_{Presented by Astra Properties LLC}
Unveiling the Potential of Tax-Delinquent Property Investments for Portfolio Diversification
_{By Nicholas Burrus · 01/17/24
Thanks for tuning in to today’s read! Read time for today is roughly 8 mins.}

Top of the morning 🌅 

Success in real estate requires making an informed decision - especially on riskier deals like tax-delinquent properties.

But don't be too quick to reject an offer for a property with past-due tax bills.

Some can be an attractive prospect with lots of potential.

That's what we'll talk about today!

Distressed Properties: Are They Worth the Investment? 🤔 

^{Is it a good idea to buy a tax-delinquent property?}

Tax-delinquent properties are exactly that: properties with unpaid property tax bills. 

If a property owner fails to settle the past due taxes, the county is free to sell it - often at unbelievably low price - to investors, property developers, and homebuyers. 

Many are wary of buying distressed properties because of the back taxes and liens that come with it.

There are risks, of course 😬 but we’re getting ahead of ourselves.

Besides finding out if there are any other debts owned on the property, it's equally important to:

• Check the condition of the property

• Be familiar with tax laws and guidelines of your state and country

• Know the process of finalizing the deal

• What is the timeline involved in buying a tax-delinquent property

Tax delinquent properties make a great investment - but only if you understand how the process works and know all the risks that come with the property.

The goal is to know the property's full details before committing. Don't jump at the first offer. 

Let's check out the advantages and potential drawbacks of buying a distressed property:

What are the advantages of buying a distressed property?

A Quick Sale

Seeking tax-delinquent properties is one of the best ways to connect with sellers who are serious about selling the house quickly and most times, the prices are good. 

That's where you come in! 

You can become a property owner at a fraction of the market value of the home.

Tax-delinquent properties aren't exactly an ideal offer, so it is hard to find a buyer. So many of these sellers are eager to get these properties off their hands. 

Potentially High ROI 🤑 

A high ROI isn't guaranteed with tax-delinquent properties, but if you lucked out, you might find a property with very high moneymaking potential. 

The property could be located near a tourist destination or a shopping district. It could be near a beautiful setting, a sought-after neighborhood. 

With a bit of remodeling here and there, the property could be sold at a much higher price or rented out, giving you a stable source of income. 

It's a win-win!

Fewer Competitors

Let's face it -

The real estate industry is teeming with demanding sellers, difficult agents, and fast-moving deals. 

It's hard to keep up!

Because many tax-delinquent properties stay on the market for a long time and most of your competitors are wary of dealing with past-due deals, you just might find the profitable niche you've been looking for your whole career!

The best part? Many of these tax-delinquent properties can be in default for just a few dollars. Even properties with larger liens are more affordable yet extremely valuable. 

Easy Negotiations

Because sellers are eager for buyers, many are willing to negotiate the terms to make the deal even more attractive, including closing dates, financing, inspections, and repairs.

You see, buying a delinquent property isn't just about hunting bargain deals. 

The property could be your next vacation home or rental space. With the opportunity to negotiate to your advantage, the deal becomes even more valuable. 

Help the Community 💥 

Many distressed properties are owned by people who fell on hard times. 

They might've been dealing with a crisis at home - like a career problem or a divorce - and are looking for people to help them out.

Buying their home will be their chance for a fresh start. 

At the same time, acquiring properties with past-due tax bills also helps the community. With your help, the property is saved from degradation and won't become an eyesore that'll ruin the image of the entire neighborhood and drain public funds.

Potential Drawbacks of Buying a Distressed Property?

Negative Equity

Many distressed properties are on the brink of negative equity. Sometimes, the homeowner owes more on the distressed property than it is worth. Some tax-delinquent properties have back taxes higher than their sale price. 

Crazy right

Being just under a year behind in property tax could add up to over $10,000.

That adds up in no time.

It’s safe to say that a distressed property may come with significant back taxes if it's been on the market for a long time. 

Our advice is to do proper diligence and find out how much back taxes a property owes to avoid any surprises in the middle of finalizing the deal. 

Extensive repairs 😰 

Distressed properties are often subject to legal issues and code violations.

Without doing your due diligence and seeing the property in person, you might find too late that the property is less than what you thought or is not worth buying at all.

Many owners give up on repairs and maintenance due to mounting debts and legal disputes. So keeping the place pristine is the last thing on their minds, and this will show.

Many distressed properties become uninhabitable due to neglect.

You should know exactly what you're getting into, including knowing how much money it will take to bring life back into a distressed property. 

Extra Expenses

Past-due taxes are often paid at the closing, and most lenders are unwilling to loan you extra to pay these off. You should have additional funds ready to settle these bills. 

Besides doing a title search to avoid any title problems, hire an attorney and a real estate expert to find out if the property has outstanding liens, you need to know. Because these will be settled by you after buying the property. 

Ready to buy your first tax-delinquent property? Start hunting at your local county property appraiser's websites and seek property auctions for these deals.

Tell-Tale Signs of a Problematic Renter

^{Because every landlord's nightmare is a bad tenant}

Dealing with a problematic tenant can be draining. Save yourself the stress - these are the signs you're dealing with a bad tenant: 

They refuse access for routine inspections

Quarterly routine checks should be a part of the lease agreement. This is one way to ensure your tenants aren't using the property other than living there. 

If the tenant refuses access to the property, they might be hiding something. It could be an extremely messy house or severe damage caused by negligence. 

A water leak that hasn't been repaired for months could lead to a widespread plumbing issue that'll take a small fortune to solve.

If a tenant refuses access to these routine checks, remind them of the clause in the lease agreement.

If they still refuse entry, provide a formal notice that refusing these checks may lead to eviction. If they still refuse and you've done everything you could to access the property, consider taking legal action. 

Complaints from neighbors

People living nearby can give you a good idea of a tenant's behavior if you're not looking. If you've been receiving complaints from neighbors, such as:

• Disruptive and aggressive with other neighbors, leading to fights

• Noises at odd hours

• Suspicious activities past 10 PM

• Disturbing the peace and quiet

• Cops being called in late in the evening

• Abnormal anti-social behavior

• Severe property neglect (unclean yard, neglected lawn)

… Take that as a sign to schedule a routine check.

Disturbing the peace, suspicious activities, authorities being called late at night, and severe property neglect are often signs of domestic disputes, violence, and criminal activities.

Late/Nonpayments

Are the tenants behind on rent payments and utility bills? These are deal breakers because if they do not pay their utility bills, the power company will cut off power and leave you to foot the bill. 

And if the power's cut off, the tenants could look for alternative ways to heat and light up their home like using space heaters that can short outlets and cause a fire!

That’s stress you don’t want in your life.

Many problematic tenants would also stop paying rent and call in fake maintenance requests to try and blame you for their nonpayment. Then they'll disappear into the night once they owe you thousands in nonpayment!

Someone else keeps answering the door

If another person is always answering the door and not the person you leased the rental space to, it could mean several things, like:

• There are more people living in the house who are not on the lease

• The tenant is subletting your property

This situation can go serious very quickly if they stop paying the rent and you try to evict them.

Squatters are notoriously hard to evict; many times, these people would cause damage to the property if you file a case against them before disappearing. 

💫 What Else is Poppin? 💫 

TikTok is working with luxury conglomerate LVMH to fight fakes

^{The app is saying NO to counterfeits}

TikTok's entry into the e-commerce game led to the widespread selling of fake goods on the platform. 

Now the app is putting a stop to the sale of counterfeits by teaming up with the biggest luxury company in the world, LVMH. The agreement is meant to guard against fakes while also providing "an elevated shopping experience.

LVMH, owned by multibillionaire Bernard Arnault, oversees a portfolio of 75 fashion and beauty brands, including Louis Vuitton, Christian Dior, Moët Hennessy, Bulgari, and just recently, Tiffany and Co.

Although nothing is set in stone yet, TikTok is also looking into offering similar agreements to other big brands to build credibility in the e-commerce game and enhance the authenticity of goods offered on the platform.

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