6 Due Diligence Tips For Tax Deeds

Posted on Apr 20 2015 - 2:41am by Lance Edwards
Joanne Musa

Joanne Musa

By JOANNE MUSA — One way to get multifamily properties is to find tax defaulted properties at a tax deed sale. Here’s an excerpt from my latest book with some due diligence tips for tax deed properties…

You have to be even more rigorous in doing your due diligence for tax deed properties than you do for tax liens because you are actually purchasing the deed to the property at the tax sale. If you make a mistake, there are no refunds, so here are six tips for doing due diligence on tax deed properties.

1. Get the Property Assessment Record. You want to get the property record from the tax assessor’s office. These records usually show all the information on the property used for valuation, the type of property, the assessed value, and sometimes you can even get the last sale data on the property.

2. Do a Title Search. I’m not talking about paying a title company to do a title search. I’m talking about searching the county records (using the owner’s name) to find the deed to the property and any liens that exist on the property.

3. Look at a GIS map. GIS stands for Geographic Information Systems and sometimes you can get a GIS map of the property from the property assessor’s website. This can show the area that the property is in and Geographic information like whether it’s in a flood plain or not.

4. Get Market Value and Neighborhood Information. There are various websites, like www.Realtor.com and www.Zillow.com that will give you comparisons of nearby properties and allow you to look up demographics about the area. I wouldn’t trust their valuations, they usually lag behind the market, but you could look up demographics on these web sites that affect the value of your tax sale properties.

5. Find Out About Possible Environmental Issues. Each state has an environmental website that list known environmental problems. Find the environmental website for the state that you are investing in and locate the list of known problem sites for the county. Do not bid on any of the properties listed as having known environmental problems. You may want to stay away from any properties that are near any of these problem sites as well. A portal that you can use to find public records databases and environmental websites is http://NETROnline.com.

6. Check Notifications. You want to check that proper notification of the tax sale was made to the delinquent property owner and all liens holders. One of the reasons for doing a title search is to make sure that all lien holders, as well as the property owner(s) were given proper notification of the tax sale. If the property owner or any of the lien holders were not properly notified of the sale, they could contest the sale in court and purchase the property back from you. You would get your money back, but you would have done all that work for nothing.

This article is an excerpt from Chapter 5 of my Kindle book Tax Lien Investing Secrets: How You Can Get Double Digit Returns On Your Money Without The Risk Of The Stock Market – Available on Amazon.com for $9.99

About the Author: Joanne Musa, the Tax Lien Lady, helps investors profit from tax liens and tax deeds. Want to get started investing in tax liens or tax deeds? Find out more about tax lien and tax deed investing at www.TaxLienLady.com.