Tax Liens in Texas

We have all seen and heard ads about buying property for pennies on the dollar as tax liens/deeds. Like most things, it may not be as quick and easy as it sounds. After just a little digging, here is what I have found.

Texas has sheriff’s sales on the first Tuesday of every month. These are the properties you can bid on. Yes, bid on. It is literally an auction. I took some time to go to one. Since the entire State does this on the same day every month, you’ve already limited your options to bodies at your disposal. By that, I mean, if you are interested in a property in more than one county, you may have to<gasp> convince your spouse, parent, kid, sibling, or bored friend to help…….’do your bidding.’

In addition to this, each county plays by their own rules. You would be wise to learn these before you go. You may have to pay by an acceptable means immediately, or in a timely matter. Digging into it, I have found variance on this simple matter. Some will allow personal checks, some do not. Some allow cashier’s checks. Some will swipe your card. Some allow 24-48 hours to pay up. Some expect the payment right away.

Another problem for investors is that you do not get a solid survey of the property. You can get an address and location. You can drive by and get the street view. That is about it. Yup. It’s a house. Yup. It’s just a big chunk of dirt. You can’t tell from the street that the plumbing in the second bathroom need works. The furnace could be shot. You just don’t know about whether that’s a pile of junk in the back yard or a cleverly disguised meth lab.

Buying a tax deed does not guarantee you get the property. There is a buyback period where the owner can buy it back. If this happens, you receive the cost of the deed plus some interest. If the owner does not buy it back, there may be additional liens from a bank or other creditors to deal with.

If you do get a clear deed, you may have the owner or even a tenant living there. Depending on your business strategy or your intended purpose for this property, you may need to evict, or write a new lease. Both will take time. If your business model is to get the lien and have the owner pay it back, remember, there is a reason they are behind in the first place. You might get stuck with a property you don’t really want.

The positives for this type of acquisition are that the sales are mostly predictable. You can get lists and use a solid month to research the property. You can hire an attorney to help with this. You can walk in knowing what you want to bid on and how much you are willing to bid. You can watch the lists month over month and see what goes unsold. You can do this to peek at what others are bidding on. If a property stays on the list too long, some counties lower the opening bid. If you go to the same auctions month after month, you might see the same faces making the same type of bids. If you are serious and track this, you will know your competition for these properties. If John keeps his bids between 10k and 20k, you can bid around that to avoid competing with investors who have more resources. If John only buys one at a time, you can wait until he spends his money and low ball the next one on the list.

Billy Blogger

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