Today I’m answering your question about Michigan tax deed sales which really are auctions.
I’m Ted Thomas, and for the past 30 years, I’ve been involved in a subset of the traditional real estate business. The subset is called tax defaulted real estate.
This isn’t a very well-known segment of the real estate business. However, it can be outrageously profitable once you learn how the process works.
Table of Contents:
- An Exciting Day at a Kalamazoo Auction
- It All Starts With Delinquent Property Taxes
- Get Amazing Deals at Tax Deed Auctions
- Michigan Tax Sale Rules
- You Can Buy Vacant Land in Michigan at a Tax Sale
- Reselling Tax Sale Properties Quickly
- How One Couple Profited From a Tax Sale Property
- Conclusion
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An Exciting Day at a Kalamazoo Auction
Most businesses are not very exciting. However, I can assure you that Michigan tax deed auctions can be very exciting, especially when you’re sitting in the audience and the treasurer announces, “Any property not sold by 4PM today will be on a subsequent auction list 42 days from now with a starting bid of $100.”
Where are you going to buy property for $100 that doesn’t have a mortgage or deed of trust loan?
Wow, I can tell you, that auction in Kalamazoo had everyone’s attention.
For the past 25 years, I’ve been teaching and guiding others on the process of buying tax defaulted real estate for 5 cents, 10 cents, 20 and 30 cents on the dollar. Most tax deed sales are auctions conducted by the official county treasurer. Here’s how all that works.
It All Starts With Delinquent Property Taxes
It all starts with the state legislature enacting laws that apply to all counties throughout the state. One of the many statutes is that all property owners must pay property tax.
If the property owner fails to pay, the treasurer will confiscate the property, evict the residents, and resell the property at a public auction to the highest bidder. Bidding will start very close to the back taxes.
The county does not want the defaulted real estate and motivates buyers by discounting the auction price by 60%, 70%, and 80% below the tax assessed value.
Get Amazing Deals at Tax Deed Auctions
Michigan tax deed sales will have starting bids of 10 cents, 20 cents, and 30 cents on the dollar. Prior to the auction, the county will delete the mortgage or deed of trust loan.
This process is happening across the United States in all 3,000+ counties. For decades my students have been purchasing bargain price real estate at Michigan tax deed sales and many other public auctions.
A student started out a number of years ago purchasing Michigan tax-defaulted properties, and over a six-year period, he purchased and resold over 60 properties. The majority of the properties were purchased for less than 30 cents on the dollar.
Michigan Tax Sale Rules
The auction rules are posted on the county website and also listed in the local newspaper. Michigan tax deed sales will have unique rules for bidders, and the rules must be followed.
All Michigan counties are authorized to seize tax defaulted real estate and resell at public auctions with the bidding starting at the back taxes. Properties are sold to the highest bidder.
The auctions may be online as well as offline. In Michigan, the only qualification at auction is you must have money to pay your bid price.
Auctions are the preferred method of selling In the state of Michigan, and the auction is referred to as a tax deed sale.
The first auction can be followed by a second auction where properties are discounted more than 90%.
You Can Buy Vacant Land in Michigan at a Tax Sale
Michigan tax deed sales are conducted in all 83 counties. The auctioneer will also include vacant land which could be residential lots or open land, and in many cases, unsold subdivisions.
On more than one occasion, my students have purchased many properties in newly built subdivisions that were uncompleted and the developers allowed them to go to tax auction. This is a challenge unless you know how to resell quickly.
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Reselling Tax Sale Properties Quickly
We teach our students to market the real estate, and of course, they’re buying it low for pennies on the dollar of the tax assessed value. However, to complete the strategy, they must sell low and do so fast so they won’t end up at a tax auction.
Basically, the same system has been used by Costco, Target, and Walmart for decades.
Selling the property is usually the auction buyer’s biggest challenge. We teach student investors to use media, like Craigslist, MLS, eBay, Facebook Marketplace, Trulia, and Zillow, and to advertise real estate with signs on the property. Newspapers and real estate clubs also still work.
The whole idea is to buy low and sell low to flippers and guys and gals who do fix-up.
Don’t underestimate the importance of marketing. It can mean the difference between a seller being successful or failing. You must know who your buyer is and if the pricing is acceptable.
How One Couple Profited From a Tax Sale Property
One student couple purchased a livable used and abused home for only $8,000. It was valued at $55,000. The property needed clean-up and minor repairs. After completing clean-up and repairs, the students were now into the property for $12,000.
Using a contract for sale, they sold the property for $35,000 and more than doubled their money. The contract for sale read that they would accept a down payment and monthly payments for 10 years.
In summary, the gross profit on the deal was $23,000. They didn’t take all of their money in one payment; they took it in 120 payments plus charged interest and received an extra $15,000 in interest payments.
The total profit is $23,000 + $15,000 = $38,000 for their $12,000 investment.
Conclusion
We hope you enjoyed Ted’s lesson on Michigan tax deed sales.
If you could buy a mortgage-free property for 10 cents or 20 cents on the dollar and then resell it for 60 cents on the dollar, how many properties would you buy at a tax deed sale?
If you’d like to know more about tax delinquent real estate 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.
You can learn how to reap the huge rewards from tax lien and tax defaulted property investing! 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.
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