Texas Tax Lien Sales

If you are interested in making a big profit and want to own real estate, you need to look at Texas tax lien sales. The Lone Star State has plenty of opportunities for you to invest in real estate tax sales. Before you invest, you need to know the rules and do your homework. Every state and every county in each state has different rules for their own tax sale. The homework is unique to each property, but the process is the same. I’m Ted Thomas and I’ve made a fortune investing in tax lien sales and tax deed sales across the United States. Now, I teach other people how to make big profits and retire early, if they want to. texas tax lien sales

What Are the Different Types of Tax Sales?

Tax sales are grouped into three categories.

1: Tax Lien Certificate

In a tax lien certificate state, you pay the past-due property taxes and you collect as much as 36% interest on your investment. You do not get the property. The owner redeems his property by paying the back taxes, premiums added by the tax collector, and the interest you collect. He pays the tax collector. The tax collector sends you a check.

2: Tax Deed

In a tax deed state, when you buy something in the tax auction, you own the property when the paperwork is completed. The owner cannot redeem the property.

3: Hybrid

A few states have a hybrid auction, combining elements of the tax lien certificate and the tax deed. Texas offers a hybrid auction. In the Lone State State, when you buy a property at the tax auction, you get a redeemable tax deed. Smith County calls the redeemable tax deed a “sheriff’s deed.” The name does not matter. What matters is, if the owner does not redeem the property, you own it. If the owner does redeem the property, you earn interest on what you invested. The Smith County tax office says “The owner may redeem the property at any time up to six months to two years after the sale. The redemption period varies for each property according to the type of property, the length of time we have been trustees, etc. When an owner redeems the property, he must pay the investor the amount paid at time of sale plus 25% and any costs of sale during the first year of redemption. During the second year, the investor is entitled to the amount paid at the time of sale plus 50% and any costs of sale.” Homestead and farmland properties have a two-year redemption period. Other properties are limited to six months redemption. More than 95 percent of all properties in a hybrid auction state like Texas are redeemed.

It Starts With a Texas Tax Lien

In all cases, the process starts with a lien. The local tax collector puts a lien on the property for the back taxes. The property cannot be sold, transferred or refinanced as long as this lien is in place. When the lien goes to the sale, it becomes a tax lien certificate or a tax deed, as I explain above. Here is a more detailed discussion on a tax lien certificate. Learn more about tax deeds here. Now, let’s talk about what you need to know about investing in Texas tax lien sales.

Before Bidding at a Texas Tax Auction: Do This

Your homework is critical to your success as an investor. In short, learn as much as you can about a property. The real estate information website Zillow is a free resource. It is one of the top websites for real estate. I have videos on my website that teach you how to use Zillow. You need to know if the property is worth at least the minimum bid at the auction. Sometimes you may find the property is not worth buying. If that is the case, walk away. Find another property or another auction. Tax lien sales are held every week across the nation. If the property appears to be worth at least the opening bid, then do more research. Start with Zillow. If you can, drive by the property. If you cannot go see it in person, call a real estate agent in the area and ask for a professional opinion of the property’s value. Call the county’s Building Department and see if they have any information. You must know what the property is worth because the tax collector does not give you that information. “All sales are sold ‘as-is’ to the highest bidder on a ‘Buyer Beware Basis’. Any and all questions concerning the properties offered for each sale should be directed to your attorney. The Sheriff’s Office will not answer legal questions,” says the Denton County tax collector’s office. A few other things you want to know about Texas tax lien sales are:
  • The size of the property, including the heated square feet in the home and the lot size.
  • The neighborhood. This will tell you about the area you are investing in.
  • Your total. You need to know the minimum bid and then decide how much more you will spend to get the property. Stick to your budget.
I wrote an article on LinkedIn that goes into more detail about the homework you need to do and what you need to learn.

You Must Understand Texas Property Auction Rules

Every state holds tax lien sales. The laws in every state are different. Every county then has its own rules about the auction. You must know these rules. The Texas state legislature created the set of laws that every Texas county’s rules are based on. Much of the code section deals with the technical aspects of Texas tax lien sales and the right of redemption. A major part of the law is you cannot owe past-due taxes in the county where you want to buy a property at the sale. Another Texas tax lien sales rule is once you buy the property, you are the owner and have a right to go on the property. This is different from Georgia, another hybrid state.Georgia’s tax deed does not give you permission to go on the property until you complete a foreclosure process. Let’s take a look at two different Texas counties so you will better understand what I mean.

Example 1: Williamson County

In Williamson County, the tax office makes it easy for you. The tax collector posted the complete list of rules on the county website. Here are highlights:
  • Tax sales are held 6-8 times a year, not every month as in some counties.
  • The law firm McCreary, Veselka, Bragg and Allen handles the sale.
  • This is an in-person auction. You have to be there or have someone represent you at the sale.
  • You have two hours after the sale to bring the money to pay for your winning bid.

Example 2: Galveston County

Galveston County also has a list of rules. Here are the key differences that set Galveston County apart from Hill County:
  • Online only. While the county uses the Linebarger Goggan Blair & Sampson law firm to oversee the sale, it uses Real Auction as the online platform. This means you can be anywhere in the world with an internet connection and you can participate in this auction.
  • You must register with Real Auction.
  • A bid deposit is needed. You need to know the maximum amount you plan to spend and then send five percent of that to the Galveston County’s Sheriff’s Office.
  • You have until 4:00 p.m. on the day of the sale to wire the full payment to the Sheriff’s Office.
Learn more about the rules and where to find them on my website in this article I wrote.

What Are ‘Struck-Off’ Properties in Texas?

Sometimes property does not sell at Texas tax lien sales. If that happens, the real estate is listed as “struck-off properties” or “resale properties.” You can find some great deals in these sales if you pay attention and do your homework. Here is what happens:
  1. The property is offered at the regular auction. It does not sell.
  2. The tax collector prepares a deed for the local Board that collects taxes on that property. In Texas, several local Boards can collect ad valorem taxes; they are: the county, school board, special tax districts and if the property is located in a city, the city can collect taxes. Ad valorem is Latin for “according to the value.” Property taxes are sometimes called ad valorem taxes because the amount of the tax is linked to the value of the property.
  3. This deed is offered for sale at a later auction, usually at a lower price.
Be very careful here. If the property did not sell at the regular auction, it may not be worth the original asking price. This is why doing your homework is so vital. You must know if the property is worth what you want to invest. Here is a recent example of a resale property for Beaumont, TX. The address is 760 Madison Ave, Beaumont, in Jefferson County. Jefferson County is a Gulf Coast county. The tax collector uses the Linebarger Goggan Blair & Sampson law firm to handle its tax sales. The law firm’s information on the property says it has an assessed value of $29,290. That may sound low, especially for a property so close to the ocean. Do your homework. Zillow’s estimate says the home is worth $35,596. Pictures on Zillow show a maintained yard and a house that needs some roof work. Neighborhood pictures with Street View show an attractive community. Nearby homes are selling for twice as much. Going into the struck-off sale, the property did not have a minimum bid. If you’d like to get started today, you can begin now at no cost by taking advantage of Ted’s FREE Master Class. It’s only about 1 hour of streaming video and will open your eyes to the incredible opportunities available in tax delinquent real estate investment.

 Beware of Other Taxes Owed on the Property

An important part of tax lien investing is other taxes owed on the property. You must pay off all the past-due taxes on the property. The auction may only cover one of the tax-collecting local boards. You need to find out about other taxes and pay those too. If you do not pay these other taxes, those taxes might be sold at another auction. If someone buys the taxes at that auction, it can jeopardize your investment. In Texas, homes and farmland have a two-year redemption. While you hold the Texas tax deed on these properties, more taxes will come due. Pay those taxes. You get to roll that into what you spent at the auction. The owner has to pay you interest on those taxes as well to get his house back.

How to Find a Tax-delinquent Properties List Near Me

Finding a tax-delinquent property list is easy. Pick a county. Texas has 254 counties that range from plains and desert in the west to resort communities along the Gulf Coast and metropolitan areas like Austin, Houston and Dallas-Ft. Worth. The counties range from small rural places like Dallam County with a population of 6,900 people to Harris County with a 4.2 million population. The county’s demographics and size are not that important unless you are looking for a home for yourself. If you want a place to live, then you must look for sales in the place you want to live. If you are interested in making a big profit then all you need is an auction and money to invest. Once you pick a county, then find out when the next sale is scheduled. Texas law says the sale must be announced in the local newspaper a few weeks before the auction. Most newspapers have websites and you can read their legal or public notices at the website. The easiest way to find an auction to invest in is through Texas Public Notices. Most newspapers in the state put their public and legal notices, which includes announcements of Texas tax lien sales, on this website. Just type “tax sale” into the Search For box and leave the rest of the boxes as they are. You will get a list of upcoming Texas tax lien sales for the various counties. Open the legal notice and start reading. If you find something worth investigating, you may need to go to that county’s tax collector office to start your research. Many times the sale announcement does not give a street address. It lists a deed book number or county parcel number. Go to the county’s tax collector website and look for the parcel or map viewer. Go to that webpage. Now, take the property’s parcel number and put that into the search bar in the parcel viewer website. This gives you the address. With the address, you go to Zillow to start your research. My website has articles and videos to teach you how to look up property to get the information you want and need. If you’d like to get started today, you can begin now at no cost by taking advantage of Ted’s FREE Master Class.  It’s only about 1 hour of streaming video and will open your eyes to the incredible opportunities available in tax delinquent real estate investment.

Texas Tax Lien Sales FAQs

Two of the most common questions I get are “How much money do I need to start investing?” and “Is this really safe?

How much money should I have before I start investing?

There is no set amount you need. Properties can sell for less than $1,000 to more than $100,000 depending on the property and the competition at the auction. The City of Dallas posts results to its website. One of those sales saw a property with an opening bid of $2,000 sell for $3,105. Four bids were received. The same sale had another property with an opening bid of $5,000 sell for $33,000. This property drew 18 bids. The small home is now valued at $106,500 by Zillow.

Are tax lien certificates a safe investment?

Yes, tax lien investing is safe. The US Supreme Court has ruled several times that the tax collection process that ends with selling the property to collect the past due taxes is legal. Each state’s supreme court has also ruled the same. These various court decisions have refined the tax sale process, which just makes it safer for you.

Texas Tax Lien Sales – a Solid Investment

Tax deeds are also a solid investment. A tax deed is backed by real estate, something you can see and touch. If you buy stocks or bonds, you are essentially buying a promise. The promise, made by someone you will never meet, is “We will make money and give you part of it.” ABC News reports investors lost $1.5 trillion dollars when Enron went bankrupt. Not too long ago, small investors drove GameStop stocks through the roof and cost major investing houses a lot of money. Many of these small investors also lost money. Commodities are something you can see and touch. The problem with commodities is you have to do something with them. You can buy soybeans on the futures market. When the harvest comes in, you hope the market is high enough to let you make a profit by selling your soybeans. If not, you can pay someone to store those soybeans, which eats away at your profit. Or, you can sell the soybeans to break even or lose money. In real estate, your expense is property taxes, which are tiny fraction of the real value of the property. Furthermore, if you own the property as you can in Texas when the owner does not redeem the house, you have rental property. You can have a monthly income. In many cases, that rent will pay back your investment in less than two years. Ask your stockbroker to provide you with a monthly income that repays your initial investment in two years. Click here to see eight reasons why tax sales are such a good idea. You may have more questions. I have a Frequently Asked Questions page to address the top 25 questions I get.

Texas Tax Lien Sales – Learn More With a Free Master Class

If you’d like to get started today, you can begin now at no cost by taking advantage of Ted’s FREE Master Class. It’s only about 1 hour of streaming video and will open your eyes to the incredible opportunities available in tax delinquent real estate investment.

Ted Thomas

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.

The Ted Thomas Difference:

  • Ted is recognized as America’s Tax Lien Certificate & Tax Deed Authority and has been helping people with investing in tax defaulted properties for over 30 years.
  • Ted has built a team of certified coaches that have 70 combined years of auction experience and are available to his students by phone to guide and mentor you to avoid getting overwhelmed or worse, losing money
  • Ted has ironclad PROOF that what he is teaching you does work. With hundreds of successful students providing testimonials and a 4.9 Google rating which is unheard of in this industry.
  • Ted and his staff don’t hide behind a website; they can be reached during office hours at 321-449-9940.

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