Investing on a slim budget

There are two types of people that go to the county tax auctions, and there is always some unfounded resentment. First, there are big investors. They have deep pockets, and they will typically bid up the price on higher-end properties, and walk away with dozens of liens at the end of the day. I’ve seen these people spend upwards of a million dollars at a single auction. Their goal is to invest for the purpose of getting financial return–that is, they don’t want title to houses, they are targeting houses that are occupied and the owners of which are likely to pay back the taxes and the substantial penalties. It’s a darn good investment, especially when banks are paying two percent on CDs!

On the other hand, there are small-timers who also attend. People who want to get just one or two properties. They’re not interested in getting interest, they want title to an actual house, either to live in or rent out. Now this latter category of person is no less worthy than the first category, but sometimes there is some resentment, which comes mostly from misunderstanding. I’ve heard a lot of these small-timers who attend county real estate tax auctions complain about the deep-pocketed investors taking all the properties, and mistakenly believing that they don’t stand a chance of getting anything. Nothing could be further from the truth! It’s just a matter of coming prepared, and waiting it out. You don’t have to have big money to play and win at this game. Here’s a few tips: Don’t walk away mid-auction in frustration. Come prepared with several properties to select from in case you get outbid on your first choice. And most importantly, remember that the guys out there with the big money are no better than you are.

There are a lot of houses out there that will slip through the cracks, that the big-time investors will not target. Remember, they’re looking mostly at high-end properties that probably will get redeemed before the end of the year anyway, so you are really targeting different areas. You want title to the house, so you are targeting a whole different category.

Come with as much money as you can muster, but don’t be intimidated because other people have more than you. All it takes is a couple thousand to win a good bid–and if you read my book, you’ll see that I got one for just $235!