7 Best Practices for Buying Tax Delinquent Properties

When homeowners fall behind on property tax repayments, their homes become tax delinquent. The municipality will remind them to pay. However, if they don’t, the property will be sold at a tax sale.

Buying tax-delinquent properties is an excellent way to develop your portfolio. You can improve them and convert them into rentals or sell them. However, although these properties are often sold at deep discounts, they also have risks. For this reason, it’s crucial to understand how they work.

Below, we share best practices for buying tax-delinquent properties.

Learn Local Laws and Procedures

Tax delinquent properties are bought in large numbers depending on the municipality. This includes the type of sale, redemption period, bidding process, and payment method. Before buying these properties, you must learn the local tax sales laws.

Do they hold tax deeds or tax lien sales? Do they have redemption periods? Answering these questions can mean the difference between walking out of a tax sale as a new property owner and waiting several months or years before foreclosure on the property.

If you are interested in owning properties outright, you should look for municipalities conducting tax deed sales with no redemption period, not tax lien sales.

Get Information as You Can About the Property

Delinquent properties are sold ‘as is’, and no home inspection is typically performed before real estate sales. This means you could end up with a property with a leaking roof, mould, or a completely damaged interior, but you should still make these investments.

Conduct thorough research on the property by looking for public details. Do a title search to uncover any other liens and encumbrances attached to the property or disputes in ownership. If that is manageable, get as close to the house as possible to see how it looks. Ask a neighbor what they know about the property.

Set a Budget and Stick to It

You will want to set a budget depending on the property’s condition. Having a budget is important because you may spend less without one. Talk to a real estate agent in the area to get an idea of the market.

Determine your budget’s maximum bid, repair cost, and potential legal fees. Keep in mind that the cost of repairs may exceed your expectations. Set aside funds for unexpected expenses like more extensive repairs.

Make Your Best Bid First

Depending on the bidding process, you can use several strategies. For instance, you’ll only get one bid if it’s a public tender. In this case, you must give your most competitive bid. Whether it wins or not depends on whether other bidders believe the property is more valuable and are willing to pay more than you can.

Have a Plan for the Property

Before bidding on a property, have a clear plan for what you will do with it. If you do, you will be stuck with it with no idea of how to make a profit. This can be challenging, especially for novice investors needing more funds.

Depending on the property’s location, you can fix it up and rent it out as you wait for it to appreciate. If you need quick money to invest elsewhere, you could sell it with or without major repairs.

Wait Until the Redemption Period Expires

As a novice investor in delinquent properties, you may think it will save you time to fix a property during the redemption period. However, that would be a mistake. Making repairs or renovations during this time is like working on someone else’s house and hoping they sell it to you. The original owner can still pay the debt and return the property.

If this happens, they’ll only pay you the amount you paid at the auction plus the predetermined interest. They will not have to pay for renovations or repairs. Always wait until you have full ownership before buying tax-delinquent properties.

Network with Professionals

You must connect with experts in this area to develop a real estate portfolio with tax-delinquent properties. Talk to real estate lawyers who focus on these types of properties. They can help you understand the tricky legal issues of buying tax-delinquent properties.

Real estate agents are also important because they know about local market conditions, trends, and property values. Experienced investors in tax-delinquent properties can be mentors and give you valuable advice.

New and experienced investors can invest in tax-delinquent properties. However, you need to understand their potential risks and rewards before investing. This way, you can follow best practices to mitigate risks and increase your chances of profit.

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More Recommended Ebike/Scooters

Check out these other ebikes and scooters I've reviewed:

Urban Arrow Ebike – Last year, I made one of the largest purchases I’ve ever made – I bought a $9,000 electric cargo bike from Urban Arrow. In my Urban Arrow review, I will discuss what it is and why I decided to buy this bike, as well as discuss how impactful a bike like this can be on your journey to financial independence.
Troxus Explorer Step-Thru Ebike – The Troxus Explorer Step-Thru is a fat-tire ebike that I’ve had the pleasure of riding for a while now. It has amazing power, great looks, and awesome range. If you’re looking for a great fat-tire ebike that offers a lot for the price, the Troxus Explorer Step-Thru is definitely one for you to consider. Check out my Troxus Explorer Step-Thru Review.
Hovsco HovBeta Ebike – The HovBeta is a folding ebike with great specs and a lot of interesting features, and importantly, it’s sold at a good price point. I’ve had a blast commuting with it and using it to do deliveries with DoorDash, Uber Eats, and Grubhub. Check out my Hovsco HovBeta Ebike Review.
Vanpowers Manidae Ebike – The Vanpowers Manidae is a fat tire ebike that I’ve been riding as my primary winter commuting bike and have also been using it to do food delivery with apps like DoorDash, Uber Eats, and Grubhub. After clocking in a decent number of miles with this ebike, I wanted to write a post sharing what my experience with the Vanpowers Manidae ebike has been like. Check out my Vanpowers Manidae Review.
Sohamo S3 Step-Thru Folding EBike Review – A Great Value Folding Ebike – The Sohamo S3 Step-Thru Folding Ebike is an entry-level folding ebike that offers a lot of value for the price point. I’ve been riding the Sohamo S3 for a while now, putting the bike through its paces, and I have to say, this bike has exceeded all of my expectations. Check out my Sohamo Review.
KBO Flip Ebike – The KBO Flip is an excellent bike. I’ve had a great time riding it and think it’s a versatile bike that can be used for a lot of purposes and can fit a variety of lifestyles. It’s worked out great for me as a general commuter bike and as a food delivery bike. Check out my KBO Flip Review.
Hiboy P7 Commuter Ebike – The Hiboy P7 is an excellent electric commuter bike that’s offered at an affordable price point. The range and speed of this bike are both very good, so you won’t have any trouble getting anywhere you need to go with it. As a food delivery vehicle, this is also good – with how much range it offers, you’ll be able to work all day on a single charge. Check out my Hiboy P7 Commuter Electric Bike Review.
Himiway Escape Ebike – The Himiway Escape is an interesting bike for anyone looking for a moped-style ebike. If you’re a gig economy worker, the Himiway Escape is particularly interesting and it’s possible to think of it as an investment, especially if you can opt to do deliveries with the Himiway versus using a car. It’s not cheap, but you can definitely make your money back when you compare the mileage you’ll put on your car versus using an ebike. Check out my Himiway Escape Bike Review.
Espin Sport Ebike – The Espin Sport is a good ebike for someone who is looking for an ebike that feels and rides more like a regular bike. There are many ebikes that are really only bikes in name. In reality, they’re basically electric mopeds. The Espin Sport, by contrast, is a bike you could probably ride without the battery and you’d feel like you’re just riding a regular bike. Check out my Espin Sport Review.
Varla Eagle One Scooter – The Varla Eagle One is an excellent scooter that can make sense for a lot of people. It can work as a primary mode of transportation. You can use it to work on gig economy apps like DoorDash, Uber Eats, and Grubhub. And it can also be a recreational vehicle if you’d prefer to use it for that. Check out my Varla Eagle One Review.
Varla Falcon Scooter – The Varla Falcon is an excellent scooter that offers a good amount of power at a lower price point compared to more powerful scooters. It’s not exactly an entry-level scooter, nor is it a high-powered scooter. I think it fits somewhere in-between those two categories – an intermediate scooter if I had to give it a category. Check out my Varla Falcon Review.
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Hiboy S2R Scooter – The Hiboy S2R is one of the more interesting electric scooters I’ve been able to test out. It’s not a high-powered scooter, but for an everyday transport option, it’s very useful, especially given some of the unique features that it has. Indeed, for the price, the Hiboy S2R might be the best value scooter I’ve used. Check out my Hiboy S2R Review.
Fucare H3 Scooter – The Fucare H3 is a fun scooter and I’ve enjoyed testing it out. For a daily commuter or quick trips or errands, the Fucare H3 is probably the scooter I’ll use. It’s portable and easy to maneuver, so it’s just easier to take on the road when I need it. Check out my Fucare H3 Scooter Review.

More Recommended Investing App Bonuses

For additional investing app bonuses, be sure to check out the ones below:

M1 Finance ($100) – This is a great robo-advisor that has no fees and allows you to create a customized portfolio based on your risk tolerance. You also get $100 for opening an account. Check out my M1 Finance Referral Bonus – Step-By-Step Guide.
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More Recommended Bank Account Bonuses

If you’re looking for more easy bank bonuses, check out the below options. These bonuses are all easy to earn and have no fees or minimum balance requirements to worry about.

Upgrade ($200) – Upgrade is a free checking account that’s currently offering a $200 referral bonus if you open an account and complete a direct deposit. These bonus terms are easy to meet, so it’s well worth doing this bonus as soon as you can. Here’s a post I wrote with more details: Upgrade $200 Referral Bonus – Step By Step Directions.
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US Bank Business ($900) – This is a fairly easy bank bonus to earn, since there are no direct deposit requirements. In addition, you can open the Silver Business Checking account, which comes with no monthly fees. Check out how to earn this big bonus here.
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Varo ($25) – Varo is a free fintech banking app similar to Chime or Current. It’s currently offering a $25 bonus to new users that open a new Varo account with a referral link. The bonus for this bank is very easy to meet, all you need to do is spend $20 within 30 days of opening your Varo account. Check out my step-by-step guide to learn how to earn this bonus.

Kevin is an attorney and the blogger behind Financial Panther, a blog about personal finance, travel hacking, and side hustling using the gig economy. He paid off $87,000 worth of student loans in just 2.5 years by choosing not to live like a big shot lawyer.

Kevin is passionate about earning money using the gig economy and you can see all the ways he makes extra income every month in his side hustle reports.

Kevin is also big on using the latest fintech apps to improve his finances. Some of Kevin's favorite fintech apps include:

SoFi Money. A really good checking account with absolutely no fees. You'll get a $25 referral bonus if you open a SoFi Money account with a referral link, and an additional $300 if you complete a direct deposit.
5% Savings Accounts. I'm currently getting 5.24% interest on my savings through a company called Raisin. Opening a Raisin account takes minutes to complete, it's free, and all of your funds are FDIC-insured. I explain how it works, why I'm now using it to store my emergency fund and any other cash savings I have, and why I recommend everyone check it out in this review.
US Bank Business. US Bank is currently offering new business customers a $900 signup bonus after opening a new account and meeting certain requirements.
M1 Finance. This is a great robo-advisor that has no fees and allows you to create a customized portfolio based on your risk tolerance. You also get $100 for opening an account.
Empower. One of best free apps you can use to monitor your portfolio and track your net worth. This is one of the apps I use to track my financial accounts.

Feel free to send Kevin a message here.