Why do counties sell properties?
Counties collect money from property taxes to fund various projects like schools, roads, etc. When property owners refuse to pay taxes, the counties are put in a bind. They still need the money for the projects.
After several failed attempts to collect taxes from the current property owners the counties seek payment elsewhere. The come to me and you. They are willing to either give us a nice interest rate (tax lien) or sell the property free and clear (tax deed) for the amount of taxes owed and associated fees.
The starting bid at government property tax sales is almost always the amount of taxes owed and administrative fees which is good news for the investor. Land can be purchased for less than $200. And this isn’t land out in the middle of the desert. It is land in a private community with a golf course or lake.
Tax auctions aren’t limited to just residential lots. They also include:
- Single family homes
- Commercial lots
- Apartment buildings
- Motels
- Hotels
- and much more
Since the properties are so inexpensive, many novice investors think there isn’t much risk. Don’t get caught thinking there is no risk, because there is.
From meeting other investors at auctions, I have heard many horror stories about properties purchased at a tax deed auction. One investor told me he purchased a home only to find out that there was a demolishion order on that home.
Do your due diligence when you are interested in purchasing properties at tax auctions. Many people have the false presumption that if you buy a property at a tax sale, the title automatically is cleaned off of all liens. That is not entirely true. Federal liens are not erased and come with the property so watch out!
There is a lot to know when it comes to tax sales. If you are interested in learning more, visit this helpful site about government property tax sales.
