Buying Tax Delinquent Property Outside the Tax Sale In 3 Easy Steps

If you’ve been considering buying tax delinquent property by bidding at tax sale auction, think again. Besides the fact that you can’t inspect the property before you buy it and the fact that you’ll have to wait at least a year to own the property, there’s one major reason to avoid tax sale: competition, the great equalizer. You will not get a good deal on a great property this way. Here’s a quick guide to buying tax delinquent property outside the tax sale – and for $200 or less much of the time.

1. Buying tax delinquent property is easiest when you buy directly from the owner. Wait to approach them until the end of the redemption period after tax sale. The owners that are still unpaid on their taxes are usually owners that have decided to let the property go; thus, they don’t care much what happens to the deed. This is the state of mind you want them to be in when you offer to buy their deed.

2. Tell the owner that you can’t afford to pay much, but as long as they’re already letting the property go, you’d love to see if you can do anything with it. Offer the owner a token amount – $200. They may be happy just to get a few hundred dollars, but if it’s a nice property or a more savvy owner, they may want more than that. Offer to give them a percentage of whatever you eventually get from the property, but stick with the $200 to buy the deed up front.

3. Quickly flip the property to another investor. It’s best if you have a list of investors interested in buying tax delinquent property; that way you can set up the deal with the new buyer as you’re setting up the deal with the current owner. This way, you don’t ever even have to have your name on the deed – OR pay the taxes. The new buyer can take care of that. You can walk away from a double closing with nothing but cash in your pocket.

This is the right way to go about buying tax delinquent property. And of course, if you want to keep the property and pay off the taxes this is also an option.

If you’re smart, you’ll avoid tax sale, especially with the “gold rush” of inexperienced investors that’s happened since the bubble burst. Use these techniques, and you can begin profitably buying tax delinquent property even if you don’t have a lot of available cash to start with.

By: Maggie Dawson