Investing in tax sales

There is only one reason to consider investing in tax sales and that reason is to make money.

The question is - can you actually make money in tax sales? There are all kinds of people out there selling "training" programs about how to make money from tax sales, but how good are they at doing their job, which is training you to be able to make money from tax sales?

Tax sales can be very profitable. I have been investing at tax sales for over 20 years now and I have averaged well over $100,000 a year doing so, but I made a lot of mistakes at the start. There were not any of the tax sale "gurus" around when I started, which was probably a good thing. I had to learn on my own.

What do you need to learn?

1. Where and when are the tax sales held?
2. What are the properties that are on the sale?
3. What are the rules of that particular sale?
4. How do I research the property?
5. Once you buy a property, what next?
6. How do I get title to the property if it doesn't "redeem"
7. How do I sell the property (assuming I want to) once I have one?

Any training program should give you all of this information, but do they? Based on what I have seen, the answer is no. Why is that? The reason is that most of the "gurus" have never actually been in the tax sale business. They are great at "marketing", but not very great at telling you how to do it because most haven't done more than buy a few tax sale properties so they could say they had. On top of that, they want to charge you many thousands of dollars to teach you what they don't actually know.

First rule - You check out the guru who wants your money.

Go to a website called RipOffReport.com and check out any guru that you are considering buying a program from. If they are not listed on that site it doesn't necessarily mean they are great, but it is a start. If the company is trying to sell you "coaching" or "mentoring" be aware that the coach or mentor you are working with will probably never have done it at all.

Second rule - don't spend more than $2,000 for training

I don't care how much you think the salesman you are talking with is great, do not pay anybody more than $2,000 for a training course, ever! You can take a full semester of a university course at one of the top colleges in America and you won't pay more than $2,000 for it. These folks aren't worth any more than $2,000, most of them are not worth that. On the other hand, don't expect some package of books and tapes that costs less than $100 to be worth much either (normally they sell those just to get your phone number so they can try and sell you some $5,000 plus package).

How do you find out what you need to know?

When are the sales and how do you get the list? You can find out where the sales are held, when they are held and get lists of properties these days by using the internet. Most of the taxing jurisdictions have web sites and you can contact them that way. Another source I use is a website called www.taxsalelists.com, which posts several thousand tax sale lists, along with sale dates each year. They do charge for the lists, but the cost is fairly nominal considering that their lists are in Excel, whereas most of the lists you will get from the taxing jurisdictions are just newspaper lists and the taxing jurisdiction will charge up to $5.00 just for sending you the newspaper.

What are the rules of the sale? Each state has different rules and sometimes the taxing jurisdictions within a state will treat the rules differently. This is where a good training course can help so you understand the different bidding methods, payment methods, etc. A lot of jurisdictions do have a "term" sheet for their sale, but some of them can be a little confusing.

How do I research the property? This is another area where a good training program is very helpful. Unfortunately, there are only a couple and I have provided links to a couple below. You can use a website, www.searchsystems.net to find the assessor's sites for the jurisdiction, which can help a lot getting you the basic information, but you need to know how to evaluate the property you are interested in.

Once I buy a property, what next? This is an area where most of the "gurus" fall short. There are a number of things that will happen between the time you buy a property at the tax sale and you actually get the property or you get paid back your money with interest. Again, a good training course can be useful here.

How do I get title to the property? The "gurus" want you to think that they (the taxing jurisdiction) just gives you the property if it doesn't "redeem". That is not true. There are specific steps you have to go through to get the property. They vary by state and vary by degree of difficulty. Some states you just send a check for "costs" to the county treasurer and in other states you have to go to court. Again, a good training course can help here.

How do I sell the property once I get it? This is the easiest part. If you acquired a property through a tax lien sale you will have paid a very small percentage of market value for the property. You may have paid as little as 5% of market value and in most places will not have paid 15% of market value. Even in today's difficult real estate market you can sell property all day long at 75% of market value. If you bought a property at tax sale that is worth $100,000 that means you may have paid as much as $15,000 for it and you are selling it for $75,000. The only question you have then is how many times can I do it again.

I have put some links below that I think you will find useful.

Have a great day.