It seems like every time you get up for a good ‘ole 3 a.m. snack these days and flip on the tv, you’re bombarded with a new real estate “guru” trying to convince you that the next big cash cow is buy properties at tax deed auction- that is, properties the government has seized for non-payment of taxes. John Beck was recently “outed” for having deceived his audience with the pictures of the beautiful properties supposedly purchased at tax deed auction for $1000- or less. As they say, if it looks too good to be true, it probably is. Here is why tax deed auctions SEEM like the place to get a great deal- but actually are a huge waste of time.
First off, what you see isn’t always what you get. Each state is different, but in many states, you don’t get to inspect any of these properties until AFTER you’ve bought them. There’s no way to know the proper condition, and thus no way to really know how much you should invest in them. Furthermore, oftentimes you don’t get immediate possession of the property once you’ve got the deed- and in some states, you have to buy a lien against the property, wait for the time for the owner to pay off the lien to run out, and THEN apply for a deed. In this waiting period, any number of things can happen to the property. Even if you were reasonably sure when you bid that it was a nice property you were trying to buy, by the time you get it, it may be in considerably worse condition than when you first bid on it. Not to mention, if you’ve been around for the last several years, you’ve seen what can happen to property values in the midst of an economic downturn. Yikes!
Even if that weren’t the case, your odds of actually getting a property or a lien at one of these auctions is very small. With all the publicity tax sale investing has gotten in recent years, sales/auctions are filled to the brim with other bidders like yourself. By the time the bidding is over, most decent properties have been bid up close to retail value. You’ll be bidding against big companies that spend all their time researching these properties, and who can afford to make less money on their investment, just because they have so much of it. Unless you’ve got tons of cash, chances are you can’t compete.
I know this will surprise you in light of the above statements, but… I still think tax sale property holds the best opportunities to get great bargain properties you can make a lot of money on. JUST NOT AT TAX SALE. It’s a system called “deedgrabbing”, involving little-known loopholes to get properties before the auctions, without bidding, without almost ANY competition (it’s a pretty well-kept secret), and yes, for VERY little money.
Want to learn the secrets of deedgrabbing? Go to deedgrabber.info.
Olliver Kennedy is a successful entrepreneur and real estate expert.
[tags]tax deed auctions, tax deed auction, tax auction, tax sale, tax deed sale, tax lien auction[/tags]
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