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June 22, 2018

Buying Tax Liens In South Carolina

If you’re a property owner, you have should have some familiarity with the legal repercussions of not paying your property taxes. If you get behind, you’ll be charged interest, and then, if you don’t pay up within the allotted amount of time, your property is gone – you’re foreclosed on by the government. Your property will then be put up for auction to the highest bidder. While this is bad news for property owner who is unable to pay their taxes, this is good news for those looking to start real estate investing in South Carolina. There are a few things you should know about the process. When Does It Happen? South Carolina opens its property auctions during October, and they then run for the next three months as various counties go through the auction process. You’ll need to check with the county tax office to learn when a specific county will have its auction. Can Owners Settle? Like some other states, South Carolina offers a redemption period to owners. This is the period during which the owner still has a chance to pay delinquent taxes and retain ownership of the property, prior to foreclosure and auction. If you’re more interested in buying the tax lien certificate for the property, rather than the actual real estate itself, this is the prime period of interest for you. South Carolina offers up to 12% returns on tax lien certificates, but there is only a single year during which owners can redeem themselves. It gives a real incentive to pay up, but it also means that you might be holding that certificate for a year. What’s the Minimum Bid? Some states allow you to bid the amount owed in taxes, or even under that amount, in an attempt to recoup tax revenue. However, South Carolina has an “overbid” style of auction. What that means for you is that you’ll be paying more out of pocket than you would in other states. An overbid auction means that the bidding starts out above the amount of back taxes and assessed fees due on the property. However, while you won’t win any properties for less than the taxes owed, the overbid style discourages competition. This means that you might still end up getting a good deal with this type of real estate investing. Quite Title If you win a property at auction, don’t think you’re free and clear to do what you want with it. In order to sell that property or use it as collateral for a loan, you’ll need to go through the quiet title process. Quieting a title is the process of legally ensuring there are no claimants to the property that might put your ownership of the title in dispute. The process takes a full year, and can cost several thousand dollars. On the low end you can expect to pay $1500 for a streamline quiet title process. The end result is a property with no encumbrances. Real estate investing in South Carolina through tax lien properties can be very lucrative, but you must ensure you go about it the right way. This means of acquiring properties isn’t a favorite for “Fix and Flip” investors as most times the property has a redemption period and a lot of time has a tenant, or non-paying occupant that needs to be evicted.