What's the difference between successful real estate investors and everyone else?
It's not their marketing budget. It's not their network.
It's knowing where to look when everyone else is looking the other way.
How Does a Tax Sale On a House Work?
Today, I'm going to share something that changed my entire approach to real estate investing – something so powerful that once you understand it, you'll never look at property buying the same way again.
Let me share a little secret: Every single business day in America, about 3,000 properties are sold at tax sales.
Those are thousands of opportunities that most investors never even consider.
While everyone else is fighting over retail listings and foreclosures, smart investors are quietly building fortunes through these overlooked opportunities.
Here's what makes this so interesting: These properties often sell for pennies on the dollar.
I'm not exaggerating. I recently bought a house – yes, an actual house – for just $275.
Sure, it needed work, but think about that price for a moment.
Another property I picked up for $4,000 had a tenant already in place.
It just needed some new carpets and paint.
But before you think I'm just cherry-picking success stories, let me tell you about a property in Castro Valley, California.
An investor bought it for half a million and sold it for $1.2 million later that year.
Yes, they had to fix it up, but they certainly didn't put $500,000 into renovations.
So how does this actually work? Let me break it down for you.
When property owners fall behind on their taxes, the county needs to collect.
They need money to pay for schools, roads, and services.
After a certain point, they put these properties up for auction, and the bidding starts at just the amount of taxes owed.
Now, here's where it gets really interesting.
Most of these houses are worth far more than their tax debt.
Think about it – even several years of unpaid taxes usually only add up to a small fraction of a property's value.
This creates an opportunity for incredible deals.
Finding these opportunities is surprisingly simple.
You start by getting the tax sale list for your county.
Just Google “[County Name] tax sale,” and you'll usually find it on the tax commissioner's website.
The list typically shows you everything you need: the property address, parcel number, owner's name, and most importantly, the taxes owed – which is where the bidding starts.
But here's the smart way to approach this: Don't just jump in blindly.
Start with Google Street View.
Look at lots of properties initially, but don't do anything else yet.
Why? Because most properties on these lists never make it to auction – the owners either pay their taxes or file bankruptcy before the sale.
This is where most people mess up.
They spend time and money researching every property, only to find that most never make it to auction.
Instead, wait until about three or four days before the sale.
By then, the list will have shrunk considerably.
That's when you start your real due diligence.
Drive by the properties you're interested in.
Look for signs of occupancy, check for obvious damage, peek in windows if you can do so legally.
Remember, these properties are often neglected – if someone couldn't pay their taxes, they probably couldn't pay for maintenance either.
Now, let me be straight with you – there are some challenges.
Sometimes, properties have occupants you'll need to deal with.
Sometimes, owners file bankruptcy after the sale.
Sometimes, there are legal challenges.
But here's the thing: these issues are the trade-off for getting properties at incredible discounts.
But it gets even better.
A friend of mine, who's been doing this for over 30 years, recently discovered a way to buy these properties with absolutely no competition.
He's picking up properties for just the back taxes owed, and get this – he recently bought a property for $2,500 that rents for $800 per month.
Think about that – the property paid for itself in just over three months.
What's even more amazing is that, except for one specific sale in Pennsylvania, these properties are free and clear of mortgages.
That means no existing loans to deal with.
You get complete ownership for just the price you pay at auction.
The tax sale market is real estate's best-kept secret.
While it's not without its challenges, the potential rewards are absolutely incredible.
But like any investment strategy, success comes down to understanding how it works and doing your due diligence.
Remember what I said at the beginning about the difference between successful investors and everyone else?
It's about knowing where to look when others aren't looking.
Tax sales are exactly that kind of opportunity – hiding in plain sight, waiting for smart investors who understand how they work.
The question is: Will you be one of them?
