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How To Create Your Own Tax Delinquest List in Any Market

If someone told you that you could purchase a $250,000 house for $50,000 would you do it?

Chances are, if you’re a savvy investor, you’d be all over it.

Now, let’s go one step further.

What if you could find a seemingly endless supply of these deals — finding properties for sale for pennies on the dollar — what do you think you could accomplish in your business?

Let’s say you knew exactly what to look for, how to find them, how to negotiate for them, and how to ultimately add them to your portfolio WITHOUT taking on a ton of debt to do it.

Think you would be able to grow your investing business year-over-year?

In this guide, we’re going to help you understand the tax delinquent property strategy, where to find an endless support of these properties, how to quickly buy them, and how to repeat the process over and over again.

By the time you’re done reading, you’ll know exactly how to find and build a tax delinquent list and skyrocket your investing business’s growth.

But first…

What Is A Delinquent Tax List?

It’s a blessing and a curse that many investors simply don’t realize these lists exist.

It’s a blessing for the investors who know the power of tax delinquent lists and use them to scale their real estate portfolio.

But it’s a curse for new and upcoming investors who don’t realize how close to success they really are when they’re trying to use the same strategies most mainstream investors are using.

The reality is, though, that some of the best real estate deals simply go unnoticed by most investors.

Luckily for you, somewhere down the line, you got turned onto the potential in a tax delinquent list.

As you know by now, every property owner in the U.S. is required to pay annual taxes on their property.

This means that local municipalities, cities, counties, and states are required to keep detailed records on the properties within their jurisdiction.

These records include:

  • The property owner’s name.
  • The date they purchased the property.
  • What they paid for it when they purchased it.
  • How much they owe in taxes.

And a lot more.

This information will be included in the public record which means you can find the data for ANY property in the U.S. as long as you know where to start looking.

Typically, county websites will give you this information.

Other times you can use services like Propstream to find the information you’re looking for.

The records keep track of who is up to date on their tax payments — and who is delinquent.

When they are delinquent long enough, the city, county, or state can begin proceedings to seize the property in exchange for the delinquent tax payments being fulfilled.

How Tax Delinquent Lists Work

When an owner fails to pay their fair share in taxes, the county treasurer or tax collector responsible for tracking the payment of these taxes will begin creating a list of anyone that owes them money.

Anyone who is delinquent on their property taxes will be added to this list.

Then, the county will wait anywhere from one to five years for the payments to be made on the back due taxes on the property.

If these taxes go unpaid for more than the statutory time period, the county will begin proceedings to seize the properties from their owners via a method called tax foreclosure.

It’s similar to a bank foreclosure, where the property owner owes the bank an excessive amount of money, but instead of the bank seizing the property, it’s the county who is owed the taxes that begins the process.

If the owner fails to pay their property taxes even after being notified of an impending seizure of their property, the property will be seized and the county will take ownership.

Then the county will put these properties up for sale or auction to investors in order to recoup the property taxes that were overdue.

How To Find A Tax Sale List

To start finding these upcoming tax sales, there’s a few different strategies you can use.

There will typically be a few different places the lists will be posted — mainly in an effort to get the attention of the property owner so they will pay their back due taxes.

When they go unpaid, though, these same sources will list the upcoming auctions.

Those could be nationwide lists, local newspaper lists, countywide lists, or city lists.

Rather than waiting for these lists to come out (since a ton of other investors are looking through the same lists) you can use a tool like Propstream to start finding them yourself.

To start filtering for tax delinquent properties in Propstream, check out the video tutorial below.

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You’ll also be able to search for other Quick Lists inside of Propstream:

  • Owner Occupied
  • MLS Status
  • Pre-Foreclosure
  • Property Liens
  • Bankruptcy
  • Divorce
  • Equity Information

And more.

Tools like Propstream are how you get ahead of other investors, especially when it comes to finding tax delinquent properties before they’re sent out through mass publications.

To learn how you can use it as effectively as possible by finding both tax liens as well as other types of liens that could trigger a sale for pennies on the dollar, check out How To Find Liens On A Property.

How To Find Tax Auctions

Once the properties have been seized by the county, they’re sent off to auction.

Here, investors will have an opportunity to bid on the property in an effort to purchase it.

The county’s goal, in these instances, is to recoup the cost of the unpaid back taxes. They don’t care what happens to the home after the auction as long as they’re made whole on the money owed to them.

One of the easiest ways to find these auctions is to simply call your county treasurer or tax collector.

They can guide you through looking up the lists of existing tax liens in the county or point you in the right direction in terms of finding an upcoming auction.

From there, once you know which properties have liens against them or may be facing the auction block, you’ll need to perform due diligence to figure out how much you’re willing to bid on the property.

While there are some amazing deals to be had, you also need to remember that a lot of the properties on the tax lien list have been neglected for years — so you’ll want to account for that in your bidding strategy.

After you’ve learned when and where the auctions will happen, you’ll want to register so you’re able to bid and then show up to the auction with money in hand.

How to Invest In Tax Delinquent Properties

Before you show up to the auction, though, you want to perform due diligence on the properties you’re interested in purchasing.

You can look up the addresses online.

You’re looking to see what other properties in the area are selling or renting for. You also want to see if there may be up-to-date pictures on the property you’re interested in.

Then you have a few options.

You could offer to purchase the tax deed before the auction if you see enough potential in the property.

This strategy could save you a ton of time and money over showing up at the auction and potentially getting into a bidding war with another investor.

You could also reach out to the property owner before the auction, let them know you’re interested in purchasing their property, and potentially working out a deal that saves you time and money.

Or, you can wait for the auction to start and then show up.

Sometimes, you may be the only investor that shows up interested in the property, making it possible for you to get an even better deal than you would by reaching out to the property owner first.

Other times, though, you may have other investors interested in the property, too, creating a bidding war that drives the price up higher than you wanted it to go.

If you reach out to the owner and are unable to come to an agreement with them before the auction, plan on being at the auction when the property goes live and see how it goes.

How To Bid On Tax Delinquent Properties

Before you start bidding on properties, remember the golden rule: do your due diligence.

While these properties may be behind on their taxes, there may be other liens that exist on the property.

For instance, if they had a contractor working on the property, to replace the roof as an example, and failed to pay the contractor for their work, the contractor may have placed a construction lien on the home.

In order for you to purchase the property, you’ll be required to cover the back due taxes and any fees associated with the auction while ALSO covering the cost of the lien to make the contractor whole.

Since counties also charge interest on the back due taxes, you’ll be required to cover that interest in order to make the county whole.

These extra costs need to be accounted for while you’re bidding to ensure you’re going to be able to turn a profit if you win the auction and take possession of the property.

To protect your profits, you want to look out for different types of liens:

  • Mortgages
  • Personal Loans
  • Lines Of Credit
  • Deed of Trust
  • HOA
  • IRS
  • Medicaid
  • Child Support
  • Municipal
  • Code Enforcement
  • Mechanics
  • Contractor

Each of these liens could wipe out any potential profit margin you may have thought was left in the deal if all you looked at were the back due taxes.

Tax Lien Certificate vs Tax Deeds – What’s The Difference?

One other important thing to take note of is the difference between a tax lien certificate and a tax deed.

You’ll see both terms when you’re starting to look into tax delinquent properties.

A tax certificate refers to a lien placed on the property at the local level.

When you’re bidding on a tax certificate, you’re essentially bidding on the right to collect interest on the back due taxes, the same way the local county would collect the interest.

This can range anywhere from 2% to 36% depending on the location of the property.

Then, if the outstanding balance on the back due taxes is fulfilled before a tax deed is sold, you’ll be reimbursed your investment in the certificate as well as any interest that has accrued.

Tax certificates are a way to alleviate the county of the burden of collecting while giving an investor a chance to make money and the property owner a chance to save their property from seizure.

A tax deed, on the other hand, means that the purchaser is entitled to take ownership of the property.

When a tax deed is sold, the property is then transferred to the deed purchaser.

While purchasing tax certificates can be a great way to generate passive income, tax deeds tend to have more potential upside — as long as you’re making sure there are no hidden pitfalls like other liens.

Tax Delinquent List – Final Thoughts

Investing in tax delinquent properties can be a great way to grow your investment portfolio.

The key to making this strategy work is knowing what you’re looking for, what may be hiding underneath the surface, and what needs to happen for you to turn a profit.

If you’re interested in investing in tax delinquent properties, we recommend using a tool like Propstream to help perform due diligence before you start getting into the process of purchasing the property.

When done the right way, you can build your entire business around this strategy.