Transcript:
Hey there, it’s Casey Denman here with the taxsaleacademy. Today I wanted to answer a question that was actually sent to me through Instagram. The question was whether there would be any unexpected expenses for tax sale investing. Now, this obvious depends on your experience level, your training in this business and many other things, but what I wanted to do is go through a few of the expenses involved that some new investors could considered unexpected and a few things you must budget for.
I’ve got 8 of them, so we’ll go through them real quick.
The first one are public record search fees. Public records, are well public. And in 95% of the cases you can easily access these records. In other cases, they’ll provide this access for a conveience fee. So, in order to view a property assessor report online it might cost you $.10 or a dollar or something. To read plat maps or GIS, it could cost you some money too. These are usually nominal fees, but don’t be surprised. The fees are likely much cheaper than the time it would take driving to their office and puling records. And they aren’t charged in most places anyhow.
Another one are registration fees. Some counties or auction companies charge a registration fee in order to be assigned your bidder number. According to most counties, it serves to offset the expense of the auction and to limit the attendees when space it a concern but it is a little annoying especially when you’re not expecting it. Again, this is not charged in the large majority of counties, but don’t be surprised if you see it.
In addition to registration fees, some counties will require a signed affidavit from the tax collector in that county that states you don’t currently have any delinquent taxes. They do this so the properties get sold to responsible tax payers. But that affidavit and signature might cost a few bucks.
The next one are buying fees. Not only are you paying for your property, you also need to pay for the deed to be prepared and recording, plus any recording taxes. And by the way, some auction companies might take on 10 or 15% as a buyer’s premium. So be ready and budget for it.
Property taxes are next. Even though you’re buying a tax defaulted piece of land, you’ll still have to pay the current year’s taxes in most states. So it you buy in December 2020, you’ll still owe for every other month in 2020 even if you didn’t own the property for the other 11 months. This can be a shocker, especially in areas where they have exorbitant tax rates.
How about governmental inspection fees? In some counties and cities, anytime a structure sells even if it’s at a tax sale, it must be inspected by the local government who will tell you what exactly needs to be done, if anything. And if you don’t they’ll start issuing daily fines.
The next one is title clearing expenses. If you want to get top dollar, you’ll want title insurance and this will require that you go through a suit to quiet title or a tax foreclosure certification in the majority of cases. This is pricey. Be ready if that’s your angle.
Next one, when you sell that property that costs money. A big one will be Realtor commissions if you use them. Otherwise, be sure to budget for deed prep, title and closing fees if using an attorney or title company, in addition to any transfer taxes or fees.
Lastly are property specific fees. And this could go on and on and is something we have numerous lessons on inside the academy. In short, the two big ones I see people stumble upon are HOA dues, even if there are absolutely zero amenities, they might still charge dues for something. This can be a shocker when you get that large bill in the mail a week after purchase. And the second biggest property specific fee that many stumble upon are water bills. I’m not talking about previously due water bills, but instead future water bills. Some areas charge for water or access thereof, even if you don’t use it or have any intention to. So be ready and do your research.
So as you begin your tax sale business or as you start to expand, be sure you budget and prepare for these expenses
Tax sale investing is an incredible business as long as you know and understand what you’re doing. I’ve been in this business a long time, I’ve trained thousands and as you can tell simply by the in quote negative content of this video, I tell it like it is. If you’d like to learn from myself, just head on over to TaxSaleAcademy.com. That’s TaxSaleAcademy.com and there’s a link down below in the description.
Have a wonderful day! See ya!