What to do with your tax auction purchase. After you buy a deed or a lien, you may be wondering what to do with your tax auction purchase. If you purchased a tax deed, that answer is pretty simple. You either sell the property, develop it, if it is a home you could fix it up and rent it out, or live in it.
There are a handful of companies that buy tax deed properties in bulk and sell them to investors way below market value. This was a profitable venture when real estate prices where on the rise, but with the downturn in the economy properties aren’t selling as much as they were before.
The companies that would buy several tax deeds, or Land Banks, would often sell on eBay or offer training on how to buy the properties, but the real goal is to sell land to investors. There was a prominent company that followed this type of strategy. They sold a training course that briefly went over the tax deed and tax lien process, but they didn’t teach a person how to find, research, buy, or sell tax properties. Their goal was to overwhelm the investor so they would buy land from the company rather than buy land from the tax auction.
If you purchase a tax lien there is more you can do than wait until it is redeemed or foreclose. Those are the more obvious choices, but following the same principle as with tax deeds you can actually sell your lien to somebody else.
You can find tax liens for sale on eBay and other sites, but what a few investors will do is form investment clubs. In these “clubs” they offer the members discounts on tax liens and sometimes tax deeds. The club organizers will purchase the liens and then sell them to their members advertising risk free investing.
This strategy is transparent because the club members know the organizer buys the liens cheaper, but they do all the leg work. In most cases, they aren’t trying to sell them education that is intended to overwhelm them so they will give up on learning to do it on their own and buy from the organizer.
If you are ambitious there is a lot of money to be made in reselling tax properties after you purchase them. However, there is also a lot of money to be made by holding the liens you buy and waiting for them to be redeemed.
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