Are you a bargain hunter? Always on the lookout for a good deal or a way to make some extra cash? Depending on where you live you can find property priced below market value. What’s the catch? You need to have your funds available the day you place your bid. So do your homework in advance.
A word of caution: research, research, research the property and the neighborhood before you even think of placing a bid. Talk to the neighbors. Knock on doors and ask about the house’s history before you do any bidding.
I was working as a property manager and had watched way too many house flipping shows on HGTV when I first started thinking about bidding on tax auction properties. I had five years of experience handling what could go wrong in the rental world: late rent payments, evictions, repairs gone wrong, bedbugs, trashed apartments, false promises, you name it. My experience in rental property was definitely eye opening.
So I thought I was ready to leap into buying tax auction properties. I spent hours online on the Gaston county website looking to see which properties were going to be auctioned off and when. I went to one auction just to observe the process.
I watched a red-headed twenty-something guy and his grandpa buy a commercial building for $4,000.00. They were the only bidders on that property. According to the rules I had read, another bidder could go to the courthouse and place an upset bid on that property by bidding ten percent more than the current bid. The redhead said they had bought several properties this way but this particular one was going to be used for their family business: a dental lab.
Four grand for a commercial property? Yes, the building needed some work. The exterior was brick but the whole property was overgrown and some of the growth appeared to be invading the former beauty salon. Still, that was a sweet deal. I knew commercial real estate and the property could easily be rented for several hundred a month…which could mean positive cash flow. I wanted in on the action. I could smell money in the air.
The next live auction was in December and the turnout was considerably larger. I looked around at the people huddled together in clumps of two or three beneath the overhang, trying to keep out of the rain and place their winning bids.
These people seemed calm and confident. I felt like the new kid at school, out of my element and not sure what might unfold. When the auctioneer called off the address of the house on Howe Dairy Road, my heart jumped. Eleven thousand was the opening bid. It was just a bit more than the amount of back taxes the family owed on the property. Twelve thousand, fifteen, twenty, twenty-five. I felt a bit sick. I wanted that house for twenty thousand. That would give me a few thousand for the repairs which it surely needed. Like a new HVAC system.
The bid was too high so I never opened my mouth.
Still, the little “what ifs” whirred about in my brain. What if I could get another house just by waiting and outbidding by just a small amount?
After that day, I spent every free minute at work checking addresses on the tax site. I had heard another address that day at the courthouse and phrases like “corner lot” and cul-de-sac. I looked it up online. It was a two bedroom brick house with a carport on a large lot. The house did need work: lichen covered the roof ( I naively told myself a thousand dollars to replace the roof), the house stank of old cigarette smoke from years of hardcore smoking (paint? would that get rid of the smell?)
Tax auction houses are as is. There is no going inside the house before placing your bid. You do your homework, send your contractor friends out to snoop around and hope you get lucky. I was naive to think that the house just needed paint and some flowers in the bald flower beds. It needed a bit more than that.
Fast forward a year. I got the house with a bid of $55,125 after several rounds of upset bidding with a local builder. I borrowed $43,000 from my boss and her husband until I could get a mortgage on the house. Note: you need cash on hand to write your check to the tax office. I had a pre-approval letter from CitiBank which was worthless because I quit my job after I bought the house and before my mortgage went through. My boss’ husband had always been a jerk but he had ratcheted it up a notch and one day I walked out in tears, completed my last round of bank deposits and called my boss in tears to tell her that I couldn’t do it anymore. I’d had enough bullying and manipulation.
So I had no loan and just a part-time seasonal job and had to repay that $43,000 fast. I was determined to get that house and called my mom one day from the Aldi’s parking lot to explain my situation. I needed a check for $50,000 and I would figure out the rest. Mom, the infamous tightwad, assured me that she would send me a cashier’s check the next day. I felt a little lighter after that. Like maybe my crazy house dream was doable after all.