College Student Considering Investing In TEXAS TAX DEEDS

I am new to investing as a whole, but I want to get started early on investing, making money, and building a diversified portfolio. I am considering investing in a Texas tax deed, and my general impression is that it is somewhat of a risky venture. It seems that many things could go wrong. I will have anywhere from 5 to 10 thousand dollars at my disposal, and ould be willing to invest time on improving a property. Here are my questions:

Is 5-10 K enough capital to gain a significant return?

How long will I have to wait before I can flip the property? Do I have to get a quitclaim in order to make it quick?

Will a Tax Deed and a quitclaim make me the legitimate owner of the property?

Who do I need to talk to? What kind of paperwork do I need?

What risk do I run? Is there a possibility of me losing all the money I invest or breaking any law?


Any feedback will be very much appreatiated. I would love to discuss this over the phone; I am very serious and think I could potentially make this work. Thanks for your time.

- Kristopher

Kris, while I have bought a number of TX tax liens I'd think these days you're not likely to find anything of much value for under $10k and maybe that's too low.

As per TX tax law, the defaulting owner has 2 years then to redeem by paying the lien purchaser back plus 25% per year for interest...and the RE is basically useless to you until the 2 years has passed.

I never got to keep one past about 18 months but since I made good interest it was OK.

Thinking about what you might do with your $6 or 8 k cash, I'd recommend you look into Lonnie Scruggs' system of buying little, old, Mobile homes in MHPs and then reselling those for higher prices but you're selling on notes with interest...so you'd make a great return and I know a lot of young guys who're making a lot of money with these.

If it's new to you find and buy Lonnie Scruggs' "Deals on Wheels" on this site.

Best wishes.

I know this post is a little old, but here is my .02c.

To answer your questions in order:
5-10k is enough for certain types of deals, e.g. sub-to deals usually dont need too much cash up front, wholesaling can be profitable without much cash just a contract, you could actually partner with someone who will put up the money and split the return.

How long to wait?? An hour, a day, a year if you want. There is no time frame that you have to own a home before you sell it. I usually sell my properties before I actually own them. Oh, and dont ever do a quitclaim deed. Most title companies will not recognize them.

You will own the property, but the person who lost it has redemption rights. 6mo or 2 yr if it was homestead property.

Talk with the county tax assessor/collector. They can point you in the right direction.

In any venture there are countless risks as to whether you will make money or lose some or even all your money. That is the risk of being in business.

Anything else, email or PM me. You can google my name Rick Pozos