Government Tax Sales-How To Begin!

Government Tax sales are a result of properties where the owner has failed to pay their property taxes.  When this happens the local government places a tax lien on the property and allows investors to buy the tax lien certificates ( which is just a piece of paper listing how much tax is due).

The investor will then get the money back when the home owner makes good on his or her taxes.

Now if the homeowner does not pay their taxes you could own the property for the amount of the tax owned.

To start investing in government tax sales, first you need to find your county’s property tax website or contact information. To do this, go to Google and type in your county and state + “property tax collector”, “property treasurer” or “property taxes”.

Once you locate your county’s property tax office, look on their website, email or phone them and find out where you can find a list of their “delinquent tax properties.” (sometimes it will be on their website, or in a local newspaper). Also ask when their tax sale is held and for a copy of the rules of their government tax sales. (Keep in mind that different counties and states call the government tax sale by different names such as: tax deed sales, tax lien certificates sales,and tax levy sale…but they’re all the same thing.)

Once you have found a list of the properties available, you should find out which real estate properties are valuable for you to bid on at the tax deed sale and which ones you should cross off the list. To do this, visit your county’s property appraiser website and search the public records for each property listed in areas that you desire.

Most counties have this info online. If your county doesn’t, then you must go to your county property appraiser’s office to look at paper hard copies of the delinquent property records. Overall, the best properties you should focus on are the ones with the lowest risk and easiest potential to sell in case you end up owning the property.

You should avoid vacant land as a beginner because this is the riskiest. Single family homes in decent to good neighborhoods are a safe bet and should be your focus. Begin to narrow down your government tax sales list to properties you are interested in according to area, recent sales history, and estimated home value.

To find the estimated home value of a property look on your county’s property appraiser records website or do a search in Google for home value search or use a website such as CyberHomes to get an idea of the estimated home value.

Take your list of the best properties and go visit them in person. Get a feel for the neighborhood, the outside of the home, take pictures and notes. I can’t stress this enough. It is critical that you visit the property.

I have done research on properties that looked like gold mines on paper, but when I actually saw the home in its current condition, I found that a car had wrecked into it and took out the brick wall side of the home!

Believe me, you will thank yourself for spending the extra time to visit the property. Once you get a few tax lien certificates or government tax sales under your belt, you will be able to quickly analyze and pick the best properties.

Before you go to the tax lien certificate auction or government tax sales auction, you should already know what properties you want to bid on, and what your maximum bid will be. (As a general rule of thumb, you should always keep your max bid to at least 60% or less than estimated market value of the home to leave room for profit and unexpected repair costs, etc.)

If you win the bid for a government tax sale or tax deed and the delinquent owner pays his taxes, you can expect a nice return on your money sometimes 20% or more! If the owner doesn’t pay his taxes, you could find yourself becoming the owner of a new new piece of real estate that you got a a bargain price…thanks to your effort and research.

Either way, investing in government tax sales if you do it right, it could be a win-win outcome and an exciting project. Much safer than investing in stocks, and a much greater return on your investment than a bank savings account.