Tax Deed Sales – The Opportunity

As I discussed in my article “Tax Deed Sales – The ‘Catch'”, tax deed sales are largely a non-opportunity in my opinion.

There are several reasons for this, but the main reason is that other investors will want the same bargain property you want, and will bid the price up way past “bargain” levels in almost every instance.

Tax sale markets are usually very “efficient” – meaning that bargains do not go unnoticed by the public.  However, as usual, if you look a little below the surface, you will find opportunities even in the tax deed sale arena.

Luck-Based Opportunities

Most tax deed sale success stories that you’ll hear, if true, are the result of luck.

While the overwhelming majority of “cheap properties” at tax deed sales are bid up to beyond bargain prices, there are always rare instances where a bargain slips through.  Perhaps:

• A particular sale, for some reason, didn’t attract as many investors as usual
• All the other investors somehow missed a bargain property that you identified, and you were the only bidder
• The crowd at the sale was small and everyone ran out of money before all the properties were sold

As you can see though, there’s nothing you can do to increase the chances of these things happening.  You’ll just have to attend every sale you can, prepared to bid, and wait for one of these very rare situations to occur.

Personally, I like to control my destiny a BIT more than this, and I don’t like spinning my wheels waiting for luck to bless me with a deal.

Specialty Opportunities

Here are several ways to potentially “make your own luck” at tax deed sales, and get valuable properties for the minimum bid (or close to it).  Note that most of these properties come to light only through very careful examination of the tax deed sale list.  Look up each and every property even if it appears to be worthless at first glance, or is available for very little money.

• Concentrate on “nuisance” properties.  These are properties that don’t have much value on their own, but may prevent others from enjoying their properties to the fullest. Examples include railroad easements that go through valuable commercial properties, lots that contain “part” of a house (the homeowner still owns the lot with “most” of the house), and any other property that could create a problem for another property owner.
• Buy “unusual” properties – for example, a man purchased an undeveloped tract for $3900 at tax sale, which was needed later for flood control by the county.  The county ended up having to pay over $300,000+ to buy the property (see the story here).  This is the type of property that would almost surely be available for the minimum at the tax sale.
• Look at land carefully – While most land at tax deed sales is worth very little, or even worthless, occasionally some quite valuable pieces of land will be offered without bid.  This is because most raw land does not have a street address, only a legal description and parcel number.  This makes it more difficult to identify – therefore the majority of investors skip it.
• Billboards and Cell Towers – It’s worthwhile to visit all land, even if the land doesn’t appear valuable at first glance.  This is because the land may contain a billboard, cell tower or other structure which you will be able to collect rents from if you successfully purchase.  These rents can be significant, and require little or no “landlording” as a rental property would.

Bottom line – concentrate most of your effort on the non-obvious properties listed for the tax deed sale.  You may want to be prepared to buy a single family home or other improved property in the rare event that it goes unnoticed by other investors.

But spend more time than the other investors on property investigation, and you will likely find regular buying opportunities at minimum bid – for properties that can be even more valuable than the houses everyone else is fighting over!