If you spend any time at tax sales you’ll quickly discover that many auctions are packed with homes that are in disrepair.
Transcript:
Hi there! Casey Denman here with TaxSaleAcademy.com. In this video, we’re talking about buying dilapidated homes at tax sale auctions.
I’ve been to many, many auctions and I’ve seen my fair share of dilapidated homes sell at these auctions. We’re talking about homes that are in very poor condition. However, these homes are selling for very, very little money. We’re talking as low as $50 or $100. I’ll be the first to admit it, I have bought my fair share of dilapidated homes and I made a substantial amount of money off these homes.
And you can do the same. You can buy properties very, very cheaply; maybe as low as $50 or $100, or some for $1,000, $5,000, $10,000. There’s definitely a lot of money to be made here, but you have to understand what you’re doing before you even think about buying a home in less than fair condition.
My best advice here is to call the city or call the county. Tell them you’re thinking about buying a dilapidated home or a home in poor condition and ask them, “Is there any record of this home having any issues in the county office?” Provide the address to them and say, “Is there any code violations, citations or anything like that I need to know about before I consider purchasing it?”
If they say no, then you continue to probe a little bit more. Say, “Listen, if I do buy this piece of property, is there anything I have to know about?” Usually, they’re going to say, “Of course, in order to renovate it, you need permits and stuff like that.” But you need to ask them; say “Listen, if there’s a broken window, is that an issue? If there’s a broken door, is that an issue?” and that kind of thing. So keep probing them for more and more information. That way, you know what you’re getting into before you consider buying these dilapidated homes.
Here’s what I’ve seen and I’ve seen it many, many times. A piece of property is in poor condition. It’s just in disrepair. It might take two, three, four years to go through tax foreclosure. During this time, you have one or two people that own it; either the county or a former owner, the defaulting taxpayer that owns it.
The county, the people the issue the citations for code violations, go out there and actually charge fees to clean it up and that kind of thing. They’re not going to go after the county obviously because there’s no money in that. And they’re not going to go after the defaulting taxpayer more likely because they aren’t even paying the taxes on the place.
So what I’ve seen time and time again is somebody will buy a piece of property at a tax sale auction. The next day; the very next day, the county or the city will be out there to issue them a citation because they know that this investor might have money. Obviously, it’s a much better target to go after than somebody that couldn’t pay their taxes or the county who isn’t going to pay the citation.
So the first thing they’ll do is the day after you buy a piece of property, is they’re going to come after you. And what happens here is not only they’re going to come after you and say, “You need to clean this up.” Sometimes, they’ll actually do it for you. They’ll say, “We’re going to clean your yard up or we’re willing to patch those broken windows or patch those doors. Not just because we’re nice guys. Because it probably violates some sort of city ordinance or city code. And in return for us doing this, we’re going to send you a hefty bill. If you don’t pay this bill, guess what? We’re going to have the county or the city attorney come after you. If you don’t pay the city attorney when they start coming after you, we’re going to take you and we’re going to sue you in court.”
That’s one option. Your second option is that you have a code inspector come out there and issue you a code violation citation, more or less. It’s kind of like a speeding ticket. If you don’t pay this citation, you can land yourself in very hot water. We’re talking misdemeanor charges here if you violate certain codes in certain cities. And the last thing you want to do is go to jail because you bought a tax sale property and unbeknownst to you, there was something wrong with it.
So when it comes to buying dilapidated or poor condition homes at tax sale auctions, there’s a substantial amount of money to be made here. The thing you have to do there, you have to remind yourself that the county or the city wants the county or the city to become a better place to live. So they’re going to kind of probe you and kind of push you to make you sell this property to somebody that’s going to fix it up or they want you to fix it up. They don’t want dilapidated homes. They don’t want poor condition homes, obviously.
So when you buy these homes, you have to have at the back of your mind, I need to either plan on fixing it up myself or plan on selling it to somebody that will fix it up themselves. And in the meantime, I need to be careful not to get myself in any trouble. So again, consider buying dilapidated or poor condition homes because there is a lot of money there, but you just have to be careful. You have to understand the local ordinances and the local laws of that city or that county.
I hope you’ve enjoyed this video. If you’d like more videos about tax sale investing, head on over to my website at TaxSaleAcademy.com, which you can do by clicking the blue link right here next to my head. Again, it will take you to TaxSaleAcademy.com. Once you get there, download your free copy of my e-book, The Tax Sale Investing Blueprint, and you’ll be on your way to a very, very successful tax sale investing career.
Take care, folks! Bye-bye.