Redeemable tax deed, what it is, and how does it differ from a standard tax deed? Unlike a standard tax deed, where you get ownership right away. A redeemable tax deed gives the original owner extra time, called the redemption period. This is to reclaim their property by paying back the auction price plus a penalty or interest. If they redeem, you earn a profit from the penalty. If they don’t, you get full ownership of the property, often for much less than its market value.
Here’s how it goes: You attend an auction and win the bid. You now hold the deed to the property. But, the original owner has a set amount of time to pay you back. This period varies depending on the state, but it could be anywhere from six months to two years. If the owner redeems the property, you get your money back plus a nice penalty fee. If they don’t, the property is all yours.
Why Invest in Redeemable Tax Deeds?
High Returns: The penalties for redeeming the property can be pretty high. This means you could make a good profit even if the owner pays you back soon after the auction.
Chance to Own Property: If the owner doesn’t redeem the property, it’s yours. You might get a piece of real estate for much less than it’s worth.
Less Competition: There’s often less competition compared to other types of tax sales. This makes it easier for individual investors to get in on the action.
Flexibility: Redeemable tax deeds let you profit from penalties or take ownership of the property. This gives you flexibility based on your investment goals.
Things to Keep in Mind
Redemption Periods Vary: Each state has its own rules for how long the redemption period lasts. It’s important to know these rules before you invest.
Legal Stuff: These deals can be more complex legally. Talking to a lawyer who knows about tax sales is a good idea to ensure everything is in order.
Limited Availability: Not all states offer redeemable tax deeds, so you might need to research or travel to find opportunities.
Redeemable tax deeds are a great way to start real estate investing without the high risks of buying property directly. With the proper knowledge and preparation, this could be your subsequent big investment success.
Ready to start redeemable tax deed investing? Schedule a call or access our FREE tax lien and tax deed courses to learn how to begin. Get all the tools you need for success: Free Courses & Book a Call.
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Lien Sales Annually Oct – Nov. Deed Sales Are Held on a Needed Basis and Only on Properties That Were Not Sold at Lien Sale and Were Held by the County for 18 Months
10% Penalty if Redeemed in 1st 6 Months, 15% Penalty if Redeemed in Months 6-12, but Only on the Taxes and Fees Not the Overbid. Overbid Amount Receives 5% Interest.
Redemption Period:
1 Year if Sold at County Sale, Liens Not Sold at County Sale Are Certified to Commissioner and Sold in “Commissioner’s Certificate Sale” With 120 Day Redemption Period
Online Auction:
Yes
Over the Counter:
No but There Is a Second Auction Called a Commissioners Certificate Auction With a Shorter Redemption Period of 120 Days
25% Penalty Per 6 Months for Non Homestead or Special Land Use Properties. If 2 Yr Redemption Period Applies 25% for 1st Year and 50% Penalty for 2nd Year
Redemption Period:
6 Months for Most Properties. 2 Years for Homestead and Special Land Use Properties
Online Auction:
The Vast Majority No, but in 2019, Two Counties (Victoria & Orange)
“Upset Sale” First With Premium Bidding Which Does Not Extinguish Other Liens, Followed by “Judicial Sale” Where All Liens With the Exception of Irs Liens Are Extinguished
Frequency:
Annually Throughout the Year. Upset Sales Typically Held in the Fall. Judicial Sale Typically in the Spring but Could Be Anytime After the Upset Sale.
Interest Rate / Penalty:
N/A
Redemption Period:
N/A
Online Auction:
Very Few
Over the Counter:
Yes Through “Repository” List With County Acceptance
Understanding Redeemable Tax Deed
Click on the State of your Preference
What Are Redeemable Tax Deeds?
Redeemable tax deed, what it is, and how does it differ from a standard tax deed? Unlike a standard tax deed, where you get ownership right away. A redeemable tax deed gives the original owner extra time, called the redemption period. This is to reclaim their property by paying back the auction price plus a penalty or interest. If they redeem, you earn a profit from the penalty. If they don’t, you get full ownership of the property, often for much less than its market value.
How do Redeemable Tax Deeds Work?
Here’s how it goes: You attend an auction and win the bid. You now hold the deed to the property. But, the original owner has a set amount of time to pay you back. This period varies depending on the state, but it could be anywhere from six months to two years. If the owner redeems the property, you get your money back plus a nice penalty fee. If they don’t, the property is all yours.
Why Invest in Redeemable Tax Deeds?
High Returns: The penalties for redeeming the property can be pretty high. This means you could make a good profit even if the owner pays you back soon after the auction.
Chance to Own Property: If the owner doesn’t redeem the property, it’s yours. You might get a piece of real estate for much less than it’s worth.
Less Competition: There’s often less competition compared to other types of tax sales. This makes it easier for individual investors to get in on the action.
Flexibility: Redeemable tax deeds let you profit from penalties or take ownership of the property. This gives you flexibility based on your investment goals.
Things to Keep in Mind
Redemption Periods Vary: Each state has its own rules for how long the redemption period lasts. It’s important to know these rules before you invest.
Legal Stuff: These deals can be more complex legally. Talking to a lawyer who knows about tax sales is a good idea to ensure everything is in order.
Limited Availability: Not all states offer redeemable tax deeds, so you might need to research or travel to find opportunities.
Here are the states where you can find them:
Conclusion
Redeemable tax deeds are a great way to start real estate investing without the high risks of buying property directly. With the proper knowledge and preparation, this could be your subsequent big investment success.
Ready to start redeemable tax deed investing? Schedule a call or access our FREE tax lien and tax deed courses to learn how to begin. Get all the tools you need for success: Free Courses & Book a Call.
Sign up or log in to view the full content.
Join Us
Learn how to get 18-36% returns on your investment and buy property for as little as $500 with tax lien and tax deeds.