Hello,

My name is Curtis and I live in Michigan.

My two brothers and I are starting a partnership to buy houses cheap and flip them for profit. We know there is a way to pick up houses with back taxes on them for cheap. However, none of us have experience doing this. I was wondering if you could tell me how to use back taxes to my advantage.

Thanks,

Curtis

You get yourself on a mailing list for tax auctions. All taxing districts conduct sales, usually once a year. At that time you will have the opportunity to bid on deliniquent properties. Generally such properties are run down so you will have to do some work on them before you can flip them.

Read the posts from Fr_Chuck:
https://www.askmehelpdesk.com/members/fr_chuck.html
He does this and has some posts that discuss it.

I feel special this morning I have been quoted.

First don't expect to find a lot of good houses that only need some paint.

If a home has a mortgage on it, the lending company will almost always ( and I said almost) pay the taxes and then add that to the deliquent bill and then foreclose and then they sale the house as a foreclosure.

So what you normally get is a house where someone died and no one paid the taxes, or where someone is so poor they can't afford to pay the taxes.
( and then you have to be the bad guy and evict them from their home of many years)

But normally you find empty lots or abandoned houses with no windows, holes in the roof and so on.

I have gotten several in areas where holes in the roof where crack dealers were sleeping and the such. If you live in a area where the bulding inspector does not bother you much, you may be OK, but in a area with a strict buidling inspector it can be different, if there is proof of crack residue in the house, guess what special crews to clean it up, if there is mold, guess what you have to pay a special person to test for it, to see if it is above certain levels and so on.

And the next real problem is you have no idea which of the properies listed will sell, since the people can pay their taxes till the morning of the sale. So if you have a list of lets say 200 property that are listed, only 30 or so may actually sale that morning, so if you go and look at them ahead of time, you can wastes weeks of searching for them to find none of the ones you wanted are for sale.

And then where do you live ( OK, I don't know all of the state laws) but some places have a redemption period where the past owner can still get it back from you by paying the amount you paid, plus interest plus improvements. ( the actual cost of improvements) so you put 20,000 into it, they come back pay the money you paid at the sale plus 10 percent interest on that amount and pays your 20,000 back, you make almost no profit.

About 1/2 of the properties I buy are redeemed, so I never do anything to them during that period. Now some states give you a title at the time of sale, not a tax certificate, so you will have to talk to the property tax department and ask them if you get clear title at sale or not.

Now don't feel too bad, if you buy an empty lot for 1000 and it is worth 15000 it is still a good profit for doing nothing but clearing a lot.

If you buy a lot with a old house lets say in Atlanta GA for taxes for 4000, and you pay 10,000 to tear the house down and the property sales for 60,000 you do better than fixing the house up. ** yes it does work that easy if you luck onto the right property.

Next the fliping is not near as easy as it looks on TV, you need to really find a good neighborhood and find the worst house in that area.
If you buy a bad house in a bad neighbor you are never getting larger dollars.

Let me give my current home for example, we found a home that the bank foreclosed on when the family went bankrupt. It is a 3 bedroom two bath in a up scale subdivision. The bank was holding out for full value and turned down several offers of 90,000 to 100,000. It sat empty for 6 years and no offer for the last 3 years

We finally bought it for about 65,000 Add landscaping, new carpet and some fresh paint we should be able to sell it for about 120,000 now.
But of course we are now living in it, and don't plan to sell right now.

But for everyone you see on TV where they make 50,000 a house, there are those who loose money also. This is not a poor mans hobby.
And if you don't have your own real estate sale company, remember from those "profits" you see listed on TV someone is paying that real estate sales commssion also.

Not saying it does not work, but I will be honest most of my "flips" were all flops,

Thank you for all the help. I know its not as easy as it looks, but thankfully we have help to fall back on should we need it, our father has done this sort of thing for almost 35 years, he knows what to do. Also he is financially backing us, at least until we can afford to buy him out.

I do believe that were I'm at has a redemption period, however I was under the impression that should we do improvements during the redemption period and the old owner chose to pay, I thought they only had to pay the taxes plus interest and not reimburse us for the improvements.

I know there is a lot of research involved in deciding on which houses to go with, this is nothing new to me, although I really do appreciate all of the info you have provided. If you have any more legal info, it would greatly be appreciate, or if you could point me in the right direction of where I could get the legal know-how to purchase a house on back taxes.