How to Invest in Tax Sale Property Without Attending Auction

When you buy a property, you want to buy it with its profit already built in. What that means is, when you buy a property, you want to buy it for so low that if you had to turn around and sell it immediately, even to another investor, or through a realtor for half its market value, you want to know you will still walk away with thousands in profit. Sound too good to be true? It's not. Smart investors buy tax sale property this way every day.

If you're investing in properties, you'll run across many types. But the three you'll find are most plentiful are tax sale property, mortgage foreclosure property, and properties for sale by their owners or realtors. All three types are visible, and thus, there will be competition if you use the usual routes to go about obtaining them.

With rehab properties (or nicer properties) for sale via owner or realtor, you're going to have a few problems. First, you're probably not going to be able to get them for very cheap. These owners are NOT desperate to sell, in most cases. You may be able to negotiate a good deal, but the idea is not to get a good deal; it's to get an incredible bargain: a property for under $1000. Secondly, anyone can access the listings for this property, so every investor out there will have his eyes on it too. Third? It needs rehabbing!

Mortgage foreclosure properties also have plenty of problems. First, and foremost: they have a mortgage! If you are able to find a good property, and make a deal with the owner to purchase it, you will have to bring the mortgage current and keep making payments while you're trying to flip the property or get financing on it yourself. Do not underestimate the headache that this causes. Secondly, the owners are almost impossible to get ahold of. They are dodging bill collectors left and right, and they know how to dodge you.

Tax sale property, on the other hand, doesn't have either of these issues. While a lot of investors have their eyes on the property before tax sale, most pay no attention to it after tax sale... which is when you're going to go after it. And best of all? These properties almost never have a mortgage! Mortgage companies lose their stake in a property if it gets deeded to the tax sale bidder, so they will almost always come in and pay the taxes off, and foreclose on the home themselves.

So what you end up with is free and clear property that none of your competition is going after. Read the full scoop on buying tax sale property outside the auction from the free Deed Grabber e-book How to Get Tax Sale Property Outside the Tax Sale Auction.

So - why buy tax sale property outside the tax sale auction? If you've ever attended tax sale, then you're aware of the number of other bidders you're competing with on every property. Most properties get bid up within 10-20% of market value - and that's doesn't leave much room for profit, and it certainly eliminates the possibility of getting a property fo under $1000 - which is entirely doable if you buy tax sale property outside the tax auction.

By the way, it's not greedy to need more than 10-20% profit margin on a property. There are two reasons for this. First, you can't inspect the property before you bid on it. It could easily have existing interior problems (or exterior problems you can't necessarily see from the street) that can eat up that 10-20%, and then some, in an instant.

Second, let's say you could inspect the tax sale property before buying it, and it checked out. After you win the bidding at tax sale, the owner has at least a year grace period to try to come up with the tax money. Think of all the things that could go wrong during that year. The roof could cave in. The owner could strip all the copper wiring and pipes out of the house and sell them. Don't laugh - this happens REGULARLY! Basically, the bottom line is, you have no idea what you're getting yourself into until after you're already committed for a lot of money.

Speaking of a lot of money... you'll have to come up with your entire bid, in cash, right then and there at the tax sale auction. So you're taking the above risk with a large some of cash tied up for at least a year. And after all that waiting, the owners pay off the taxes most of the time. You'll get a nice return on your money, but that's not what you were looking for, right? You were looking for a property, and to make many thousands of dollars (or to keep it), not to make a 10% return after a year on your cash. You can beat that in the stock market.

So to really profit, you have to use a few insider tips to buy this property outside the tax sale auction. Want to learn the best way to get lists of these properties, and decide which ones to go after? Get the free Deed Grabber e-book How to Get Tax Sale Property Outside the Tax Sale Auction.

There's no secret way to buy tax sale property - you either get it at auction, or outside the auction. To buy outside the auction, you'll have to purchase the property directly from the owners themselves - but don't make the mistake many investors do, of approaching the owners at the wrong time.

Before the tax sale (and just after), most owners of tax sale property are scrambling to try to find a way out of their mess. Imagine the mind set these people are in. They're probably avoiding other bill collectors, and the last thing they want is to hear from you. Other investors will be calling them around this time, and these owners get very good at avoiding calls.

But then after tax sale, things change. Most investors stop going after the property once it's been "sold" at tax sale. But as you know from reading the first article, the property hasn't really been "sold" until the owner has had another year or so to try to pay the taxes off - which means that during this time, he can still sell to you.

The insider technique that will allow you to buy property for pennies on the dollar is this: wait until there are only a few months left for the owner to pay his taxes, and then approach him. At this point, most owners have already redeemed their properties. As you can imagine, the ones who haven't are reaching a desperate point in the process. They either have to sell, NOW, or they will lose everything to the government.

By waiting until this time, you can offer owners very little - often, less than $1000 - for their deeds, with great success. The best part? You're not buying anything unseen - you can inspect these properties before you make an offer.

Want to learn the "magic words" to say to the owners? Get the free Deed Grabber e-book How to Get Tax Sale Property Outside the Auction.

Once you've gotten property this cheaply, there are a world of things you can do with it.

If you have the money to pay the taxes, you can redeem the property and keep it yourself. Some properties will be fully ready to live in or rent out; that you can do right away if you like. Other properties will need some "freshening," and you'll need to do that before you find a renter.

One thing you can do with a property you've gotten for $1000 or less is create a free income stream for yourself. How? Well, there are a lot of people out there who simply can't get approved for a mortgage - people with no credit or bad credit, people who don't have a big enough down payment, people who don't make enough money, etc. But these people still need a place to live, and these people still would often rather buy than rent.

What you can do is offer to sell your new property to these folks, with you as the financier. You've got $1000, plus the cost of the taxes, plus maybe a few improvements invested in the property. Let's say the grand total you've invested is $4,000.

Offer to sell the property to someone who can't get a mortgage for a down payment of $6,000, plus monthly payments totalling whatever market rent is in the area, for 5 years. Since you've padded the down payment, you've just made back your investment, plus $2,000, and now you have an income stream of, say, $300-800 a month for the next five years! If the owner doesn't pay, you'll have the right to foreclose. However, you'll always want to try to work with these folks as much as you can. You've already made your money, so there's no need to be heavy-handed or greedy.

What if you don't have the money to pay off the taxes, after you've gotten a property for $1000? This one's easy - either list the property with a realtor, or sell it yourself to another investor. Ensure a speedy sale by pricing the property well below market value - you'll still walk away with a nice profit in your pocket.

Want to learn how to "option" a property for $1? (One dollar!) Get the free Deed Grabber e-book How to Get Tax Sale Property Outside the Auction.