Can you actually make money in tax sales? There are all kinds of people out there selling "training" programs claiming that they will teach investors how to make money from tax sales, but ultimately most of them are worthless?
- Where and when are the tax sales held?
- What are the properties that are on the sale?
- What are the rules of that particular sale?
- How do I research the property?
- Once you buy a property, what next?
- How do I get title to the property if it doesn’t "redeem"
- 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 many don’t. The reason for this is that most of the "gurus" have never actually been in the tax sale business. These "gurus" might be great at marketing, but not many can really help you succeed in this business. To get real help, you need to find someone who has actually been in the tax sale business, and been successful. Don’t let these people charge you thousands of dollars to attempt to teach you what they don’t even know.
Second rule: don’t spend more than $2,000 for training. I don’t care how great you think that salesman is, 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 for less than $2,000. These folks aren’t worth more than $2,000, and most of them are not worth anywhere close to 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 contact information, and then later will try to sell you a $5,000 plus package).
How to invest in tax sales
Find a list of tax sales: You can find out where the sales are held, when they are held and get lists of properties these days through the internet. Most of the taxing jurisdictions have web sites, and you can contact them that way. Or you can use a web service like www.taxsalelists.com. Taxsalelists.com post several thousand tax sale lists, along with sale dates, every year. There is a charge for the lists, but the cost is fairly nominal considering their lists come in Excel format – opposed to the newspaper format you will get from the taxing jurisdictions. In addition the jurisdictions will charge you for the records too, so they aren’t free either, and the format is much more difficult to work with.
Learn the rules: 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 you understand the different bidding methods, payment methods, etc. A lot of jurisdictions do offer a "term" sheet for their sale, but some of them can be a little confusing.
Research the property: This is another area where a good training program is very helpful. Unfortunately, there are only a couple good ones, which I have provided links to below. Use the website, www.searchsystems.net to find the assessor’s sites for the jurisdiction. This site can help with 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 when you actually get the property or your money paid back with interest. A good training course, though, can be extremely valuable here.
How do I get title to the property? The "gurus" want you to think that they (the taxing jurisdiction) just give you the property if it doesn’t "redeem" – which is not true. There are specific steps you have to go through to get the property. They vary by state, and some places have a much more difficult process than others. Some states you just send a check for "costs" to the county treasurer, for example, and in other states you have to go to court. Again, a good training course can help here.
Investing in Tax Sales can be very profitable. While It is not rocket science, it is helpful to have some with experience help you get started – just make sure they actually have legitimate experience and success. Also make sure to avoid paying exorbitant fees for this service, and be ready to put in the time to learn the basics. If you apply yourself, and use the tools available to you, you should be very successful.