Buying tax liens is an opportunity to own a property for pennies on the dollar. While this is entirely true when buying tax liens, develop proper due diligence procedures so you aren’t buying a piece of swampland and trying to evict alligators.
Here Are Five Quick Tips You Should Know Before Investing in a Tax Lien in Houston
Start Close to Home
You can buy tax liens anywhere. Initially, stick to Houston and the surrounding areas, where things are more familiar and accessible. Pick an area you know and are familiar with. This way you know the area and its ups and downs. Plus you’ll be able to easily drive to visually inspect potential properties and neighborhoods. Of course, you should always look at a property before buying the lien first. Just to make sure that there is a house there.
But learning the process closer to home helps you avoid mistakes of investing in properties sight unseen. Once you have a few deals under your belt, you’ll be able to develop a plan and process to determine if further locations are a good investment.
Be Patient and Happy with the deals in your area
Don’t try and force a deal if the numbers don’t work move on. Be happy with the ones you can get. So many People tire to make a deal out of nothing. It is always OK to walk away rather then get into a bad deal. Houston has a lot of tax foreclosures every month. Some months there may not be any good deals. Just wait they will come.
Do Your Homework
Investing in tax liens in Houston isn’t without risk. Property owners may not pay the property tax because the real estate has no value – maybe it was built on a nuclear waste dump. You need to do more than putting your eyes on the property and neighborhood.
Learn how to go through public records to find title encumbrances including other taxes, potential bankruptcy delays, mortgage information and other history related to the parcel. Make sure it’s a property you can rehab and flip or rent out as is. Either way, doing homework gets you the best potential return on your investment.
Get Organized from the Start
While the first tax lien or two that you buy won’t overwhelm you, as time goes on and your inventory grows, you’ll need an organized system in place for keeping track of investments locations, Redemption time lines, Rents and other things of importance.
A big problem for tax lien investors is not following through on the investment when they see the opportunity. It is managing the property ie. Taxes, insurance, rents and so on.
Investing in tax liens in Houston is a real business. It is not a hobby. Be organized so you can make money and have really fun hobbies, like traveling to Greece and learning to scuba dive.
Have an Accountability Partner
If you can, have someone you can bounce around research ideas with. If you can get a mentor, that is even better, but at least find someone who is willing to help you stay on track with budgets and research. This is especially true if you plan on attending a live auction that is on the first Tuesday of every month..
Undisciplined tax lien investors will continue to chase bids, going above budget and cutting into potential profits. An accountability partner should understand the bottom line dollars you plan on spending on each potential tax lien investment and help hold your hand down if you suffer from the “shiny object” syndrome.
These are the five quick tips you should know before investing in a tax lien in Houston. If you need any help, feel free to give us a call at 832-210-3088 or fill out the form on our website today. We’ll help you get started and avoid common mistakes along the way.