Like in any market, Tax Deed have their share of problems. For example there is competition. Excessive competition during tax deed auctions auctions will affect the prices drive them up closer to the true market value. However in the Tax Deed arena has some ways to circumvent the number of problems I am listing below;
In this publication I am focusing on the most drastic problem investors face when attending Tax Deed auctions, particularly when targeting higher value properties.
The problem is that Tax Deed Sales are usually a Cash affair. That means you can’t come to an auction with $500.00 in your pocket expecting to be able to buy a $100,000 property and then spend the next few weeks qualifying for financing, like it happens in the regular market for residential homes. Instead most counties have regulations expecting any winning bidder to come up with the full cash within somewhere between 24 and 48 hours from the sale.
As a result, because most of the population does not have $100,000 or even $10,000 sitting in their bank accounts unused, the vast majority of the population will and cannot attend the auctions to buy a property.
Solution: Partner with investors
One of the fastest and easiest ways to solve the CASH requirement in a Tax deed auction if you don’t have the cash yourself is to partner up with someone who has the cash. As they say “If the deal is good enough, the money will show up.” In my experience of doing over 5,000 Real Estate Deals in the tax Delinquent real Estate area I have yet to see where this is not true. Any investor in his/her right mind will say yes to a deal you bring to them, where they can buy a property for as little as 10-30% of market value, where you do all the work and they give the money and then you share the profits in some way (up for negotiation).
And finding investors is easy. Just place an ad into the newspaper or attend a meeting of your local Real Estate Investor’s association. Or just ask around, I am sure you have someone in your extended circle of friends who has some money available. If none of this works go online and look for Real Estate investors or private money (also called hard money) lenders.