Im new to all forms of financial knowledge but recently have been reading a lot of finance and investing books as well as paying off all my debt except for the duplex I purchased.
I read the 16% solution and it was great but didnt really apply much to Texas and I have read quite a bit online but I still have a few questions.
Can you recommend any place (book, website, etc) to find Texas specific information or at least info that applies?
Have any of you purchased or seen reviews from http://www.reiclub.com/products/174 Texas houses for pennies II… I dont know if its a good deal at $200 or if its just a hyped up Guru… He does offer your money back but id rather not go through the hassel… its also a few yrs old. But it is exactly what I am looking for and if it is worth the $200 I would have no problem paying it.
My last question is about the 25% fee in Texas, So if the taxes owed are $1000, and the bidding goes up to $5000, do you get the 25% of only the $1000 or of whatever you bid on it and what ever else you spend?
After the sale and for a specified period of time, the delinquent taxpayer has the right to buy back or “redeem” the property. This is called the right of redemption. In many cases, this redemption period may be as short as 180 days for certain property types in Texas. If the delinquent taxpayer does not redeem the property during the specified time, the successful bidder is entitled to the property regardless of the purchase price.
If the original owner exercises their right of redemption, the delinquent taxpayer must pay the investor an interest penalty charge in order to redeem. This interest charge could be as high as 25 percent in the first year or up to 50 percent for second-year redemptions. What this means is that the investor will generally get back the original investment plus the interest penalty charge.
If the delinquent taxpayer wishes to redeem, they must pay a penalty return within a certain amount of time. Generally, in Texas the period is either 180 days or 24 months. The amount of time will depend on the type of property that is sold at the tax sale.
Try this site…their info seems to be good. Use the pull down menu on the left and go through and read all about TX tax liens. I do not have any interest in or know the site, just looked it up to try and assist you.
Tax deed and tax liens are IMO excellent investments…HOWEVER…like any other form of real estate you can get badly burned. I have been doing this for long time…and YES…have been burned a time or two.
Invest for the interest and penalties ONLY…do not expect to get a bunch of property for pennies on the dollar. If you do get a house it may well be a burned out crack house and you do not want to fool with trying to rehab it under current EPA Guidelines!
I am a real estate investor in Dallas, and I have been to several real estate tax deed sales.
I bought this book - Complete Guide to Real Estate Tax Liens and Foreclosure Deeds: Learn in 7 Days: Investing Without Losing Series - from Amazon.com and it was somewhat informative. After that I did some research online, and just started attending the tax sales to see what they were like.
Based on my experience, most of the good properties up for auction will be removed prior to the sale. That usually leaves nothing but the worst of the worst properties left over…or ones with child support or IRS liens which are not extinguishable! BUT - don’t let that get you down - deals can still be found though. I think the reasons most of the good properties are removed from auction are (a) people getting property tax loans, (b) investors stepping in and buying the properties for the cost of the property taxes PLUS a little profit for the (probably) broke property owner, and in turn paying off the property taxes prior to auction, among other things.
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 (homesteaded or not if I remember correctly). 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.
A Quit Claim deed only transfers the interests of the person issuing/signing the deed (the grantor). It makes no “warranty” that they have 100% of the interest in the property. It also does not make any “warranty” as to the status of the property title.
When are QC deeds used? Because of this lack of warranty, quitclaim deeds are most often used to transfer property between family members, as gifts, placing personal property into a business entity (and vice-versa) or in other special or unique circumstances.
Lenders also use a QC deed at auction to transfer their interest. But, suppose that the property had more than one loan and there was a foreclosure from HOA and a tax lien. In the end, you will only receive ownership of that one lender’s interest. All the other interests also have a claim on the property. To gain full ownership, you will have to buy out all of the other interests.
Thus, buying on a tax sale, auction or sheriff sale can get you some good deals, you have to do you research and know exactly what you are purchasing. Plus, you need to be prepared to have 100% of the purchase price within 24 hours.