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Lethul1 · Guest

Hey, all,
I am a newcommer to real-estate. I found this forum yestersday, and I think it's excellant! I only have a ouple thousand dollars to start with, but I have found that at my local county tax auction, that should be enough to get an acre or two to start with.
Unfortunately, what this means, is I cannot afford to make a mistake, at all! I was hoping some of you might be kind enough to give me some advice (especially anybody familliar with the laws in Texas) as to things I should look at and take into consideration, so that I don't just jump in over my head, and lose my total investment. Thank you all very much!

-Pete Otterstad

nemmar · Site Admin

Pete,

State/City/County tax auctions can be a great place to find real estate deals. Since you are interested in buying a vacant lot then it's a lot easier to evaluate. If you're buying a house/condo at an auction then that can get riskier since some areas do not allow the bidders to view the interior of properties they are selling at auction. If you do have access to the interior of the properties, then you may be limited in evaluating some aspects due to utilities being turned off, locked doors, inaccessible areas, lack of maintenance history information on the building and operating systems, etc.

To be the safest and reduce your investment risk as much as possible, I would recommend you hire a qualified licensed appraiser to estimate the market value of the lot or lots you're considering bidding on at the tax auction. An appraisal will cost you from $250 - $500 depending upon the rates in your area and how in-depth the appraisal will be.

You need to also calculate what ALL of your closing costs and yearly expenses will be for the property. For example, there will be deeds to record, title companies and title insurance fees, attorney closing costs, property taxes, etc. All of that MUST be determined before you invest money. You may be able to buy a lot at auction for a few thousand dollars but you'll need to pay the additional expenses at the closing and each year so you don't end up losing your property in a tax foreclosure.

You also need to determine what your long-term interest is with this investment.
1) Are you going to buy it at auction and then try to sell it for a profit as soon as possible? If yes, then the appraiser you hire should give you feedback on the local real estate market for vacant lots and how long they are on the market before being sold. Depending on the market and your asking price it could take a month, a year or longer to sell the lot for an acceptable profit. The appraiser should also give you details on what types of properties are selling well in that area - houses, condos, or vacant land. Is the area increasing in population and home construction or is it a declining area? The appraiser should know this and give you advice.
2) Are you thinking about buying the lot and then finding investors to build a house on it to rent or resell? You then need to line up your investors ahead of time and get estimates from builders so you know what the total investment will be.
3) Are you going to put a mobile home or manufactured home on the lot? If yes, then you need to get prices for mobile/manufactured homes before you buy the lot.

I'm not familiar with the laws in Texas. You'll have to check with a local Real Estate professional or attorney in Texas to get details on the laws.