$275. That's all it took to buy my first tax-sale property, and no, that's not a typo.
It's the reality of tax sale investing, and it's just the tip of the iceberg.
Tax sale properties are the hidden gems of real estate investing.
They offer mind-blowing discounts that can turn forward-thinking investors into millionaires.
But most people have no clue how to tap into this goldmine.
How To Buy Tax Sale Homes?
We are about to change that. Right now.
Tax sales happen when property owners fail to pay their taxes for 3-4 years.
The county auctions off these properties, often at a fraction of their market value.
We're talking 50%, 70%, even 90% discounts.
It's like finding a $100 bill and only having to pay $10 for it.
But before you rush off to the next tax sale with dollar signs in your eyes, pump the brakes.
This isn't a get-rich-quick scheme. It's a get-rich-smart opportunity.
And smart is exactly what you need to be.
Because tax sales are a double-edged sword.
On one side, you have the potential for massive profits.
On the other hand, you've got pitfalls that can swallow your investment whole.
We're talking about properties with hidden damage, legal issues, or environmental nightmares that could turn your bargain into a money pit.
So, how do you navigate this high-stakes world of tax sale investing?
That's exactly what we're going to dive into.
By the time you finish reading this guide, you'll have the insider knowledge to spot the diamonds in the rough and avoid the landmines.
Ready to unlock the secrets of tax sale investing? Let's get started.
Now, there are actually three types of sales that fall under the “tax sale” umbrella: redeemable deed sales, tax lien sales, and what we're focusing on today—normal tax sales.
In a normal tax sale, you're buying the house outright, not just a lien or a redeemable deed.
These sales happen in 31 out of 50 states, and the potential for profit is enormous.
Take California, for example; a property on Christian Lane was bought for $548,000 at a tax sale and later resold for $1.2 million after renovations.
That's the kind of profit margin that makes investors' eyes light up.
But here's the thing: while the potential rewards are huge, so are the risks if you don't know what you're doing.
You absolutely must do your homework before bidding. Why?
Because they sell everything at these auctions – useless land, polluted properties, even completely burned-out houses, and they don't tell you anything about the condition.
So, how do you protect yourself? It's all about due diligence.
If you're serious about bidding, don't just drive by. Get out of your car and knock on doors.
If someone answers, chat with them. Are they a tenant or the owner? What are their plans? And here's a sneaky trick – ask if you can use the bathroom.
It's a great way to get a quick look inside without raising suspicions.
When you're checking out properties, pay close attention to occupancy.
Check if the windows are square (twisted windows can indicate foundation issues).
Inspect the roof for holes or damage. Look for signs of fire damage.
A vacant property could spell trouble if you're buying in a cold climate because of frozen pipes.
If a house has been empty over a cold winter, there's a good chance the pipes have burst, leading to extensive water damage.
Sometimes, an occupied property can actually be a better bet.
Here's a crucial tip: never, ever buy commercial properties at a tax sale.
Factories, warehouses, and dry cleaning plants can have hefty environmental issues that could cost a fortune.
Stick to residential properties to play it safe.
Now, you might be wondering how to actually participate in these sales.
First, you need to find the tax sale lists.
These are usually published online by the county conducting the foreclosures.
A quick Google search like “tax sale list [County Name] [State]” should do the trick.
But here's something many newcomers miss: you need to register well in advance – sometimes up to two weeks before the sale.
You'll need to provide information and possibly make a small deposit.
Don't make the rookie mistake of showing up on the day expecting to bid without prior registration!
One more thing you need to know: these are cash-only deals.
You can't get a mortgage for a tax-sale property.
That's part of why the prices can be so low, but it also means you need to have your finances in order before you start bidding.

Now, let me let you in on a little-known secret: owners can sell their property right up until the tax sale.
This is what we call a pre-foreclosure deal.
If you can strike a deal with the owner beforehand, you avoid competition at the sale and many of the title issues.
It's more time-consuming but can lead to even better deals.
Plus, you might even be able to use traditional financing for these pre-foreclosure deals.
Speaking of title issues, here's something crucial to remember: in almost all these sales, you're getting the property free and clear of mortgages and most other liens.
But there's a catch.
Some liens can survive the sale. The most common culprit is the IRS liens.
If there's an IRS lien on the property, they have 120 days to redeem it.
That means they could potentially swoop in, pay you off for your bid, and take the property.
Now, don't panic – this rarely happens.
But it does mean you shouldn't rush in with a construction crew the day after the sale.
Give it those 120 days, just to be safe.
If you want to speed things up, you can contact the IRS special procedures branch and ask for a release.
They often grant these routinely, so it's worth a shot if you're eager to get started on your new property.
So, is buying tax-sale homes right for you?
The pros are clear: incredible bargains, sometimes as low as 10-20 cents on the dollar, and the potential for huge profits.
But there are cons too. It requires extensive knowledge and education, and there's potential for costly mistakes if you're not careful.
That's why I always recommend finding a mentor.
When I started in this business, I learned from an experienced investor buying tax sales in Philadelphia.
That education was priceless and led to millions in real estate profits.
Find someone who knows the ins and outs of tax sales.
It might cost you, but it's an investment in your success.
Tax sales offer unbeatable deals, but it's not a game for amateurs.
If you're serious about getting into this lucrative business, start by watching tax sales in person to get a feel for the process.
Educate yourself thoroughly before making any bids.
And consider finding a mentor to guide you through the complexities.
Remember, like anything worthwhile in life, success in tax sale investing isn't free or effortless.
But with the right knowledge and approach, you can build an amazing business and acquire properties cheaper than anywhere else.
The opportunities are out there – it's time to seize them!