I get this question a lot and wondered if it’s also a concern that you have about flipping houses:
“I want to start flipping houses, but I want to start with a low-risk flip. I want to flip a cheap house as my first flip and then go from there once I get a deal under my belt. Where can I find cheap houses to flip?”
You might be struggling with the thought of putting all your chips on the table with your first flip.
Fortunately, there is a way you can acquire a property very inexpensively, sometimes as low as $500 or $1,000.
In the interest of full disclosure, getting houses this way requires more patience than if you buy from the MLS. You also have to be willing to put up with a few inconveniences.
Where do you find these bargain houses?
You find them at Tax Deed Auctions.
This is hands down the best source of (very) inexpensive houses.
A tax deed auction is the only place where a seller’s asking price has nothing to do with the value of the property.
The “reserve” or minimum bid, is usually equal to the amount of the back taxes.
– A property is worth 100k.
– 5k is owed in back taxes.
– The minimum bid would be 5k.
If you bid 5k and you’re the only bidder, you get a house worth 100k.
(Each county has its own rules, regulations, and policies. Some counties have no reserve auctions. This is where you hear about people getting property for just $1.)
Obviously it is extremely rare to get a property for a dollar. However, it is quite common to find a fixer-upper for
$500 or $1,000.
Case-in-point: The house pictured below is a tax deed house with no reserve. The bid is currently at $300 Why are tax deed houses so cheap?
Most counties do a poor job of getting people to the auction. For example, some counties require people to mail a request just to get the auction notices.
This extra hurdle turns people away and reduces your
Here are a few other hoops you have to jump through to get these bargain properties:
1. Tax Deed Houses have no inspection period. You buy “as is.”
2. Provided a property is unoccupied, you can only get access at a pre-scheduled date and time. Even then, you might only have about 15 minutes to look around.
3. You work around the County’s schedule. You have to show up when and where the County says to show up.
It is almost always during business hours. You need to have a flexible schedule if you want to see the property and attend the auction.
How do you pay for a tax deed house?
If you win, a down payment is required the day of the auction. This might be 10% for example. Some auctions allow you to pay the down payment with a debit or credit card.
You then have time to pay the remaining balance. Depending on the County, you’re given 2-4 weeks to come up with the rest of the funds.
If you think a tax deed auction could be where you get your next property to flip, make sure you are prepared.
One of the DVDs in the Pro House Flipping Guide is fully dedicated to how to conduct a walk-through.
You can watch it and have the unique ability to identify any major issues with a potential property before you bid on it.
This is critical skill to have when buying tax deed houses. Our Pro House Flipping Guide also gives you access to
our list of 162 nationwide private lenders and sources of hard money loans.
Or Call: 1-844-240-2399