My sister and I are trying to get into real estate investing, and we are wondering if tax deed sales would be a good place to start. I just started a job in the offshore oil industry that keeps me on a boat for weeks on end. Our preliminary plan is to send most of the money I make to her (I have very few bills, no rent or mortgage payment) and have her use the money to buy tax deeds. We plan to focus on texas, although we live in the st. louis area. Is this a good plan? Our main questions are:
-
Is tax lien/tax deed investing a good way to get started in real estate investing?
-
What’s the average rate of return for tax deed purchases in texas? I have heard some people say that tax sales are a waste of time because the bidding is too competitive to make a decent return.
-
What percentage of purchases result in the purchaser taking possession of the property?
-
Can you borrow money from a bank to use to purchase tax deeds?
That is a possibilibty. However you need to do your due diligence in the state you are liiving in. Typically there is a tax collector, and property approaiser. They may be called different things in different states. There is also a huge diffference in the percentages in each state. For ecample IOWA has 24%, Florida has 18%, Arizona has 16% return. However this is not per month, rather per year. To get the monthly rate, divide by 12. and its csimple intest i believe. You dont need to buy at the auctions because you can get auction fever and go overboard paying for the deed/lien. Oh year, the states are split more or less into tax deed states like California and tax lien states like AZ and FL. Howefver florida acts like a tax deed state when you decide you can get the house after 3 years of no payment by the owner. Apply for deed, but florida law stipulates that each house must go to auction!!! Google the internet to learn more about this. I will say this, I learned more from John Becks courses than Ted Thomas. The major drawback for Ted is he is very flambouyant, i dont have aproblem but his prices are astronomical. I did sign up for more information about his courses and got a lot of good information. Being a computer geek actually help me ferret out more information about the process. Sometimes on ebay you an find deals about the taxdeed/tax lien certificates. I have bought bouth in Arizona and Florida. I
In answer to your question, Darius B. knows his stuff as well. I listened to the audio presentations and learned a lot from them. Text is very intersting. The moment the property goes to the auction. the Homeowner has 6 months(as long ias it is not homesteaded). to redeem. at the end of the time. you hve to do a few more thnigs to get the property. The intersteing tewist is anytime in that 6 months, the owner needs to pay a lump sum of 25% of your purchase price, It could 1 day after the sale or 6montnts down the road. The other intersteing item is that if it is homestead(somecne correct me if I’m wrong), 6months and 1 day to 12 months down the road, if the homeowener decies to pay, it goes upt to 50% of the prices!!!
4) In answer to this i’m not sure, but you can use a self dirfeected IRA to buy tax liends. I just leanred about this recently going to REI meetings.
Sorry this is long winded, but you asked a lot of questions.
f you wantmore information email me directly. Hope this helps.
Steve