Purchasing tax deed properties?

General or Alabama specific experience; please let me know of your own personal experiences with purchasing tax deficient properties at tax sales or from the state.

I am just getting started with this type of investment. I am looking for my first property to purchase and move into as soon as possible. I will fix it up and sell it later, then may purchase more homes the same way.

I am looking for others' experience from which I can learn and any advice you can give.

Thank you.

I live in California (a tax deed state). I purchased land at a tax deed, and turned around and sold it for 220% of purchase price. It can be fruitful if you do your homework. At the time, it was not a good deal to buy houses at auction because everyone was throwing their money at real estate (and driving even auction prices above and beyone retail value).

Number one - you need to know whether you are in a Tax Deed or Tax Lien state. Deed states - you get the deed when you win the auction, Lien States - you get a lien against the property (with a % of profit built into it), which the owner must repay along with his taxes. After a specified amount of time, if he doesn't repay, then you can file to get the deed. In these states you will often need a real estate attorney, because it is up to you to hold the owner to the lien.

Number two, you must get the rules of the auction and now them. You don't want to bid on what you think is the purchase price, but is actually just the profit percentage on the lien. You can get the above info from your local county clerk office. A lot of times the clerks at the tax office will be able to help you.

Finally you MUST investigate the property. You need to check the title, the land, the house, the repairs, any assessments of liens against it, etc. You don't want to buy a money pit, or a property that has assessments worth way more than the property.

Finally you must bid. Most counties require you to have certified funds at the time of bidding. Don't worry about all the people who show at these things - only about 10% are actually there to make an offer.

Good luck, and let me know how it goes.

Tax deeds are a bit tricky because you actually own the
property rather than just get interest from late taxes
(tax liens). You need to know the tools online and with
your county to

look up encumbances, outstanding tax liabilities, IRS
issues, etc. To type it all up in this small space and
time would take a few hours. I'm going to refer you to
two things, a web site and also a book.

1. The web site for proper tax deed research is:
www.investingwithoutlosing.com. It contains not only
auctions that's going to happen but also tips and
tricks.

2. The book I'm going to recommend to you which I found
to be the best in tax deeds is: Complete Guide to Real
Estate Tax Liens and Foreclosure Deeds: Learn in 7
Days [ISBN 0978834682] by Sausa.

If you have the opportunity, I highly suggest knowing
the tax lien auction process first before jumping into
tax deeds, since there is less liability in tax liens
and in some cases, you get more money. But everything
depends on what you're trying to do as a goal,
whether you want to invest in tax deeds to have a
portfolio of land for long term or whether you want to
flip it.

Have a great one!

Excellent replies!
Thank you all, learned somthing new.