First of all, you will need to have a lot of cash on hand if you want to bid and buy. If you’re a winning bidder, you’re required to pay for your new property or lien, in cash, right then and there. You can get started investing in tax sale property with only a few hundred dollars, if that’s all you have, and there’s no good reason to go the tax sale route. If you do have a big amount of cash, even better– but you still won’t want to bid at tax sale.
This is because you’ll frequently find yourself bidding against agents from large investment firms. These companies are simply better equipped and have more money to invest than the average investor– meaning that they can afford to bid a little more than you can, and take a smaller return on their investment than you. It’s rare for the average Joe to even be able to win the bid profitably at tax sale.
Not only that, but if you do somehow end up bidding and winning, it’ll be on a property you haven’t had a chance to inspect. You can’t legally go inside these tax properties beforehand, and anything and everything may be wrong with them. This is a risk few new investors should be willing to take. Nothing will sour you on property investing more quickly than ending up owning a money pit that costs you money rather than makes you money.
A much better way to invest in tax sale properties exists, but few investors take advantage of it. Why? Maybe because it means they have to do more work. It involves more than just sitting at a computer or attending an auction and raising a paddle… but more likely, it’s because they simply haven’t figured it out. It’s easy and surprisingly obvious: contact the tax delinquent owners yourself before they lose the property, and make a deal to buy their property!
Contrary to what you might first think, the owners of these properties are often happy to hear from an investor who wants to help them out of tax delinquency. The last thing anyone wants is to see their home lost to tax sale, and when the sale date or redemption date is drawing near, often these tax delinquent owners are primed and ready to get out of the sticky situation they’re in with a little money, rather than lose it all to the government.
Another surprising thing you’ll find out as you do this is many of these owners simply got tired of the burden of home ownership, or never wanted to own the property in the first place (heirs and spouses of deceased former owners). You’ll find ex-landlords who got tired of the deadbeat tenants, family members who got tired of their deadbeat relative tenants, and people who bought property on a whim, didn’t get as good a deal as they thought, and let the property go tax delinquent– on purpose!
The thing all these tax delinquent owners have in common by the time the sale rolls around is this: they are ready to sell to you, quickly, and for much, much less than you’ll pay bidding at the sale.
This little-known method of investing in tax foreclosure properties is known as “deed grabbing” amongst the small number of real estate investors that practice it. It’s not difficult to do, and due to the current economic climate, there are more tax foreclosures than ever before, and will likely continue to be for some time.
To learn how to determine which properties will be good investments, how to find their owners, and what to say to them once you’ve got them on the phone, go to http://deed-grabber.com.
To take a free deed grabbing mini-course via email, visit http://getdeedsnow.info.
M. Dawson is a Chicago area writer, real estate investor, and entrepreneur.
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