In our previous articles, we had discussed and understood the mechanics of Tax Lien on real estates, which basically, involves two types. The tax lien certificates where a bidder/buyer bought the unpaid or delinquent taxes of a foreclosed property as investment. The other is the Tax Deed Sale where the winning bidder or buyer practically, bought and paid for the property itself by paying the delinquent taxes plus some penalties and value on the property imposed by the taxing authority. Basically, a bigger sum of money is needed in a Tax Deed sale.
Tax Lien Auctions as Passive Income
You need to put in some hard work first, prior to creating a passive income in real estate. This is especially true for tax lien investing which can give you the opportunity to sit back and relax while earning profits. However, as much as tax lien investing is so enticing, and can give you passive income do not invest if you have not done some due diligence first.
Take Time in Tax Lien Auctions and Do Not Rush
Take your time whenever you deal with tax lien auctions. Remember that there are always good transactions out there but too often other investors would let the attractive investment cloud their judgment, and screw things up. So, prepare yourself and do not rush.
Maryland Tax Lien Auction System
If you are in Maryland, the bidding system for tax lien auctions is different from the other states. In Maryland, the counties have premium bidding. However, there is no need to pay for the whole premium at the tax sale. You only pay for the amount of the tax lien certificate as well as a portion of the premium, which is called high bid premium.
Tax Deed Auction Essentials
In many aspects, tax deed auction and tax lien sales are quite similar but they are not totally the same. It is important to note that when you plan to buy tax lien property and bid on it, there are what we call “redemption period” or the allotted time for the homeowner to pay his dues. If the homeowner fails to pay his back taxes and redeem his property, you can foreclose it and take ownership. However, if he is able to pay, you would receive profits in the form of fees and interests. In contrast to tax liens, winning at a tax deed auction as the bidder, grants you legal and full ownership of the property when you’re going to pay the county right away. As a result, the previous property owner loses the opportunity to take back his real estate. Remember though for any of the two, the sale or auction varies for each county and state.
Tax Deed Auction Bidding Techniques
Every tax deed auction has its own set of rules and procedures for bidding. Also, there are times when a professional auctioneer would control the pace of the bidding increments to have order. When this happens, you only have limited creative strategies and opportunities in your hands. However, you need to discover what works for you best and continue doing it. Here are some important tips that can help make a big difference on your next opportunity to attend an auction.
My Secret Live Auction Checklist
I was just writing up a sweet Live Tax Auction Checklist, and I wanted to share with you some bits of it, because I believe that value of it to be priceless. (It’s still in the works, so forgive the “un-professionalness” of the format :))
Sam Helsper Live Auction Testimonial
“I think you should use Dustin Hahn’s website….We bought a $17,000 property worth about $50,000…With about $5-$10,000 in repair, we could easily flip it and sell it….We also had a $25,000 house worth about $200,000. Needed some new carpet, paint, but you could easily flip the house for a profit.” – Sam Helsper
