* $200 Real Estate Investments?
* Where are These $200 Investments?
* Isn’t There Lots of Competition?
$200 Real Estate Investments?
Is it possible for you to buy a piece of real estate for $200? If so, where would you find these properties? Ok, maybe you can scrape together the two hundred dollars. What if you have not-so-good credit?
It is possible for you to buy a piece of real estate for $200 or even less. Yes, even less. I have bought properties for a little as $15 and you can too, when you know where to look. It may be way easier than you think.
In the United States there are 3,033 counties. Each and every one needs tax dollars to survive. We all enjoy driving on good roads, walking on sidewalks, going to parks and sending our kids to decent schools.
The money has to come from somewhere. The majority of the money, in most cases, comes from real estate and property taxes. Who pays these taxes? We all do. We are all in the real estate business, whether you want to be or not.
You might say, “Wait a minute, I’m just a renter!” Not so fast. You are still paying someone else that is paying taxes on where you live, so you are paying taxes.
Even when you go to Starbucks, to a restaurant or even the grocery store, you are indirectly paying real estate taxes. Those in control of the real estate must pay taxes or the government will take over.
When the government takes control of the property they can sell the property at auction or OTC (over-the-counter)…to be continued…
Where are These $200 Investments?
… So where do you find a piece of real estate that you can buy for $200? You can buy directly from the government. That’s right. When you know where to look and what to look for, you will find tremendous deals.
Our government is practically begging us to take these screaming deal properties off of their hands. In many cases they will discount these parcels of real estate far below what is actually owed in back taxes.
Let me explain. Every state and every county follows their own rules when someone does not pay their real estate taxes. What many do, and what is commonly known, is Government Tax Auctions.
Tax Liens or Tax Certificates
There are two ways in which the government auctions the properties that have taxes owed on them. There is the lien auction and the certificate auction. It is almost a fifty/fifty ratio in which counties operate.
In a lien state, the counties will sell a lien on the property. That is, you will buy a lien on the property if you are the high bidder at the auction. The owner of the property will owe you the back taxes and a specified interest rate of return, if and when they redeem the property.
When the property owner does not pay you the amount owed, you may foreclose and take possession of the property after a certain period of time. This is a good strategy for those that want to make interest. You must also keep in mind that you may end up with a property you may not want.
In a certificate state you will get a deed to the property when you are the high bidder at the auction. This can be a good strategy for those that want to actually own the property.
The auctions can be very lucrative and fun. Many get wrapped up in the emotion of the auction and overpay. What most don’t realize is that many counties do not sell all of their properties at the auctions and still need to sell them.
How Can the Government Help You?
So, how does that help you? The counties are not in the real estate business. They are in the money business. They need to sell these properties. That is why they will sell them many times for pennies on the dollar. Many sell for under $200!
So how do you find these screaming real estate deals? …to be continued…
Isn’t There Lots of Competition?
Last time we talked a little bit about the difference in lien and certificate real estate tax auctions. At lien auctions you get to charge interest on your investment when and if the delinquent taxpayer redeems the property. At certificate auctions you get a deed to the property.
Where you find the screaming deals is from the states and counties sell the certificate. Not all of them and there are many. You actually get some of the best deals from the counties after the auction. That is, some of the very best deals are the properties that did not sell at the auction. How does that work?
Many counties will sell their properties OTC (over-the-counter). That means no auctions, no bidding or getting out bid and little to no competition. The counties still need the tax money and many are glad to sell them to you. Many times you can get them at a tremendous discount.
This is where you can get real estate for $200 or less. Turning these $200 properties into $2,000 in about 2 hours…next part coming soon…
I’m New to This, So What Do I do?
At this point, you may be thinking, ” I’ve never heard of this. What can I do to get started?” If this is sounding kind of foreign to you, don’t worry. It’s actually a very simple process. With just a little knowledge, you can easily buy your first property.
You can start by finding a state that is a certificate state. That is, one that you can invest in the actual property as apposed to a lien on the property. Next you will want to search for a county that will sell OTC (Over the Counter).
When first starting out, you will probably have better results looking for building and camping lots. Building and camping lots are easier to understand and are usually less complicated.
Keep it Simple
What I mean by less complicated is you do not usually have to be concerned with a previous structure or previous financing on the property. Properties that have prior structures or financing or just fine. They require more due diligence and many times a quiet title. More on that later.
For now, you’ll want to get your feet wet with a simple deal to understand and implement. Building and camping lots are generally both easy to understand and implement. They are usually easier for you to market and sell.
After you’ve narrowed your search down to the county, you will need to contact them. You will normally get the information you need from the county collector or treasurer. Sometimes they are called something else depending on the state and the county.
Many counties today will have this information online. Other counties you will still have to call. Make sure the counties will sell properties OTC so you get the certificate right away. And make sure there is not a redemption period.
What is a Redemption Period?
A redemption period is an amount of time that the county gives the previous owner to come and redeem their property by paying the back taxes and penalties. You will want to find out the procedures for each county, as they are all different.
Ok, so what about these building and camping lots?…more on this next…
Hello John Lee. I heard your interview on SiriusXM Urban View a couple of months ago. I bought your book and now I am so happy to discover your website. This blog is very helpful to me – thank you for writing it.
Now that I got to the end, I want to know more about the building and camping lots. Your book doesn’t really break this down. Could you finish this part of the blog or send me info? I plan to listen to all the episodes in your podcast so perhaps the answers lie there.
Thank you for sharing your knowledge.
Hi Regine, Thank you for your interest in the Dealionaire information. Is there something specific you would like to know? I would be happy to answer any of your question. Thanks again!