Mid-America Association of Real Estate Investors announces Michael Williams of the Michael Williams one of the "Rogue Investors" here in Kansas City, joins us to discuss Tax Deed Investing on Tuesday August 11th , 6pm at the Overland Park Marriott. This event is FREE for member of MAREI with a small guest fee. Please see web site for complete details at www.MAREInet.com or call 816-523-4400
With the Tax Sales in the State of Missouri being in August, many people are asking:
• What happens at the Tax Sale?
• Can I get a good Deal?
• What do I need to do?
So let’s take a look at the Basics of the Tax Deed Sale and if you are in the Kansas City are, be sure to attend the August 11th Meeting at the Overland Park Marriott.
Tax Deeds - or as they are sometimes called, Sheriff's Deed Sales, are sales of property in which the county, city or other taxing district forecloses on a property for failure to pay taxes. This allows an investor to buy the property for as little as the taxes owed. In some cases, it is possible to buy property for 50, 75 or even 90 percent below market value. A few states even have a right-of-redemption period in which you can earn flat interest rates of 20 percent in Georgia and 25 percent in Texas, even if the properties are redeemed in less than one month.
Some states set minimum bid amounts for properties in addition to the taxes owed, so it is important to educate yourself on how to maximize your investing.
What is a Tax Deed and How does the Tax Deed Sale process work?
A deed is a document that transfers ownership to property. A tax deed is a special type of deed resulting from nonpayment of taxes.
In many U.S. states and Canadian provinces, Jerry Latepay is given many opportunities to pay his taxes. After multiple warnings, the county puts his property up for sale to investors, often for as little as the taxes, penalties and fees that Jerry owes. At a tax deed auction, the winning bidder receives the deed to Jerry's property. In some cases, Jerry may still have a short time to redeem after the sale; otherwise, the investor becomes the legal owner of the property.
The investor may have to wait a year or so to obtain a marketable title, but the investor may have just bought Jerry's property for a fraction of what it is worth.
What are the Benefits of Investing in Tax Deeds?
They can be summarized as follows:
Obtain property ownership for 50 to 90 percent below market value: Although it varies from state to state, in certain circumstances you can obtain an entire property for only the taxes and penalties owed. In many cases, you can obtain properties for 50 to 90 percent below market value
Investment secrecy: If few people have heard about tax lien certificates, even fewer people know anything about tax deed sales. When we started researching tax sales, we found very little information on how to invest in tax lien certificates and no information on how to purchase property at tax deed sales. However, many states have tax deed sales and there are more tax deed sales than tax lien sales. The supply of foreclosed properties almost always exceeds the demand. In the United States there are thousands of counties that have tax deed sales every year. At each auction, hundreds of properties may be available. Many states have so many properties that they have foreclosure lists based on how many years the property has been in foreclosure.
What are the Risks or Drawbacks of Investing in Tax Deeds?
The drawbacks of tax deed investing can be summarized as follows:
Liquidity: If tax liens certificates are not liquid investments, then tax deeds are even worse. In some cases you will have your money tied up for several years before you can sell the property, because title companies may not issue title insurance on the property until all liens are cleared and it obvious that clear title can be granted. This process can take more than a year.
Complexity: Tax deed laws vary from state to state.
Time: Tax deeds sales require a time commitment to learn the rules of a state and its counties, research properties and attend auctions.
Risk: Purchasing foreclosed property at a tax deed sale definitely has some risk. You must do your homework. Remember, once you buy a tax deed, you will own the property including all of its potential problems. In addition, title companies sometimes will not issue title insurance for at least the first year on any property bought at a tax deed sale. This means it could be hard to get a loan until it is clear that everything is fine with the property.
Capital: You definitely will need more capital to buy properties at tax deed sales. Although it varies from property to property and from state to state, you will likely need a minimum of $5,000 to $10,000 to get started in tax deed investing. Check local rules and regulations.
Much of the information in this press release is from our Guest on August 11th, Michael Williams. Michael is co-author of the book and online course, Rogue Real Estate Investor Collection, a book that profiles the wide range of investing options available to real estate investors in one comprehensive 500-page manual that covers all 50 states and Canada. For two years, Rogue Real Estate Investor Collection has been one of the top real estate books on the Internet, selling over 5,000 copies.
