Are you looking for a way to snag incredible real estate deals?
Upset tax sales might be your ticket to property investing success.
But before you jump in, there's a lot you need to know.
This guide will walk you through the crucial steps of physical due diligence for tax sale properties.
What Is An Upset Tax Sale?
Trust me, this knowledge can be the difference between striking gold and hitting rock bottom in the real estate game.
What Are Upset Tax Sales?
Upset tax sales happen when property owners fall behind on their taxes.
After 3-4 years of unpaid taxes, the local government puts these properties up for auction.
It's a chance to grab real estate at incredibly low prices – we're talking 10 cents on the dollar in some cases!
But, let's face it: if someone couldn't scrape together $2,000 a year for taxes, do you think they splurged on a new roof or regular gutter cleaning? Probably not.
These properties have often been neglected for years, making thorough due diligence absolutely essential.
Your Pre-Sale Checklist: What to Look For
- Timing is Everything
Don't waste time checking out properties weeks before the sale. Wait until the list narrows down to about 50 properties a few days before.
This way, you're not wasting time on properties that won't make it to the auction block.
- Drive-By Inspections: Your Secret Weapon
Here's the deal: you can't legally enter these properties before the sale. But that doesn't mean you can't gather valuable intel. Here's what to do:
- Drive by in the early evening to check if the lights are on
- Look for overgrown weeds in the driveway (a sign of vacancy)
- If possible, knock on the door (you might get lucky and talk to someone)
- What to Look for From the Street
Keep your eyes peeled for these red flags:
- Bowed or wavy rooflines (potential structural issues)
- Racked windows (sign of foundation problems)
- Soot stains under the eaves (possible fire damage)
Pro Tip: In some city areas, I've seen properties where only the front wall was standing. It's like an old Western movie set – all facade, no substance!
- Location, Location, Location
Tax-sale properties are often in less desirable neighborhoods. Focus on areas that are still safe and where you can potentially find tenants or resell.
The Polaroid Trick: Old School Meets New School
Here's a little hack I've used for years: Grab a Polaroid camera (yes, they still exist!) and snap photos of each property.
Clip the photo to an inspection sheet, jot down notes with a Sharpie, and voila! You've got a quick, tangible reference system.
Why Polaroid? You can't write on digital photos with a Sharpie, can you?
The Potential Goldmine of Upset Tax Sales
Now, don't let all this talk of due diligence scare you off.
The potential rewards are massive.
We're talking about properties at 5-10 cents on the dollar.
Even after repairs, you're often looking at half-price deals.
My first-ever investment was a $3,000 piece of land that eventually netted me $122,000.
Not too shabby for a rookie, right?
Words of Caution: What to Avoid
- Useless properties: Watch out for drainage ditches or tiny strips of land.
- Commercial properties: Steer clear! You could end up with a massive environmental cleanup bill.
- Farms: Surprisingly risky due to potential soil contamination.
Stick to residential properties that are already built. It's your safest bet in this game.
The Overages Opportunity
Here's a bonus tip: Sometimes, properties sell for more than the owed taxes.
That extra money is called an overage, and it's rightfully owed to the former owner.
The catch here is that most people have no clue this money exists.
That's where the overage business comes in.
We reach out to former homeowners, help them claim this money, and take a percentage.
It's a win-win: they get an unexpected windfall, and we make a profit without the risks of property ownership.
Wrapping It Up: Is This for You?
Upset tax sales aren't for the faint of heart. It's a lot of work, but the potential rewards are enormous.
Remember, effort equals success in life.
This isn't a lottery ticket—it's a real business opportunity for those willing to put in the work.
Ready to learn more? Check out my video on“How to Buy Tax Sale Homes” for a deeper dive into both upset and judicial sales.
And if you're intrigued by the overage business, I've got a free intro video waiting for you.
Remember, with great risk comes great reward. Are you ready to take the plunge into the world of upset tax sales?
