If you're looking to score big in real estate, you need to know about upset tax sales.
But they're not for the faint of heart.
These sales, unique to Pennsylvania, offer a golden opportunity to snag properties at jaw-dropping prices.
We're talking about potentially getting houses for half price or even less.
Does this sound too good to be true? Let me break it down for you.
What Is An Upset Tax Sale?
Upset tax sales happen in the third week of September in all Pennsylvania counties except Philadelphia.
This timing is set by state law, so you can mark your calendar well in advance.
But this is where it gets interesting – and a bit tricky.
Unlike standard tax sales across the country, properties at upset tax sales don't necessarily come free of liens and mortgages.
This is the key difference that makes these sales a whole different ball game.
When you buy a property at an upset tax sale, you might be inheriting someone else's financial baggage.
That mechanic's lien is still there.
The judgment against the previous owner? Yep, that's now your problem too.
This is why due diligence is absolutely critical in upset tax sales.
You need to know exactly what you're getting into before you bid.
But here's the thing – you can't possibly do thorough due diligence on hundreds of properties.
That's where the pros have a secret: they wait.
As the sale date approaches, many property owners scramble to pay their taxes or make arrangements with the county.
Some even file for bankruptcy.
All of this happens in a frenzy during the last 10 days before the sale.
Smart bidders wait until this period to start their due diligence.
By then, the list of available properties has often shrunk by more than half.
So, what does this due diligence look like?
First, you need to check for liens on the property.
Services like Data Tree can give you a quick overview. But be warned – this data isn't perfect.
You might see multiple mortgages that don't make sense.
Often, this is because mortgage lenders don't always file the paperwork to show a mortgage has been satisfied.
You'll need to use some common sense to interpret this data.
Once you've narrowed down your list, you'll want to do a more thorough title search on the remaining properties.
This is where it gets real.
You need to know exactly what financial obligations come with each property.
But here's the thing – even with all this complexity, upset tax sales can be incredibly lucrative.
Let me share a real-life example that illustrates the potential of upset tax sales.
I once bought a house at an upset tax sale for just $275.
Yes, you read that right—$275 for an actual house.
Was it in the best neighborhood? No. Was it in perfect condition? Far from it.
But at that price, the potential for profit was enormous.
Of course, with great potential comes some risk.
You might discover hidden liens after purchase.
But here's the thing – even if you have to walk away from a deal, your losses are minimal compared to the potential gains.
In the case of that $275 house, the worst-case scenario would have been losing the purchase price plus maybe $175 for a title search.
Many investors would be willing to take that risk for the chance at such a huge return.
Now, I'm not going to sugarcoat it – upset tax sales aren't for everyone.
They require a stomach for risk, a willingness to do thorough research, and the ability to make quick decisions.
You'll also need some capital for due diligence costs and initial purchases.
But if you've got these qualities, you could be on your way to building a real estate empire for pennies on the dollar.
If you're ready to dive into the world of upset tax sales, start by familiarizing yourself with Pennsylvania's tax sale laws.
Build a network of professionals like title searchers and attorneys who can support your efforts.
Set aside funds for due diligence and initial purchases.
And remember, you can't be everywhere at once, so pick your target counties strategically.
Upset tax sales might just be the best-kept secret in real estate investing.
With the right approach, you could be on your way to scoring properties at unbelievable prices.
So, are you ready to upset the real estate market in your favor?
The opportunity is there – it's up to you to seize it.
In the next post, we'll dive deeper into the strategies that separate the amateurs from the pros in upset tax sales.
Stay tuned because your real estate empire might be just an upset tax sale away.
