While everyone else is fighting over overpriced listings, there's a hidden market most people don't even know exists. 

I'm talking about tax deed sales, where you can find $400,000 houses starting at bids as low as $50,000.

Sounds too good to be true, right? Well, it can be – if you don't know what you're doing. 

How To Make Money On Tax Deed Sales?

I've seen too many eager investors jump in without understanding the hidden pitfalls, only to end up with expensive problems they never saw coming.

I've been in this business for years, and I'm going to share something that might surprise you: the biggest opportunities in tax deed sales aren't where most people look. 

First, let's talk about how these sales actually work. 

When someone stops paying their property taxes for 3-4 years, the government sells their property at auction. 

The bidding starts at just the amount of taxes owed. 

Think about that for a moment – a $400,000 house might go up for auction starting at just $50,000 in back taxes.

But here's what most people don't tell you about these sales: while the opening bids are incredibly low, competition can be fierce. 

Most properties end up selling for 60-80% of their retail value. 

This is still a good deal, but not quite the steal many people imagine.

Here's what you need to know if you want to get started.  

First, getting the list is actually pretty simple. 

Just search for your county name plus “tax deed sale” online. 

You'll find the tax commissioner's website with all the upcoming properties listed, including addresses, owner names, and the amount of taxes due.

But here's the crucial part most new investors miss: timing is everything. 

Get that list about a month before the sale, but don't immediately jump into detailed research. 

Why? Because many property owners save their homes at the last minute by paying the taxes, setting up payment plans, or even filing bankruptcy.

This is why you need a strategy. 

Start by looking up each property on Google Maps street view. 

You're just trying to identify which properties are worth your time for deeper research. 

Make a list of potentials, but – and this is important – wait until 3-4 days before the sale before doing your detailed due diligence.

When you inspect a property, here's exactly what to look for:

  • Check the roof: Look for holes, blue tarps (sign of leaks), or any bowing in the middle
  • Study the windows: They should be rectangular or square – if they're twisted into trapezoids, you've got foundation problems
  • Look for evidence of fire damage, like black soot under the eaves
  • Check occupancy status – you'll need to handle any existing tenants or owners

Don't be afraid to knock on doors and talk to current occupants. 

They can provide valuable information about the property's condition and their plans. 

Remember, handling evictions or tenant issues becomes your responsibility if you buy an occupied property.

Now, let me share something crucial that could save you thousands: never, ever bid on commercial properties at these sales. 

That former dry cleaner might look like a steal, but hidden environmental problems could cost you a fortune. 

Stick to residential properties and vacant land.

You've got two options for attending these sales: in-person at the courthouse or online. 

In-person auctions typically offer better deals due to less competition, while online auctions offer convenience but attract more bidders. 

Either way, check registration requirements well in advance – many auctions close registration a week or two before the sale.

There's another catch most people don't talk about: these are cash-only deals. 

You can't get a mortgage for these properties. 

You need to have the money ready, usually in the form of a cashier's check or wire transfer. 

This actually works in your favor, though – it limits competition and keeps prices lower.

How To Make Money On Tax Deed Sales

But what about the title? This is where many investors get stuck. 

You'll need to either work with a specialized company like Tax Title Services or take a quiet title action. 

Budget about $4,000-$5,000 and 4-5 months to clear the title.

This is just part of doing business in tax deeds.

The key to success in tax deed sales isn't about rushing in with the highest bid. 

It's about careful research, understanding the risks, and having a solid plan for what you'll do with the property after purchase. 

Whether you're looking to flip, rent, or hold, these sales can offer incredible opportunities – if you know what you're doing.

Remember, in this business, what you don't know can hurt you. 

But with proper preparation, due diligence, and the right strategy, tax deed sales could be your path to finding incredible real estate deals others only dream about.

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