Use Criteria to Pick Targets From Your List
It is important to set up your investment criteria before diving into your first tax sale list. Otherwise, you won’t know what to look for and what to avoid.
There are a lot of data on tax sale lists, and it’s important to focus only on what’s crucial at that moment. Otherwise you will wander around the list and quickly become overwhelmed. When you look at a list you will typically see the following things:
How much do you want to invest?
Decide right now how much money you have set aside that you would like to invest. You can start with $100 or $1,000,000. This number shouldn’t be the number that you’d like to invest, but the actual money that you have set aside right now. This will quickly determine which investments you can make. Even if it’s a small amount, that’s okay, everyone has to start somewhere and it will only grow!
What is the property worth?
After you know how much you can invest, decide what the property value should be for your potential investments based on that investment amount. Investors will typically look at the return on investment (ROI) or percentage of property value to figure this out. For instance, if you’re investing $5,000 and you want your investment to be 15% of the property’s value, then divide 5,000 by .15. That gives you a property value of a little over $33,000. So if you’re investing $5,000 then your baseline should be $33,000.
What kind of property is it?
The final category that you should set up is the property type. Are you only interested in property with a home on it (single-family residential)? Or are you looking for raw land or commercial property? Deciding that beforehand will save time while researching.