Tax certificates result from properties that the owner has not paid the taxes on. Therefore, the government puts a lien on the property and lets you pay their taxes for them. You receive your money when the owner pays back the taxes. If the owner doesn’t pay the back taxes, you could receive a great 3 bedroom, 2 bath home for $5,000!
To start investing in government property 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 property tax sales. (Keep in mind that different counties and states call the government property 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 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 tax deed 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 tax deed sales, 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 tax certificate 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, 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.