And I’m just guessing here, but if they miss a payment, I doubt you can just walk in and tell them “you’ve got 24 hours to pack your stuff and get the hell out”. Even for mortgage companies, you have to go through a huge legal battle, and it could take months.
And f they’re delinquent in taxes, they’re probably behind on their mortgage, which will have the first lien (aka first ones to get proceeds of the sale of the house).
Moreover, in texas, I think the only reason you can foreclose on a house is for nonpayment of the mortgage. I don’t even think the state can foreclose for tax purposes. (I could be wrong.). Other states are probably similar.
i looked into this. its not easy but you can make some decent money. its not a part time gig tho. you need a trusted real estate agent. you really need to know the market. your best bet is a small market vs a larger market
There is actually some quirk about this in Texas. I forget how it works, but you can basically pay the taxes for someone and charge like 100% interest. If foreclosed, the person with the mortgage has to pay you that interest before they can take the property. Texas is one of the only states that it can happen.
I’ve been to a few tax sales. All of them were in NJ, so I can not vouch for the any other state in the union.
It’s an auction. As the lots come up, you then bid on the amount of interest you are willing to receive. (It’s reverse style… meaning they open it at an arbitrary number, say 10%, and then bids go down. The person willing to accept the least amount of interest on the lein gets the right to purchase it. You then pay the tax bill to the town in cash, and the property holder now owes the town their bill plus the interest, in which they will then pay you upon receipt. (The town just wants the bill paid… they have already accounted for that amount in their budget. You are basically assuming the risk in exchange for very little return)
If they are delinquent long enough ,the foreclosure process begins and EVENTUALLY you can take claim to the property. (I hear it is a pain the a**).
While on paper this sounds good, here is my take on it:
There are very few good properties. A lot of people with mortgages elect to roll propert tax into the mortgage payment in escrow. It saves them a few bps. Your mortgage company pays your bill for you and are ADAMANT about paying the taxes. So there aren’t really any nice homes avail. The properties that do come up are alot of the time vacant lots, non-developable land, and other undesireable properties that are nothing to the owner but a tax bill. The owners can’t sell them, and don’t want to pay the taxes… In thier mind its “go ahead and foreclose, all you are getting is property that only has value in the eyes of the tax accessor”. You may own it, but no one will buy it, and you’ll soon get sick of the tax bill just like the last guy.
The remaining good properties are bought up by large banks. These guys come in and bid the interest down to 25bps or less. At all the auctions I went to, there were always two or three guys in suits buying on behalf of banks. They had a list of the lots they wanted, and bid them all down to nothing. Any property with real value auctioned for next to nothing. What was left was the scraps no one wanted… these all sold, but for nothing near the 10% or even 5% range. Not worth the risk… you layout the bill upfront on non-marketable land, and more than likely will have to pay a lawyer to walk you through the foreclosure process. At the end of the day you simply bought a cash-draining asset.