Learn How To Buy A House By Just Paying The Taxes

Summary

In this video, Ted Thomas, a tax lien certificate and tax deed authority, explains how you can buy properties at significantly reduced prices by paying delinquent property taxes. He outlines the process of purchasing such properties through county auctions, emphasizing the importance of thorough research, understanding legal implications, and checking property conditions before bidding. Ted also shares success stories of people who have profited from this strategy, while cautioning about potential pitfalls, such as remaining liens and poor neighborhood conditions.

Takeaways

• 🏠 You can buy a house by just paying property taxes, which is legal in all U.S. counties.
• 💼 If property taxes are not paid, the county may place a tax lien, followed by a levy, and eventually auction the property to recover the owed taxes.
• 💲 Properties can be purchased at auction for just the amount of delinquent taxes, sometimes for less than $500.
• 🌍 This opportunity exists in all states, with examples of properties being bought for a fraction of their value, such as in Los Angeles County.
• ⚠️ While mortgages and deeds of trust can be wiped out at tax auctions, other liens like IRS or municipal liens may remain on the property.
• 📊 Researching and identifying profitable properties requires examining the neighborhood, property condition, and title records.
• 🛠️ Buyers should be cautious of buying properties without physically inspecting them and understanding potential defects or title issues.
• 🚨 Attending auctions in person and conducting thorough due diligence is crucial, as there are no refunds once a property is purchased.
• 📈 The goal of this investment strategy is to buy low and sell high, with margins potentially leading to significant profits.
• 🗺️ Ted Thomas offers a tool called the 'magic map,' which helps users find tax auctions nationwide and identify potential properties.

Q & A

What is the primary concept discussed in the video?

The video discusses the concept of buying properties through tax lien certificates and tax deed auctions, where properties can be acquired by paying the delinquent property taxes owed.

Why do counties auction properties with delinquent taxes?

Counties auction properties with delinquent taxes because they need the tax revenue to fund essential services like schools, police, fire departments, and county employees. The auction helps the county recover the owed taxes.

What types of properties can be bought at tax auctions?

At tax auctions, various types of properties can be bought, ranging from small homes to large colonial houses. Some properties may be in good condition, while others might be neglected and require repairs.

Can mortgages and deeds of trust be wiped out during a tax auction?

Yes, mortgages and deeds of trust can be wiped out during a tax auction. However, other liens like IRS liens or municipal liens may remain on the property.

What should potential buyers do before purchasing a property at a tax auction?

Potential buyers should conduct thorough research, including checking the property’s condition, title defects, and the neighborhood. It’s advisable to have professional help from attorneys or financial experts to navigate the complexities of liens and other legalities.

What are some common mistakes people make when buying properties at tax auctions?

Common mistakes include buying properties without physically inspecting them, not checking for title defects, and purchasing properties in bad neighborhoods. Additionally, relying solely on online information without doing due diligence is risky.

What is the significance of doing homework before participating in a tax auction?

Doing homework is crucial because it helps buyers understand the property’s value, condition, and any potential legal issues. Proper research ensures that buyers make informed decisions and avoid costly mistakes.

What happens if the property purchased at a tax auction has defects or issues after the sale?

If a property purchased at a tax auction has defects or issues after the sale, the buyer is responsible for them. There are no refunds from the county, so it’s essential to conduct thorough research before bidding.

How can someone find out where and when tax auctions are happening?

People can find out about tax auctions by using resources like the 'magic map,' which provides information on auctions across different counties in the United States. The map helps identify auctions by state and county.

What is the potential profit margin in buying properties at tax auctions?

The potential profit margin in buying properties at tax auctions can be significant. For example, a student mentioned in the video bought a property for $9,100 and sold it for over $100,000 after making necessary improvements.

Outlines

00:00

🏠 Discovering Property Deals Through Tax Liens

The speaker introduces the concept of buying houses for a fraction of their value by paying delinquent property taxes. This is a legal process across all U.S. counties, where the county seizes and auctions properties whose owners fail to pay taxes. The county needs tax money to fund essential services, so properties are sold for at least the amount owed in taxes. The video promises to show examples of properties bought this way, sometimes for as little as $500, with no mortgages or deeds of trust involved.

05:01

📈 Research and Caution in Property Auctions

The speaker explains the importance of thorough research before purchasing a property at a tax auction. Potential buyers should start by selecting a specific county and understanding property values to ensure a good investment. Properties are sold 'as is,' meaning the county does not guarantee the condition or clear title, so defects might exist. The importance of examining the property's neighborhood and condition is emphasized, as well as the risks of buying unseen or without proper due diligence.

10:03

❗ Common Mistakes in Tax Auction Purchases

The speaker highlights common pitfalls in purchasing properties at tax auctions. Many uneducated buyers make the mistake of not visiting the property or checking its condition and title, leading to poor investments. The importance of inspecting the property and understanding the auction rules is reiterated, as auctions are final with no refunds. Buyers are cautioned against relying on luck or prayer in these transactions, as due diligence is crucial to avoid costly mistakes.

💼 Steps to Success and Profitable Reselling

A case study is presented where a student successfully bought a property at a tax auction for $9,100, significantly below its value. After researching the neighborhood and understanding the market, the student resold the property for a profit of over $100,000. This example underscores the profitability of the tax lien business when proper research and strategic thinking are applied. The speaker encourages viewers that anyone can learn and succeed in this business by following a step-by-step process.

🗺️ Finding and Navigating Property Auctions Nationwide

The video concludes by guiding viewers on how to find property auctions across the United States. The 'magic map' tool is introduced, which allows users to locate auctions in every county. By using this tool, buyers can easily find opportunities and begin their journey into the tax lien and deed investing business. The speaker reiterates the accessibility of this business, encouraging viewers to explore the opportunities available to them.

Keywords

💡Tax Lien

A tax lien is a legal claim by the government against a property when the owner fails to pay property taxes. In the video, it is explained that when property taxes go unpaid, the county places a lien on the property. This lien gives the county the right to eventually seize and sell the property to recover the owed taxes. Understanding tax liens is crucial as they are the first step in the process that allows investors to buy properties for a fraction of their value.

💡Tax Deed

A tax deed represents the transfer of property ownership from the original owner to a new owner, usually following a tax lien sale. The video highlights that if the property owner does not pay their taxes, the county can confiscate the property and sell it at an auction, offering the tax deed to the highest bidder. This concept is central to the video's theme of purchasing properties at a low cost through tax deed auctions.

💡Auction

An auction is a public sale where properties are sold to the highest bidder. The video discusses how counties sell properties at auction when the owners fail to pay property taxes. Auctions are a key method by which buyers can acquire properties for a fraction of their market value, as counties are primarily focused on recouping the back taxes rather than obtaining the property's full market value.

💡Due Diligence

Due diligence refers to the thorough research and analysis that a buyer must conduct before purchasing a property. In the video, Ted emphasizes the importance of performing due diligence, such as checking the property's condition, the neighborhood, and any existing liens. This step is crucial to avoid pitfalls and ensure that the buyer does not acquire a problematic property that could result in financial loss.

💡Mortgage

A mortgage is a loan secured by real property, typically used by individuals to purchase homes. In the video, it's explained that during a tax deed sale, the mortgage on the property can be wiped out, meaning the buyer acquires the property without this debt. This is a significant point as it underscores the potential value in buying tax-delinquent properties, where the new owner may not be responsible for the previous owner's mortgage.

💡IRS Lien

An IRS lien is a claim placed by the Internal Revenue Service against a property due to unpaid federal taxes. The video notes that while mortgages and deeds of trust can be wiped out in a tax deed sale, IRS liens and other government-related liens may remain on the property. This distinction is important for buyers to understand, as these liens could affect the property's value and the buyer's financial responsibility after purchase.

💡Caveat Emptor

Caveat emptor is a Latin term meaning 'let the buyer beware.' The video uses this term to emphasize that properties sold at tax deed auctions are sold 'as is,' with no guarantees about their condition or title status. Buyers must be aware of this principle, as it underscores the importance of due diligence and understanding that they assume all risks associated with the purchase.

💡Property Condition

Property condition refers to the physical state of a property, including any defects or damages. The video stresses the importance of inspecting a property's condition before purchasing it at auction. Since properties are sold 'as is,' buyers need to be aware of any repairs or renovations that may be necessary, as these costs could impact the overall profitability of the investment.

💡County Treasurer

The County Treasurer is a government official responsible for managing the financial affairs of a county, including the collection of property taxes. In the video, the County Treasurer's role in filing tax liens and conducting tax deed auctions is highlighted. The Treasurer is central to the process of enforcing tax payments and facilitating the sale of tax-delinquent properties.

💡Title Defects

Title defects are issues with the ownership history of a property that may affect its marketability or legal standing. The video mentions that properties sold at tax deed auctions may have title defects, and buyers should be aware that these could complicate the process of reselling the property. Understanding and addressing title defects is an important aspect of due diligence.

Highlights

It's possible to buy a house by just paying the property taxes, which is a legal process in all counties in the United States.

When property owners fail to pay their taxes, the county files a tax lien, followed by a levy, eventually leading to a property auction to recover the unpaid taxes.

Properties at these auctions can be purchased for a fraction of their value, sometimes as low as $500, depending on the state and auction.

Properties bought at tax auctions often come with no mortgage or deed of trust, making them particularly attractive for buyers.

While the mortgage and deed of trust can be wiped out, other liens, such as IRS or municipal liens, may remain on the property.

It's important to consult with professionals, such as attorneys or financial experts, to navigate the complexities of these transactions.

Research is critical when buying properties at tax auctions. Buyers should start by identifying the right county and understanding property values and neighborhood conditions.

All properties sold at tax auctions are sold 'as is,' with no guarantees on the condition or title of the property.

Common mistakes include buying properties without physically inspecting them or understanding the title and neighborhood conditions.

Once you pay for a property at an auction, there are no refunds, so due diligence is essential.

Auctions are public, but it’s crucial to attend in person or at least thoroughly research the property before buying.

One example shared is of a student who bought a property for $9,100, which had a tax liability of $66,000, and later sold it for over $100,000.

The 'magic map' is a tool that allows users to find tax auction properties in every county in the United States.

This business model doesn’t require any special licenses, making it accessible to anyone willing to learn the process.

Ted Thomas emphasizes that this is a step-by-step process that anyone can learn and succeed in with proper research and guidance.

Transcripts

imagine you buying a house for pennies

on the dollar and you get the

[Music]

house hey there everybody I'm Randy much

more importantly this is Ted Thomas

who's a tax lean certificate and tax

deed Authority now Ted a lot of folks

who clicked on this video may not

believe what they just read that you can

actually buy a house by just paying

property taxes people don't believe this

but let me start off by telling you this

it's the law in all counties in the

United States everyone must pay property

tax now what if those people don't pay

the property tax so what we getting at

is could we buy some of these properties

just by paying the tax I'm going to show

you example of that but let me give you

the nitty-gritty the nitty-gritty is

this the legislature of the state makes

all the laws and they govern the state

they tell everyone in the state you must

pay property tax all Property Owners

must pay now if the property owner fails

to pay the taxes what's really going to

happen it's going to happen quickly

because the county needs that money to

run the county so what the County

Treasurer will do is they will first

file a tax lean that's a claim against

the property that will be followed by a

levy whenever you see that word Levy if

it comes to you in a written document

that means the government's coming to

take your property okay so they Levy

against the property so they take the

property they push the property owner

off the property why do they do all that

because now they're going to confiscate

the property and they're going to sell

it at auction the local County doesn't

want that auction that does not want

that auction property but they have to

sell it so they can get the tax money

now why do they want the tax money

because they got to pay the school

teachers the police department the fire

fighters they've got to pay the County

Employees so the county is now going to

sell that property they don't care what

they sell it for but they're going to

sell it for at least the back taxes what

if you could buy that that property at

the back taxes well I'm going to show

you how just one minute well Ted with

starting bids being just the delinquent

taxes what kind of prices are we talking

about here I've seen properties sold for

less than $500 two bedroom one bath

homes livable homes with people living

in them they didn't pay the taxes I've

seen people nobody showed up at the

auction they bought properties for less

than $500 now it doesn't matter what

state you're in I've seen people in Los

Angeles I have students actually dozens

of students that have bought properties

in Los Angeles County some have bought

the properties for 9 cents on the dollar

with no mortgage and no DEA trust in Los

Angeles County California I personally

have bought properties in places like

New York where they big colonial homes

on three or four acres of land okay no

mortgage no de of Trust on the property

so there's plenty of very nice

properties now some of them are used and

abused some of them need tend to 11 care

I'm not getting brand new properties for

that but I'm getting them for really

good prices wow so the mortgage deed or

the deed of trust just gets wiped out uh

I mean what about other leans that might

be on that property Ted okay now this is

a confusing part of the business okay it

confuses people because we always say

there's no mortgage and there's no deed

of trust okay those leans can be wiped

out by the treasurer but the treasurer

can't wipe out the other leans all right

so you don't want to try to navigate uh

all these obstacles by yourself you

probably want to have a skilled attorney

tell you a little bit more about it you

might not want to have some Financial

professionals on your team to help you

out about it I actually use a coach

because I like to talk to a coach that's

been through all this but the point is

other lean stay on the property what

other leans could stay on an IRS lean

could stay on the property a municipal

lean could stay on the property so I try

to find people that have already worked

their way through they've already

navigated these difficult times and I

try to talk to them about how they get

around all that you are probably going

to have to learn from someone that's

either a coach or you're going to have

to hire a financial professional that

understands these different loans in

different Lanes keep in mind they're not

going to be wiped out from the property

the tax man can wipe out only so much

what can they wipe out they can wipe out

the deed of trust and the mortgage all

the rest of those loans are staying on

the property well now that the people

who are watching kind of understand the

concept of what we're talking about here

Ted what are the steps involved with

researching and identifying potential

properties for them to purchase okay

well this is the challenge for everybody

uh everybody would like to say I'm just

going to go buy that property well you

don't want to buy a property by just

deciding that okay this is a business of

abundance Nationwide there'll be at

least 5,000 auctions so takes a little

time to learn how to do it but it's just

a really a stepbystep process and it all

starts at the counties now if you st in

Delaware you got three counties to check

out and not very much start in Texas you

got 250 counties so narrow it down to a

county that's the first thing you want

to do now from there you want to start

figuring out some margins on property so

you can make money you want to buy it at

the lowest possible price and you want

to have property that have a good

assessed value so that you can resell it

all right now that doesn't include what

the market is around you so you're going

to have to look around the property that

you're buying and see what the

neighborhoods like however all property

is sold by the county

as is that means caveat emper which

simply means beware as is okay now the

county makes no guarantee as to

condition and they tell you we're not

warrantee that the title is clear in

other words there could be defects in

the title so when you're buying you need

to have those two things in the back of

your mind all right so defects you can

find all this out because it's all at

the county records so you need to do

that research and do it right are there

any common mistakes that people make or

put pitfalls they should avoid uh when

they're buying a house through a tax

sale it would really be good if

everybody would ask themselves that

question because a lot of people just

decide they're going to buy they just

say I'm going to buy this one I'm going

to buy that one and I'm going to tell

you right now uneducated people I call

them risk-takers because what do they do

they go out and buy property without

having boots on the ground without

looking at the property in other words

observing the condition of the property

or checking the title as we talked about

just Min checking for physical defects

or when they're on the property looking

at it looking at the neighborhood what

if the neighborhood is bad but the

property is good well you can't fix the

neighborhood but you can't fix the

property so just probably going to have

a heck of a time trying to sell that

property so you don't want to buy in bad

neighborhoods you want to buy good

properties in reasonable neighborhoods

and if you can fix them most everything

can be fixed on the property but if it's

in a bad neighborhood you can't do that

now many people attend an auction and

they pray that they're going to get a

property or many people never even

attend the uh auction they'll buy online

okay when they buy online they haven't

looked at the property so they're

praying it's going to be good I can tell

you right now prayer is not a good

business strategy at all so auctions are

all public anybody can attend uh but

going to look at the property is a huge

thing that everybody should think of so

let me repeat byy everywhere the auction

rules are the auction rules and I can

tell you right now if you invest in an

auction and you give the county your

money you're not getting it back there

is no refund in an auction so if the

property was bad or did it burned down

or there' been a fire or there had been

a wind storm or a flood or anything like

that I can tell you right now whatever

you bought you bought so when you pass

your money across the county to the

county they're not doing any refund it's

the law that they can't refund the money

so you need to make sure that you've

done your due diligence if you've been

watching this video you might have a

question for Ted perfect I'll tell you

what you do just leave it in the comment

section below and you will get an answer

while you're down there be sure to like

the video and subscribe to Ted's Channel

Ted how do people go about finding where

and when these auctions are happening

you know I'm coming that we to find

these properties in just a second but I

want to explain this okay folks this is

a money business okay the objective here

is is you want to buy at the lowest

price you possibly can have enough

margin so you can make 25 or even

$50,000 on this property all right now

I'm going to show you an example before

I tell you more information about how

you can get to these auction this

example is a student that bought a

property by paying just a few dollars

over the taxes that were owed the taxes

were owed were

$66,000 the student only paid

$9,000 but the student did his homework

so as I've said all along do your

homework what did the student do for

homework well first of all the student

went and checked around the neighborhood

the student bought this property for

$99,100 you might want to remember that

number $9,100 all right so that was a

bargain it was a three-bedroom two bath

property they checked around the

neighborhood and they found properties

that were worth more than

$150,000 but this was a handyman special

had trees growing all over it from the

satellite it looked like a bunch of

trees you could barely see the property

but the St the student paid bargain

price for the property and then he

cleaned it up and started to go about

the process of reselling it well if

they're going to resell it he spent more

time checking in the neighborhood

talking to Brokers find out what it was

really worth all right he's thinking a

little bit out of the box he's saying

why don't I try to sell it with a lease

why don't I try to sell it with

installment payments all right so they

figured out the challenges to sell it

and sure enough they did sell it and

when he sold the property he sold it so

he made more than $100,000 now think

think about what we talked about he

bought it at very close to the tax value

all right the tax that were owed and he

sold it and made over

$100,000 what's the beauty of this

business you don't need a license from

the governor anybody can learn how to do

it it's a step-by-step process everyone

that's looking at me right now could do

do the exact same business all right now

if you want to check out properties

Nationwide you can go right below me

there's a there's a map that you can get

it's called the it's called the magic

map you can go to the magic map and you

can find properties in every county in

the United States you just move your

cursor around it'll tell you as soon as

you get to a white circle it'll tell you

how many auctions are going to be in

that state you can push the button and

that'll tell you take you to the

different auctions I'm Ted Thomas see

you on the next

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video