Doing your due diligence is the most important element of investing in tax deeds. Doing it properly can lead to lots of profit, while ignoring this aspect of tax deed investing could cost you your investment.
Here are 5 tips to help you do your due diligence on tax deed properties to insure that you make a profitable investment!
1. Get the Property 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 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 Realtor.com and 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, but you could look up demographics that can affect your selling price.
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 known environmental problems. You may want to stay away from any properties that are near any of these problem sites.
Bonus #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 your own title search is to make sure that if you do find any lien holders, that they 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.
Joanne Musa is a Tax Lien Investing Coach and Consultant who works with investors who want to learn how to invest in profitable tax lien certificates and tax deeds. She is founder of www.TaxLienLady.com, and is the author of numerous e-books and online courses for tax lien investing. You can get her free Tax Lien Investing Secrets video e-course on tax lien investing at http://TaxLienInvestingSecrets.com.