Tax Lien Deeds Are Different
A tax line deed, what is so different about that from a tax lien certificate? With a deed, as its name implies, you get title to the property in question. In the event the owner is unable (or unwilling) to pay the taxes on the parcel, the county will offer some sort of tax lien for sale at a public auction. In some municipalities, it is a deed.
Now, as an investor, there are a number of things to consider when bidding on a tax lien deed. First and foremost: do your homework. At the county courthouse, check out the property appraiser's office, and look up the property. If there are any improvements on the lot (e.g. a home, an office, a free-standing garage), it will be listed there.
In many cases, the property appraiser has a website and you can look up anything you like there. Next, you want to make sure the property is free of any other encumbrances: judgments, mortgages and other liens. The best way to discover this: do a title search through the Official Records for the county. You can do it yourself, or hire an attorney or a Title Company.
Once you settle on a property, find out when the auction will be held, and where. Again, most municipalities hold them once a year at the courthouse, but it can vary. Next, take care of any paperwork, often you have to register in order to make a bid. With a tax lien deed, you simply bid higher and higher, and the highest bid wins, very much like the old-fashion type of auction. Now, this is important: payment must be made once the auction is over. In some places you're allowed one to two day to present cash, a cashier's check, a credit card or some other form of payment. The point being, you have to pay as soon as possible. If you refuse to honor the bid, you may end up being essentially "blacklisted." At a future auction, the trustee could refuse to accept your bid. After payment is made, you receive a deed that gives you title to the property. Now, there is the possibility you'll still have to take action to get actual possession of the property, if the previous owner is still in the residence. What type of action depends (again) on the municipality. As an example, in Florida, you will have to go to court and present the deed in order to get final possession. So, when considering tax deed properties, following the old axiom: caveat emptor, "buyer, beware." So, a tax deed does have its plus: you get title to the real estate immediately. However, its drawback is a reduction in your profit. Since you are paying not only the back taxes, but for the property, you can end up paying quite a bit. Also, this is where homework comes in. If you find out that the land has a home on it, go out and take a look. Last thing you want is to find out that the four-bedroom ranch home you saw listed on the property appraiser's website is a broken-down wreck of a hovel. Putting forth a little effort, thoroughly checking out the properties you are interested in, and walking into the auction ready to go, will increase your chances at turning a tidy profit.
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