It wasn’t that long ago that I made the rounds to talk at a few different real estate investing clubs around Michigan and met a young guy named Desmond while I was speaking in Detroit. I’m not so much a fan of these clubs as I am of getting the chance to occasionally meet up-and-comers, like Desmond, with a lot of potential. And, I was particularly struck by this guy’s enthusiasm and his willingness to soak in all that he could from me and every other seasoned investor that he met. It was clear that, with the right training and tools, this kid was gonna go far. So, it didn’t at all surprise me when he followed up just days after my talk to ask for my feedback on buying Michigan tax lien properties for sale, as well as where he specifically might find the best deals—and, not just in Detroit. I told him that I hoped he was sitting down because what I had to say on the subject of finding good investment properties might take him by surprise.

Are Tax Lien Properties for Sale in Michigan a Good Investment?

Where to Buy Tax Lien Properties for Sale in Michigan

Real estate investors of all experience levels often look to tax lien properties as a way to find good deals, whether they’re flipping houses in Michigan or holding them as rentals. So, Desmond’s inquiry wasn’t necessarily one born out of naivete. The reason the pursuit of these homes is so popular is that when a homeowner can’t pay the taxes on their property it usually gets foreclosed on by the local treasurer’s office, then sold at an auction to the highest bidder. So, it’s possible to buy these houses for cheap. If you can keep your rehab costs low, too, you stand to make potentially great returns—even if you choose to hold the house to rent it now and sell it later.

But, there’s a lot of fine print and a good amount of red tape to sort through that can make buying foreclosure auction homes more of a hassle than anything else. So, you have to tread carefully. To help you, here are some of the more important points I distilled from three of the state’s larger tax foreclosure auctions that helped Desmond—and, should help you—decide where exactly you want to buy.

Wayne County Tax Auction

The Wayne County Tax Auction is conducted by the Office of the Treasurer on the county’s website once per calendar year. A listing of houses, minimum starting bids, and sale terms and conditions are all provided online. Deposits are either $1,000 or $25,000, depending on the property, and must be accompanied by your registration. And, unlike some auctions, you can bid on multiple homes at a time. Should you win, you may have to pay an additional deposit. But, you get either 48 hours or seven days to pay in full—again, depending on the house—which is more time than you’re given elsewhere. So, if you’re in the market for buying property in Detroit, and have the cash to potentially close on several fast, this auction could be up your alley.

Unfortunately, bidding and buying through this auction could also drag you down. If you can’t close or come up with a second installment on time, you’ll forfeit the property and your first deposit. You may also be subject to legal action, which the county has the right to pursue if they choose. In fact, you can’t change your mind even at the bidding stage. So, if you accidentally place a bid, you’d better be prepared to buy—whether you want to or not. And, that holds true even if you aren’t granted access to the house so that you can calculate renovation costs, or discover flooding and mold damage once you do. These issues and others all become yours when you’re declared the winner, which means you could lose big money just by placing a bid. Then again, it’s possible your bids may get rejected outright for no other reason than because the Treasurer’s Office can. That’s reason enough to skip a once-a-year sale that won’t help you find deals that’ll last the year through.

Washtenaw County Tax Lien Sale

The Washtenaw County Tax Lien Sale happens online about three times a year with the third-party auction house, LLC. You can find information on available properties, including starting bids, there. But, the info is also linked to each auction date listed on Washtenaw County’s Treasury Office website. Online registration is required prior to each auction date, as is a deposit of $2,000 and proof that you are current on all of your tax obligations. If you win the bid, full payment is due by five o’clock the next afternoon and the property’s back taxes are expected within two weeks.

Yes, that’s correct; your winning bid does not bring current the property’s back taxes and that’s not the only drawback to buying one of these houses. Though the county suggests you conduct your due diligence prior to bidding, you cannot enter the home if it’s secured or occupied. So, performing a home inspection is out of the question. That means you could get stuck with a money pit or tenants to evict or both. And, since these properties are sold strictly as-is, you might also get saddled with liens and other encumbrances not previously uncovered that bloat your expenses and potentially burst your ROI. But, even if you had time to back out of the deal, you can’t cancel—not without losing your deposit, anyway. Of course, you may not even win to begin with since any government agency gets first dibs and because the auction of a property can get randomly called off. And, with so many ways to crash and burn your returns with this auction, a canceled sale may be the better deal. Michigan Public Land Auction

The Michigan Public Land Auction at sells homes online or on-site at a property’s location for more than 60 counties in the state. So, it’s possible to find a fixer-upper home for sale that’s delinquent in taxes almost anywhere you invest in Michigan. The website provides just about everything you need to know about the properties being sold, plus a few extras like pictures and directions. Registration can happen online or in person on the day of the sale and you will need to bring identification in addition to your deposit. Then, if you win, you have 30 minutes to pay your balance. So, you’ll also need to bring the full amount due.

Now, in theory, 30 minutes should be enough time to complete your purchase if it’s a property you want to buy. But, without access to the home to determine the cost of repairs, you’re bidding and buying blind. So, in practice, you could end up with a home that no one should close on. And, you won’t get a refund if you figure out later that the property’s been vandalized or squatters have taken residence. You’ll just pay more to make things right. If you decide to move forward and make the most of your purchase, your troubles could get compounded once you start the renovation. Any county’s Treasurer can cancel a sale up to the delivery of the deed. Though your money will get returned if the house is taken back, you won’t be reimbursed for any work that you’ve done. No matter how you slice it, winning a property from this auction puts you at risk of burning a hole in your pocket and simply wasting your time.

Aside from the issues that each of these tax foreclosure auctions present, you might just want to consider whether there’s a better way to ensure you’re getting the best possible deal. After all, it’s not just their terms of sale that can be a hassle. Many tax-foreclosed houses can also be in pretty poor shape since homeowners who don’t pay their taxes can’t usually afford a property’s upkeep either. That means renovating these homes reasonably so that you can count on decent returns might be hard to do as well. It’s by buying directly from homeowners who are struggling to meet their obligations that you’re more likely to make good property investments—and, that they’re more likely to gain something, too.

How to Buy Direct from Distressed Michigan Homeowners

Personally, I prefer buying investment houses directly from distressed homeowners and my reasoning is two-fold. First, I don’t have to deal with tax foreclosure auctions. And, second, homeowners get the chance to unload a house that’s become a financial burden before they lose it. So, I still have the opportunity to buy and rehab a home that will yield potentially great returns and the homeowner can walk away with a sense of relief. It’s a winning strategy for everyone involved and one that gives me pride—not just profits—in what I do.

And, it’s because I’m an independently owned and operated HomeVestors® franchisee that I’m able to buy directly from distressed Michigan homeowners as often as I do. In fact, with all the marketing tools and resources that I have access to, including the widely-trusted “We Buy Ugly Houses®” national ad campaign, homeowners who need help come to me. So, I can concentrate my efforts on converting those qualified leads instead of focusing my energy on where to find them. Since 1996, franchisees from 47 states and D.C. have been able to say the same.

If you contact HomeVestors® about franchising opportunities today, you might be able to, too.


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