Make Money in Real Estate with Tax Sales

While many people want to become a real estate investor there are many common fears with getting involved in investing. The biggest issue most people have is the worry of getting in over there head. Also people worry about having to invest too much money, having to get a loan, or not being able to afford the work that may need done on the property. Now depending on where you are located cost are different. I am here in the USA in South Carolina. Luckily I am in a place where home prices are fairly low and you can easily buy investment property for $5-7000. Now these aren't homes in great shape in great neighborhoods, but good homes that typically can be repaired and rented with less than $5000. Not everyone has that type of money though. So the other great option is tax sales.

The rules for tax sales differ in every state. Generally though they are similar in every state. It starts off with signs put on the homes letting you know how far behind in taxes the person is. This is followed with about a month of them putting them in the paper making notice to the owner and people interested in bidding on the property. Now there is a few things that everyone must know about buying tax property. A lot of the time the home has been sitting vacant for quite a while. If the home has not had people in and out of it then it may be in decent shape still. If homeless people have been living in it then it may be on the rough side inside. The good news is you have atleast a year before you can even start making repairs. The even better news is you may only have to pay $300 or $400 for the home. In most states once your bid is accepted the owner has 1 year to claim the property. Another great thing is if they reclaim your property they have to pay interest on what you payed. In my state they pay 6% to 12% on your money. Can't get that in CDS!!! Once you have payed for the property you have one year to save money for the repairs you may need. Some of the work can be done by you and your family. Painting is the easiest way to make a home look better. Also you may be able to lay some flooring or fix holes in drywall. Now while these properties make wonderful rental property they are not good for immediate resale. The tax deed that is given on the property has to clear up first. You can sell a tax deed but you won't get as much for it. Also you can pay a lawyer to clear up the deed but this can cost several thousands of dollars. In most states it will clear itself up in 3-10 years. So you can have a good rental property for that time.  Typically you can rent a 2 bedroom home between $300 and $600 a month depending on your area. Or you can owner finance to someone for a 10 year time period and by the time it needs to have the deed signed over it will already be cleared up. You can also typically get $3000-$5000 down on an owner finance and can charge 9-15% interest throughout the time you carry the loan.

So if you are thinking of becoming an investor, step in the slow and cheap way by buying at tax sales. Just remember you still have to keep that yard up in the first year. Some cities will hit you with $500 fines if you don't! Good Luck!