homework before heading into an auction – you’ll thank us later.
Understanding Tax-Defaulted Properties
In conclusion, although there are risks with buying a tax deed property, there are also benefits and financial rewards that are worth your time.
A knowledgeable investor can generate high profits from tax-defaulted property investing. It’s not uncommon to make $25,000, $50,000 or even $100,000 from the purchase and sale of one tax deed property.
Buying a tax deed property and reselling it is a repeatable process that can lead to financial independence. It’s certainly worth learning and doing.
Learn More About Tax-Delinquent Properties
Ted Thomas has been investing in tax liens and tax deeds for over 30 years and teaches people like you everything you need to know before making your first investment. Click here to get your Free Auction List and Guide!
Please browse our website for more information about this fantastic investment opportunity and take advantage of our library of educational videos to start investing today!
Read the video transcript below of
“Is Buying a Tax Deed Property Worth the Investment?”
Randy: So hey, maybe you’re looking into buying a tax deed property, which I’ve just been learning about from Ted Thomas here. And Ted’s kind of the authority on tax lien certificates, and tax auctions, and such. A lot of experience. So what do you think Ted? I mean, let’s talk about buying a tax lien property. Is that something you recommend doing?
Ted: Well actually, you can buy tax defaulted, you can’t buy tax liens. Tax lien is just a piece of paper.
Ted: So that means you own that piece of paper. It does have a nice redemption on it. It means sometime either in a year, or two years, whatever the certificate says, that the property owner’s going to have to pay you. So you get a nice cash return. People with gray hair and stuff like that, they love those tax lien certificates.
Ted (cont’d): Now there’s an entrepreneurial type that likes to buy tax defaulted property. Now tax defaulted means half of the states, like New York and California and Texas, what they’re going to say is taxes weren’t paid. We confiscated the property. We don’t want the property, so we’re going to sell it. They’re going to sell it for 10 cents, 20 cents, 30 cents on the dollar. Okay, they’ll sell it to the highest bidder.
Ted (cont’d): All right, now anybody can buy one of those properties. Now, they’re going to advertise them in the newspaper. They’re going to put out, some of the counties, I downloaded this brochure from a county in New York. The county in New York printed a brochure. And these are all pictures of the properties and descriptions.
Ted (cont’d): And this particular county, there are 235 properties in this one county. It’s called Sullivan County. It’s 100 miles from New York City. 235 properties. Every one of these properties will start out, starting bid is the back taxes with no mortgage.
Randy: Okay, wow.
Ted: The mortgage has already been wiped out. It’s a starting bid of the back taxes. So if I could buy it for back taxes, now folks, somebody else going to show up in the auction. Let’s say I could buy it for 20 cents on the dollar. All the difference between 20 cents on the dollar and what I sell it for, I get to keep.
Ted (cont’d): This is a big profit business. When I discovered that 30 years ago, I said, “Whoa, wait a minute. You mean I can buy it for 10, 20 cents on the dollar? I can sell it for anything I want?” That’s been going on for 200 years. I didn’t invent it. I just learned about it. And I’m teaching you about it.
Randy: Are there any pitfalls or anything you need to be careful of before you jump into something like that?
Ted: Oh, there are huge pitfalls here. Now this is a risk business. What do I mean by that? Folks, these are not going to be brand new, shiny houses. They’re going to be slightly used and abused. Some of them are going to be junk. Don’t buy junk. Don’t buy junk. Some of them are going to be move in ready. I don’t know what’s going to be there, but you can go and look.
Ted (cont’d): You wouldn’t marry a woman without seeing her. So go look at the property. If they’re there, you can go look at them. They send you a brochure. You can read about them. All right, now when you buy a property, if you don’t know anything about property, we’ll have to teach you. Could it have a leaky roof? What about the foundation?
Ted (cont’d): What if the guy didn’t take care of it? What if it was a hoarder house, he got all kinds of newspapers or something? All right, so when you buy these houses you’re actually getting the property. So you need to take your eyes and put your boots on the ground. If you don’t have boots on the ground, don’t buy anything without boots on the ground.
Randy: That’s, that’s pretty good advice. So what did you say? You don’t get married without looking at who you’re marrying? Well, you’re not going to buy a house, I’ll take a look at it. It’s probably, you don’t want any bad surprises, but hey, Ted listen,
Ted: Yeah, yeah.
Randy: We’ve been talking about a lot of great subjects here. Let the folks know if they want to learn more where can they go to learn more right now?
Ted: So come over to tedthomas.com, that’s an easy one. Tedthomas.com. I’ve got tons of videos there and course materials, there’s everything under the sun that you can dream of. I’ve been doing this for 30 years and I’ve been teaching it for the last 25 years. So you go there, you’ll get a ton of information.
Randy: Great. Head over there right now, and we’ll see ya.
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