How to Start Investing in County Foreclosure & Tax Deed Auctions, & Wholesalers

How to Start Investing in County Foreclosure & Tax Deed Auctions, & Wholesalers

The fact that you are reading this article shows that you have more than a passing interest in Florida Counties Real Estate Foreclosure Auction’s & Florida County Real Estate Tax Deed Foreclosure Auctions.

And your interest should be piqued as the aftermath of COVID-19 will probably leave In some parts of Florida a ravaged Real Estate market.

As a new investor, you are wondering what your options are, you may have a vague idea of what the Florida County Real Estate Foreclosure & Tax Deed Auctions are, & how they operate, but in reality getting a clear view of how the County Real Estate Foreclosure & Tax Deed Auctions work, can be confusing.

Nuances of Starting to Invest using County Auctions

After arriving in Florida many years ago as a seasoned Real Estate investor of some 35 years, the look, & style and operation of the County Real Estate Foreclosure & Tax Deed Auctions was so different from California, Colorado, and Kansas was mind-boggling! 

Some nuances defy logic & make no sense at all but once you have mastered the peculiarity’s, there are riches to be gained, if you apply yourself to the learning curve.

What is paramount when attacking the County Real Estate Foreclosure & Tax Deed Auctions is education, education, & more education, & is a great resource to not only find Real Estate but to also learn about the County Real Estate Foreclosure & Tax Deed Auctions in general. Without tooting our horn, will be your best resource.

Staring through the window of opportunity you have to assess what are your options & where should you start, I suggest at the very beginning! 

If this is your first rodeo at the County Real Estate Foreclosure & Tax Deed Auctions, I would suggest that you start small, that way any mistakes that you may make & you shouldn’t if you read all the articles & watch the videos on the website will also be small. 

Start Investing in your Backyard

Before you take on the challenge of finding Real Estate at the County Real Estate Foreclosure & Tax Deed Auctions, the first thing in my humble, but tried & trusted opinion is to seek out an area that you are familiar with. Let’s call this your ‘Farm Area’.

I appreciate if you are new to Florida or are operating from afar this can present a problem, In that case, I would suggest that you pick an area by whatever means that you feel comfortable with & draw a ten square mile radius around it & start to study the Real Estate within it.

Local or recently acquired knowledge of an area that you have lived or worked in will give you a distinct advantage when it comes time to bid at auction. You will immediately know where the bus stops, train station, library, schools, swimming pool, local areas of worship, in fact, all the amenities that would be attractive to someone looking to live in the area & knowing where these facilities are in relation to a particular piece of Real Estate is situated, it will help shape your judgment as to how much you are willing to bid at the County Real Estate Foreclosure & Tax Deed Auctions.

I wrote a tutorial in the February 2020 Monthly Peel about farming an area (Real Estate Farming with County Foreclosure Auctions) & I strongly suggest when you get a further ahead that you refer to this piece, as I believe my tried & trusted method will yield success. 

Push Your Boundaries Beyond your Backyard!

Thinking you know a particular area is not good enough in my opinion, so here is a ridiculous suggestion, one that I have employed & has worked effectively for me in the past. 

A few years ago, more than I care to remember I would take my car & drive my farm area looking at the different types of streets & the Real Estate that were on them, once I had found the areas that my gut told me I liked & felt comfortable in, (don’t ask me why, but everyone experiences this feeling) locations where I reasoned I could easily sell or rent, I would return on my bicycle (yep) & ride the areas.

I referred to these districts as my premium selections, so, by riding my bike I could look more closely at dead-end roads, flag lots & all sorts of hidden gems, all seen from a different perspective than you would not get from a car. 

I understand that everybody doesn’t own a bicycle nor necessarily wants to ride one, & on occasion, I did walk an area, I called it walking for dollars, others call it riding for dollars, whatever, it is a great way to get to know an area.

When distressed Real Estate comes up at the County Real Estate Foreclosure & Tax Deed Auctions within your farm area, you can approach it with a lot more confidence than someone who has no or very little local knowledge. 

These basics being said let us look at the different options you have within to secure a Real Estate deal in what most Real Estate sages believe will soon be a buyers’ market. 

Florida County Real Estate Foreclosure Auctions

The staple diet of some diehard Florida investors is the County Real Estate Foreclosure Auctions where many people that started with high aspiration’s crashed & burned & others with the same objectives flourished & became moderately to overwhelmingly successful.

The distinction between the two was how they educated themselves, or not as the case may be, those that went straight into a County Real Estate Foreclosure Auction thinking their instinct would get them through, very quickly found out that it wouldn’t. 

Those that succeeded, even though they may have been regular or seasoned investors from out of State applied themselves to the educational process, learning everything there is to know about Florida County Real Estate Foreclosure Auctions.

Do Research, then Do More Research!

Here is the first warning, you must spend a few weeks researching Real Estate that was successfully won at one of the County Real Estate Foreclosure Auctions by a third party & see exactly how well they did, or not as you might find out.

There is a lot to learn, & you have to begin somewhere & the website is a great place to start, in tandem with back research the Real Estate that you think you may have wanted to bid on at the County Real Estate Foreclosure Auction. 

If at some point you don’t understand some of the process or something has come up in your research that you don’t understand, then as a premium member of you can contact one of our experts for one-on-one counseling.

I should point out that our experts can only answer non-legal questions & cannot cast opinions on whether you should or should not bid on a piece of Real Estate. 

Due Diligence is not a Choice, it’s a Necessity

When you bid on Real Estate at a County Real Estate Foreclosure Auction you must consider it may not be free & clear of encumbrances, In other words, there may be other liens & judgements aside from the judgement you are bidding on.

There still maybe be an existing mortgage or mortgages, if you are bidding on an HOA (Home Owners Association) foreclosure.

Alternatively, the judgement you are bidding on is for a second mortgage, with a first mortgage still in place, this means you would still be responsible for the first mortgage debt, should you be the successful bidder.

Confusingly, if you have won a bank foreclosure you are still on the hook for any outstanding HOA liens, delinquent Real Estate Taxes, mechanical liens or IRS attachments, these are just a few of the encumbrances you may find attached to a Real Estate at the County Real Estate Foreclosure Auctions, were most definitely winning the bid on a final judgment, does not mean other debts disappear.

You can see how some people, the ones that did not think an education was necessary, came to grief.  As daunting as this all may seem, help & assistance is at hand as has a Title Search Department.

Once you have found desirable Real Estate that you would like to bid on at one of the County Real Estate Foreclosure Auctions can supply you with an O & E report (Owners & Encumbrances) that will detail all open (outstanding) judgments & liens, this will assist you in determining the amount of your bid at the County Real Estate Foreclosure Auction by deducting the debt from the Real Estate value. 

I know that many of you reading this article that are new to the County Real Estate Foreclosure Auctions will be taking a big gulp & scratching their head, but the reality is that once you get to know the rules and procedures there is gold in them hills. 

Florida County Real Estate Tax Deed Foreclosures Auctions

A lot of new investors not to mention County Real Estate Foreclosure veterans prefer the calmer waters of a Florida County Real Estate Tax Deed Foreclosure Auctions.

But warning number two, there are sharks circling & they can bite you hard.

The rule of thumb with Florida County Real Estate Tax Deed Foreclosure auctions is that all private debt is expunged when you buy a Tax Deed at a Florida County Real Estate Tax Deed Foreclosure Auction, however, all State & Federal encumbrances remain.

So, what is a Tax Deed at how do they come about & end up at a Florida County Real Estate Tax Deed Foreclosure Auction? 

A Tax Deed Sale originates from unpaid Real Estate Taxes.

Each year the County Tax Collector will collect delinquent Real Estate Taxes at Tax Certificates Sales, this procedure is carried out by auction & a winning bidder receives a Tax Lien Certificate which for clarity means the homeowner has a lien on his Real Estate for the delinquent taxes.

The winning bidder will be paid interest on the Tax Lien Certificate at a pre-determined interest rate which fluctuates from time to time and County to County. 

The homeowner has up to two years from the date the taxes become delinquent to pay off the Tax Lien Certificate with all the interest, legal & administrative charges.

If the homeowner fails to pay off the Tax Lien Certificate within the two-year time period the owner of the certificate can apply to the County Court for a public auction of the Real Estate for which they hold the lien.

This Is now what is called a Tax Deed Sale & the proceeds from the sale will pay off the Tax Lien Certificate with any overage (the real estate could sell for more than the Tax Certificates value) going back to the homeowner who unfortunately at this stage has lost their home to the winning bidder, which is where you came in.

County Tax Deed Foreclosure Auction Hazards

Warning number three, there are some peculiarities surrounding Tax Deed Sales, for instance, because you have bought a Tax Deed Real Estate you have to remember that a Tax Lien Certificate covers a specific time of delinquency & there may be other Tax Certificates associated with the Real Estate covering more recent periods that have yet to be foreclosed upon or delinquent debt that has not yet crystallized into a Tax Lien Certificate, these must be paid off in full. 

As a side note, seeing this happened last week to a very experienced long term premium member who forgot to check for delinquent water utility bills, this cost her over $3,000.

How did this go undetected you may ask? The simple answer is if the water utility company does not record a Lis Pendens or lien At the County Court there is not an O & E report in the world that will be able to pick this up, so the winning bidder must check this for themselves.

I throw this into the mix, so you understand it’s not all plain sailing in uncharted waters, education, and execution of procedures are paramount to a successful conclusion at a County Real Estate Tax Deed Foreclosure Auction. 

There are many more facets about County Real Estate Tax Deed Auctions, I have not even touched on why you need a Quiet Title Action after making the winning bid, however, the sole purpose of this first article is to establish beginners guide to the County Real Estate Foreclosure & Tax Deed Auctions with a brief glossary of what you can expect from each option that you may be considering as you enter this wondrous world.

in later issues of the Monthly Peel, I will give you a more detailed explanation of each section & sub-section to give you a clearer meaning & clarification of all the procedures and due diligence processes. 

There is a lot to learn & by tackling all the information in bite-size chunks I have found to be the best method when teaching students. 

Florida Real Estate Wholesaler Deals

We have a very large group of genuine Wholesalers covering many of the Florida Counties, featuring a multitude of Real Estate.

Some are free & clear of encumbrances, others are not, but it is buyer beware in all circumstances, and it will be up to you to conduct your due diligence.

For those of you that do not know how the Wholesaling of Real Estate here in Florida works, I will explain.

A genuine Wholesaler (and many are not, I will explain later) markets their service by many different methods to attract sellers to them as a Real Estate cash buyer they range from Google Adwords Campaigns, Email Blast’s, Postcard Mailing’s, Bandit Signs On The Side Of A Road (I am sure you have all seen them), Telephone Campaigns, Leaflet Drops & the more sophisticated, Radio & TV adverts, all methods are usually supplemented with a professional-looking website.

Most of you are aware of a company called ‘We Buy Ugly Houses’ and the Wholesale Real Estate business runs the whole gambit from this type of operation down to a one-man band, all doing a variation of the same theme.

The object of the exercise is to engage a homeowner, who is usually in a distressed position, maybe for example because of financial issues, experiencing a nasty divorce, bereavement in the family or an urgent relocation, to accept a below-market cash offer & sign an assignable contract with up to a 30 days inspection, & sometimes longer, if they can get it, which gives the Wholesaler time to advertise the Real Estate at a higher value than the contracted price with the homeowner (seller).

Good Wholesalers have a well-developed network of investors referred to in the wholesaling worlds as “Wholesale Buyers“, that are willing to take the Real Estate from them on an ‘as is’ basis with no or very little inspection period.

Once the Wholesaler has his buyer in a separate contract, the original contract with the homeowner (seller) is then closed by the Wholesaler, who then closes his contract with his investor/buyer, the difference In the two contracted prices is the profit for the Wholesaler.

Good Wholesalers are doing this multiple times a week, some would you believe that I know personally are closing on average up to 20 contracts a month! 

When I refer to genuine Wholesalers I allude to the notion that there is a flipside.

The Dark Side of Real Estate Wholesalers

Thankfully, you will not have to deal with these people or companies as has taken the pain out of finding the flaws in them & their supposed deals before you do, which can and will in most cases hurt you. 

All Wholesalers that are shown on are carefully vetted & they & their deals have to go through a vetting process and a declaration signed that all Wholesale deals offered on our website are originally contracted Real Estate to the Wholesaler that is offering them for sale. 

Any violation of this agreement results in a lifetime ban from the website. 

‘Daisy Chaining’ is a term applied to alleged Wholesalers and they are well known to us, that take other Wholesalers deals & details presenting them as their own & offering them to their ever-dwindling & changing buying network.

You can imagine the problems this causes, usually lots of them & when closing a deal of this kind it nearly always fails and ends in tears, wasting everybody’s time. 

Worse still, in extreme cases, earnest money is exchanged and never returned!

As with everything I have talked about here, there are lots of angles in Wholesale Real Estate Deals, but this is the basic premise of how the business works. 

More Ways to Launch your Investing Career Coming Soon!

As with the Florida County Real Estate Foreclosure Auctions & Florida County Real Estate Tax Deed Foreclosure Auctions I will go into more detail of the do’s & don’ts when dealing with Wholesalers in future issues of the Monthly Peel

Hopefully, you find all the above informative, not to mention interesting & I look forward to continuing your education in the Florida County Real Estate Foreclosure Auctions, Florida County Real Estate Tax Deed Auctions and Wholesaler Deals in the months to follow.

If you have any questions or comments please leave them in the comment box below.

Tony Stern

Born and educated in the UK, Tony began his real estate career in 1976. By 1982 Tony launched a real estate development firm. In the 1990’s he created, acquired & sold several companies including Star Refining an international precious metal refining company with offices around the world. Since 2001 Tony has been investing in all aspects of real estate, concentrating on the Florida foreclosure market. Seeing a need to help investors, in 2016 Tony co-founded,

2 thoughts on “How to Start Investing in County Foreclosure & Tax Deed Auctions, & Wholesalers”

  1. user namePhilip Kessler says:

    Thanks Tony, this was a great overview and intro guide for new investors. I am looking forward to the follow up articles. I have been seeing the target % profit vary from market to market. Do you have a general % margin goal that you set? Does that % change if you go outside of PBC or South FL, like up towards Brevard or Duval? Is the best indicator just the data that I can pull from previous auctions? Thanks again.

    1. user nameTony Stern says:

      Philip, glad you enjoyed, there is a follow-up article that’s just published on the website entitled ‘How Liens Work And How To Profit With Them’ It covers most every type of lien that you will encounter at a Florida County Foreclosure Auction and how you should attempt to deal with them.

      Concerning profits, I am strictly a risk and reward merchant the longer and harder the job, the more profit I want.

      On a quick grab the money and run project I will be happy to take less profit. Still, generally, I will never work for less than a 10% ROI on a six-month project, but of course, it depends very much on circumstances. In most cases, it hangs entirely on if you ‘bought right’ at the Florida County Foreclosure Auction.

      If I have to travel more than 20 miles from my ‘Home Farm Area,’ I demand on myself a higher return.

      There is always going to be that extra aggravation when you’re dealing with a project that you have to drive perhaps two or three times a week too, that involves traffic and logistics with local supplies.

      There is no fixed data available for the percentage you earn out of a deal in any given area my experience is all things are relative to a given set of circumstances, did you win the property at a great price, are the repairs of a budget that can give you an excellent return, etc. it is always on a deal by deal basis it just means you have to choose your projects carefully.

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