10 Tips on how to buy a tax sale property

Ten tips on how to buy a tax sale property

I wanted to write a follow up or addition to my previous post about buying properties at tax sales.  Other than how to find and purchase foreclosure properties, the tax sale purchase process is what I am asked most about.

Lets get started.  It is important to realize that every municipality, state, parish, region or area will likely hold a tax sale at least once per year.  It is also important to realize where ever you are, they set there own rules around property tax collection and disposal of properties that have unpaid taxes owed on them.

There was a tax sale this past week in my home city, so the experience is fresh, and I figured I would summarize what to do, to give you the upper hand when buying tax sale properties.

It is definately a high risk way to purchase properties, however, it can also have big rewards.

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#1 Print off a list of the properties that will be offered at the tax sale from your areas website, well in advance and on the day of.  Make note of any changes.

#2 Locate the properties you are interested in buying and drive to the sites.

#3 Understand what “as is” means in your area as related to properties sold by way of a tax sale.  when you arrive at the site, causiously take a look around.  Smell the air close to the building, if you smell oil, mold, gas, etc.. you might want to walk away.  View the overall condition.  Is the property occupied, is it in an area you want to own a property in?  What is you first impression, and can you achive what you want based on the appearance.  In my area, the city takes zero responsibility for any environmental, physical, or occupant issues with properties sold at a tax sale.

#4 Determine the maximum price you will pay for the properties you selected, and make sure they will meet your investment criteria for the purchase.  Is it a flip as is, flip renovated, buy and hold with current building or a tear down vacant land hold, or if the property is vacant can you get it rezoned, or is it worth holding as vacant land.

#5 Make sure you are aware of the accepted forms of payment at the tax sale you plan to attend.  The one I attended this past week only accepted the following:


#6 Keep your emotions in line:  The best idea is to bring a bank draft made out to the city for the required starting bid of the property or properties you have seleced.  If you do not buy them, you can take the cheque back to the bank.  Then do not let bidding emotion take over.  The reason it is an auction is to make it fair, and competitive.  Keep your emotions in check.  If you do not get a property, that is ok.  You are better to not get a property rather than pay too much.

#7 Understand the redemption period (if one exists) In the sale I attended this past week there were 17 redeemable and 1 non-redeemable properties.  What that means is that even if you were high bid and purchased a property if it was labled redeemable, the deeded owner has 6 months to pay the tax bill, interest on your money, cost of  insurance, and any nesessary cost to secure the building during the redemption period (boarding up windows, patching the roof, mowing the lawn etc.)

If you renovate the property, you will not get reinbursed for the cost of the renovation.  Also if the roof is leaking, it is best to patch it, rather than replace the whole thing.  You can cut the grass, but not trees.  You can collect rent if it is tenant occupied, but it will be deducted from your costs at the time of redemption.

You basically need to get insurance, change the locks, cut the grass, make the property safe and secure and wait the six months.  At the six month mark, the paperwork to transfer the deed will be provided.

If the property is non-redeeemable then you get to take full ownership right away.  It also means it likely has been vacant for a long time, and likely has a reason for not selling at a previous tax sale.

#8 Understand the rules around current occupants in the property:  When you buy a tax sale property they are truly as is.  That means they could be occupied by tenants who are willing to pay rent, tenants who are unwilling to pay rent, a family member to the deeded owner who cannot pay to purchase the property, but have been living in it for several years (possibly with mental or physical limitations).  It could be occupied by squatters (people who just decided to move in), you might be buying a crack house occupied by drug users, drug dealers and prostitutes.  It could have rodents, or other animals living in it.  In the case of the tax sale I attended the other day it is up to the buyer to work with the local residential tenancy board, police, pest control, and animal control to deal with current occupants.  The good news is that you can start working on your evictions or new lease arangements right away.  That will allow six months to clean up the occupant issues.

#9 Make a plan for the property, when you purchase a tax sale property you may think you know what you want to do with it before the sale.  The plan may change based on the true condition of the property once you own it.  It may change from a buy and hold to a complete tear down.  You may discover that, it is a poor fit for your investment portfolio and decide to sell it.  You may decide to fli it as is.  What ever you decide to do, you will likely have a redemption period to plan and decide which direction your project is going to go in.

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#10 Understand your personal risk tolerance.  When you buy a property from a tax sale, it is a risky investment.  Like most high risk investments, if they work out they have high returns.  If they do not work out, it is almost always a negative result.  Make sure you think about the emotional impact of paying thousands of dollars for a property that you cannot properly inspect before you purchase.  When you buy from a tax sale it is gamble.  Property investing can often feel like a gamble at the best of times, however, to buy from a tax sale, you have to keep your emotions under control, so you do not get into a bidding war and over pay.  Then you end up with a vacant property that you will need to check on regularly during the redemption period to please the insurance company.  The other side is you may end up with an occupied property, where the occupants are not paying rent.  You will need to figure out how to get rid of them.  You may also think you got a great deal, then realize the place is full of mold and asbestos.  If you are a risk adverse investor, I would not recommend buying from a tax sale.

I hope you will find these 10 tips have helped you prepare for your next tax sale.  The first step is to get educated.  I would recommend you go to Google right now and find out when the next tax sale is in your area.  Then attend as an observer.  I have found that the people working the tax sales are very helpful.  They want people to attend, so they can start generating tax revenue once again (you are responsible for the tax right from day 1, even during the redemption process).  As long as they get the starting bid amount, all back taxes will be paid.

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Thank you for reading



30 Day Notice To Landlord

When you become a landlord the first step is understanding leases.  I am often amazed when I am interviewing potential tenants how many do not have a documented lease.  How can a tenant be expected to know how much notice to provide.

I agree a verbal lease will work in most places, however, it offers very little protection for the landlord or tenant in the case of a dispute.


The state or provincial rules will be enforced.  The problem is, that this will likely work in favor of the tenant.

For example: Joe landlord makes a verbal agreement to lease an apartment for one year to Bob tenant.  In my area, if Bob tenant wants to leave at the end of a one year lease, he would have to provide three months notice before the end of the year, or it would automatically renew for another year.

During Bob tenants second month of tenancy, he decides he wants to leave and move in with his girlfriend.  He calls Joe landlord and provides a verbal 30 day notice to quit.  Joe landlord points out that they agreed to a one year lease.

Bob tenant disagrees, and claims he only agreed to a month to month lease, and all he needs to provide is 30-day notice to quit.

Here is the challenge:  They do not have a written agreement.  If it goes to a residential tenancy hearing, Joe landlord will likely have trouble with his side of the story.

He will automatically lose some credibility with the tenancy board, due to the fact that he did not have a written lease.

In my opinion landlords and tenants should always have a written lease agreement.  It is the responsibility of the landlord to explain the lease to the tenants.

I hope you enjoyed my 30 day notice to landlord post.

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rats never give up

rats never give up, or do they eventually.

I want to share a story, that lead to rat education for me and my tenant of a single family home I had rented to a couple.

I recieved a call one hot July day, that there was a rat sighting in the house.  The tenants seemed upset about the situation.

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I went to the house and set some traps.  It was about a week later, I recieved another call from the tenant.  She said there was a foul odar coming from the closet that holds the water heater.

I paid a visit and found a decomposing rat in one of the traps I set.

There I am on a hot July day day standing in the kitchen of this house with a dead rat in a trap, and I notice maggots falling on the floor.  Fortunately I had cleaner, paper towel and a garbage bag, so I was able to quickly clean up the maggots that were squirming around on the kitchen floor.

About two months went by, and another call came in.  Yes, you guessed it, another rat sighting.

This time I called in an expert for some help.  I called a professional exterminator, that I have used before.   He came out and set up some poison traps.

I asked him to survey the property and make recommendations on how I can prevent rats from entering the house.

He made some recommendations, and showed me some spots around the foundation / crawl space, that he thought they might be getting in.  I had my handyman come out and seal up areas, that were of concern.

He also mentioned rats do not like change.  He said to move things around in the crawl space basement.  That might be enough to have them leave.

He also pointed out how destructive rats can be.  They can eat through pretty much any material.  Not even metal can stop them, if they want to enter a building.

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He also suggested items, I needed to address with the tenant.

I thanked him, them I met with the couple renting the house, and told them what the exterminator said.

You see, this couple was not big on lawn mowing, so the first thing the exterminator suggested was to keep the grass cut short.  I also had to talk to them about the overflowing garbage cans (apparently they missed garbage day).

The good news, is that, this situation happened a few few years back, and I have not had any rat issues since (with this property).

Have you had any hard to deal with rodant problems?

I wrote a whole chapter on the subject.  Chapter 10 in my book.

If you would like a copy, click this link.

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Mold Remediation

Mold Remediation

This is a guest post from an amazing American Landlord / Property management resource.

American Apartment Owners Association

Liability is always a concern for landlords. Thus, it’s easy to understand why the mention of “mold” and “millions” together would give a property owner nightmares. Not only is indoor exposure to mold known to cause respiratory problems and other health issues in some individuals, but mold is everywhere — and because moisture is critical to its ability to grow to elevated levels, something as simple as a leaky pipe could prove costly.

A web search for “mold lawsuits” reveals horror stories, one about a couple ordered to pay nearly $3 million in damages for selling a California home rife with mold. The same search shows that numerous law firms stand ready to sue property owners on behalf of tenants who believe mold made them sick.

While causation is difficult to prove, you as a landlord have enough to do without being tied up in court. And whether there is litigation or not, a prevalence of mold could lead to tenant loss.

For a landlord, mold remediation can save a host of problems. (Document efforts in case of legal proceedings.)

Mold issues in buildings are a result of water/moisture problems. Mold also needs an organic food source — and many building materials serve that purpose — and high relative humidity. The water source is the easiest factor to control.

As a landlord, the mold problem is not yours alone. Mold can grow in 24 to 48 hours after a water intrusion, so the tenant bears some responsibility for notifying the landlord the mold situation or water leak exists, and for reporting water stains that indicate a leak. Tenants also should use exhaust fans and control humidity. Mold can be hidden in many places, and a landlord generally cannot be held liable unless he or she knew — or should have known — the problem existed.

If the area where mold is growing is small, researching how to clean mold as the landlord and doing the work yourself can save the cost of hiring a mold remediation specialist.

As a landlord, the mold issue is one you must take seriously. Acting quickly and thoroughly can reduce liability risks. The accompanying infographic describes some typical mold situations, steps for mold remediation, and tips to prevent mold.

Mold Remediation Guide For Landlords provided by American Apartment Owners Association.

Landlord by Design, associates and owners, do not take any responsibility for the information in this article written and presented by Straight North internet Marketing and American Apartment Owners Association. You are using the information contained in this post at your own risk.

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