Texas Tax Liens

Does anyone have any information on how to do tax liens in Tx?

As far as what exactly?

I haven’t done them myself, but this is what I understand …

Counties all have their tax sales on the 1st Tuesday of the month. Counties can and will postpone the sale for a future month if there are no (or very little) properties on the docket for sale. The winning bidder must pay the amount immediately (or is it within 24 hrs?). They get a Sheriff’s Deed, which pretty much warrants against nothing, so you’ll need to do a lot of due diligence beforehand. The deed makes you the owner, HOWEVER, the previous owner can still get the property back as long as they pay the necessary monies during the redemption period. So the downside is you can’t do much with the property until the redemption period ends, because any improvements will be a waste if the previous owner redeems.

If it’s an agriculture or homestead property, the previous owner has two years to redeem, otherwise it’s six months.

The good thing about Texas (if you’re an investor - not the previous owner) is they tack on a 25% penalty, which includes premiums paid by the investor. For example, if the property has a bid price of $5,000, and you win the bid at $10,000, the owner must pay $10,000 + 25%, or $12,500 to redeem. However, you only bought the property for $10,000, so you automatically get a 25% ROI after the first year, and 50% if it’s in the second year.

PEP, note - Texas is a Tax Deed state. Not a Tax Lien state.

You actually get the deed, including the right to possession and occupancy, instead of just a lien on the property. You can rent it out and keep the rents, subject to the rights of redemption mentioned above.

And like Stephen said, the 25% and 50% figure is a penalty, not an interest rate. If you can get the owner to exercise his right to redeem in the first month after you buy the tax deed, you get a 25% return on your investment in one month. Not too shabby!

You might also get the prior owner to sell you his right to redeem.
Then you don’t have to worry about the redemption period.

Also, you might want to get the right of redemption on a property that someone else bought at the tax sale, if the numbers are still good. That way you can redeem the property. Of course, you might make someone mad at you if they really wanted the property instead of the penalty fee. Oh well…