Investing at tax deed sales in Texas can be lucrative if you understand the process and key factors that can impact your investment. In this article, we’ll discuss the type of tax delinquent property auctions held in Texas, the unique type of property deed that is sold, and the five crucial factors for successful investing in Texas tax deed sales. So saddle up, there’s a lot of money to be made by knowledgeable investors at tax deed sales in Texas.
Key Takeaways
- Understand the difference between tax liens and redeemable deeds in Texas
- Familiarize yourself with county-specific rules and regulations for tax deed sales
- Know the redemption period of the type of property before bidding
- Research thoroughly the property location and title
- Inspect the property’s condition to ensure a valuable investment
- Have an exit strategy planned before you make your purchase
Do They Hold Tax Lien Sales or Tax Deed Sales in Texas?
In Texas, they do things a bit differently. Texas does not sell tax lien certificates, which enable investors to earn a high rate of interest by purchasing, not the property, but the tax lien on it and the rights that come with it. Instead, Texas sells tax deeds, but it’s a unique type of tax deed called a “redeemable tax deed.”
The process begins when a lien is placed against a property for unpaid property taxes. However, at tax deed sales in Texas, a redeemable deed for the property is sold, which means that you, as the winning bidder, can earn a potential 25% return on your investment if the deed is redeemed by the property owner during the allotted redemption period. If the property owner doesn’t redeem their deed during this timeframe, you’ll end up owning the property.
5 Things You Need to Know Before Bidding at Tax Deed Auctions In Texas
Before investing in redeemable tax deed sales in Texas, take note of these five crucial factors:
Understand the County Auction Rules
Texas has 254 counties, each with its own regulations for tax deed sales so be sure to familiarize yourself with the individual county rules where you plan to invest You can access the rules of a specific county by visiting the county’s website, where you’ll find information including upcoming auction date, time and location, lists of tax delinquent properties for sale, property descriptions, and assessed values.
Know the Redemption Period
In Texas, the redemption period for redeemable deeds lasts 180 days. However, agricultural properties or homesteads may have a longer redemption period, up to two years. Be sure you know how long the redemption period is for the property you plan to bid on.
Do Your Research on Tax Delinquent Properties
Property location: Texas offers a variety of property types depending on the location, from agricultural lands to oil fields, from major cities with high-value real estate to desert areas with low-value properties. Make sure to research the location thoroughly, as it greatly impacts the property’s value.
Title research: Conduct thorough research on the property’s title, as the county does not guarantee a defect-free title. Carefully investigate any potential title issues to avoid problems down the road.
Inspect the Property’s Condition
Visit the property and examine its overall condition, be it the neighborhood, structural stability, or general upkeep. Tax delinquent properties rarely come in mint condition and could be in need of anything from a little cleaning and a minor facelift to major repairs. Keep in mind that when you buy real estate at tax deed sales in Texas, you acquire the property “as is,” meaning any repairs or improvements will be your responsibility.
Have an Exit Strategy
In order to know how much to bid on property at tax deed sales in Texas, you need to know how much you could sell the property for. Look up real estate comparables (comps) to get an understanding of the potential market value of a property and factor in any need for repairs. You can use sites like Zillow, Trulia, Redfin, and the MLS (Multiple Listing Service) to help you gauge a property’s market value.
Consider using Ted’s tried and true buy low, sell low strategy. Since you can get tax defaulted real estate for 10, 20, or 30 cents on the dollar, why not turn around and sell it to a fixer upper person for 50 or 60 cents on the dollar? Pocket a nice, easy profit for yourself without having to concern yourself with the expense and hassle of rehabbing property; leave that work to the people who love to roll up their sleeves and renovate real estate.
Conclusion
We hope you enjoyed Ted’s lesson on the key factors to consider when investing in tax deed sales in Texas.
Each county in Texas has its own set of regulations, and you should understand the county’s rules prior to the auction. To access these rules, visit the county website and review them carefully.
Also, make sure you know the redemption period for the type of property you intend to purchase. Usually, the redemption period is 180 days, but for some properties, like homesteads, it could be up to 2 years.
The location and condition of the property are critical factors to consider during your research. Texas has a diverse landscape and varying property values, so inspecting the property’s location will help you determine its worth. Additionally, pay close attention to the property’s condition, as you’ll be buying it “as-is.”
Ensure you research the property’s title, as the county does not guarantee that there are no defects. A thorough investigation will save you from potential headaches and financial losses.
Lastly, have an exit strategy in mind. Know how much you want to sell the property for before you buy it. Use your research on the property’s condition and location as well as real estate comps to help you determine the property’s market value.
Remember to do your homework and put in the necessary time and effort before investing at tax deed sales in Texas. Proper research and due diligence will help you make informed decisions, avoid costly mistakes, and ultimately increase your chances of successful investing at tax deed sales in Texas.
If you’d like to know more about tax lien certificates and tax deed investing Ted Thomas provides full support and complete training with home study courses, Q&A webinars, live tutorials, workshops, web classes, personal coaching with certified coaches, and an interactive map and auction calendar research tool that allows you to visit each county online to find the details about upcoming auctions.
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