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The Benefits of Over-the-Counter (OTC) Tax Deed Purchases

Tax deed investing provides a pathway to acquiring real estate at a fraction of its market value, but auctions can be highly competitive and intimidating for many investors. What if you could bypass the bidding wars and still access these opportunities? That’s where over-the-counter (OTC) tax deed purchases come in.

OTC purchases, which involve buying properties that didn’t sell at auction, offer unique advantages, including lower competition and better pricing. In this guide, we’ll explore how OTC tax deed purchases work, the benefits they provide, and how to effectively evaluate these properties. Plus, we’ll show how tools like Tax House School GPT can simplify the process and help you identify profitable deals.



1. What Are Over-the-Counter (OTC) Tax Deed Purchases?

OTC tax deed purchases refer to properties that have been through a tax deed auction but didn’t sell. After the auction, local governments make these properties available for direct purchase, often at a fixed price or reduced minimum bid.

How OTC Purchases Work

  1. Post-Auction Listings: Unsold properties are listed by the local government.

  2. Fixed Pricing: Properties are typically offered at a fixed price based on the minimum bid from the auction.

  3. First-Come, First-Served: Unlike auctions, OTC properties are sold to the first qualified buyer, eliminating the competitive bidding process.

Why Properties Go Unsold

  • High minimum bids at the auction discouraged bidders.

  • Limited buyer interest in specific property types or locations.

  • Concerns about property conditions or legal complexities.

Pro Tip: Many unsold properties are overlooked gems, offering substantial opportunities for those willing to conduct due diligence.

2. Benefits of OTC Tax Deed Purchases

A. Lower Competition

One of the most attractive aspects of OTC purchases is the absence of competition. Auctions often involve multiple bidders, driving up prices and creating stressful conditions. In contrast:

  • OTC properties are sold on a first-come, first-served basis.

  • You have the freedom to evaluate properties without the time pressures of an auction.

Example: An investor acquires an OTC property without competing bids, securing it at the county’s minimum sale price.

B. Better Pricing

OTC properties are often priced near the minimum auction bid, which can lead to significant savings. Additionally, counties may discount these properties further over time to clear their inventory.

  • Fixed Pricing: Avoid overpaying due to auction excitement.

  • Negotiation Opportunities: Some counties allow for negotiated discounts, especially for properties that have been available for a long time.

C. Flexible Purchase Timeline

Unlike auctions, which require immediate decisions and payments, OTC purchases offer more flexibility:

  • Take your time to research and evaluate properties.

  • No urgent payment deadlines, though funds are typically due at the time of purchase.

D. Access to Unique Properties

Properties that go unsold at auction often include a mix of overlooked opportunities, such as:

  • Residential lots in up-and-coming areas.

  • Vacant land suitable for development.

  • Properties with minimal issues that can be addressed cost-effectively.

By carefully reviewing OTC property lists, you can uncover opportunities that other investors have missed.

E. Easier Portfolio Building

OTC purchases make it simpler to acquire multiple properties, especially for investors focused on building a diverse portfolio. With lower competition and reduced costs, you can spread your investments across different types of properties and locations.

3. How to Identify and Evaluate OTC Properties

A. Accessing OTC Property Lists

Most counties publish lists of available OTC properties on their websites. These lists typically include:

  • Parcel numbers and property addresses.

  • Minimum purchase prices.

  • Additional fees or requirements.



Pro Tip: Use Tax House School GPT to locate these lists and filter properties based on your specific investment criteria.

B. Researching Properties

Before purchasing an OTC property, thorough research is essential to ensure profitability. Focus on the following steps:

  1. Review County Records:

    • Access property details through county websites or GIS mapping tools.

    • Confirm the property’s size, zoning, and assessed value.

  2. Evaluate Market Potential:

    • Research comparable properties to estimate market value.

    • Analyze neighborhood trends, such as growth, rental demand, or nearby developments.

  3. Inspect the Property:

    • If possible, visit the property or use online mapping tools (e.g., Google Earth) to assess its condition.

    • Identify potential repair or renovation costs.

  4. Verify Legal Status:

    • Conduct a title search to check for outstanding liens or encumbrances.

    • Ensure the property is free from major legal complications.

C. Calculating Profitability

Determine the potential return on investment (ROI) by factoring in all costs, including:

  • Purchase price.

  • Renovation or repair expenses.

  • Holding costs (e.g., taxes, insurance).

  • Projected resale or rental income.

4. Steps to Purchase OTC Properties

Step 1: Obtain the OTC List

  • Visit your county tax collector’s office or website to request the latest OTC property list.

  • Use the Tax House School GPT to quickly locate available properties and sort them based on your investment criteria.

Step 2: Conduct Due Diligence

  • Review property details and assess market potential.

  • Identify any risks, such as poor property condition or legal encumbrances.

Step 3: Make the Purchase

  • Contact the county to confirm the property’s availability and payment requirements.

  • Submit your payment and complete the necessary paperwork to finalize the purchase.

5. Common Risks and How to Mitigate Them

Risk 1: Hidden Issues

OTC properties may have structural, environmental, or legal problems that deterred auction bidders.

  • Solution: Perform thorough due diligence, including inspections and title searches.

Risk 2: Long Holding Periods

Some OTC properties may take longer to sell or develop, leading to higher holding costs.

  • Solution: Focus on properties in areas with strong demand or growth potential to minimize holding times.

Risk 3: Limited Information

OTC property lists often lack detailed descriptions, making it challenging to assess value.

  • Solution: Use additional resources, such as GIS maps and real estate platforms, to gather more information.

6. How Tax House School GPT Simplifies OTC Investing

The Tax House School GPT is an essential tool for investors navigating OTC tax deed purchases. Here’s how it helps:

  • Property Search: Quickly locate county OTC lists and filter properties based on criteria like location, price, and size.

  • Market Analysis: Compare OTC property prices with market comps to identify undervalued opportunities.

  • Risk Assessment: Evaluate potential risks, including repair costs and legal encumbrances, before making a purchase.

  • ROI Calculations: Input costs and projected revenues to estimate profitability and make informed decisions.

Pro Tip: Leverage GPT to create custom checklists and timelines for evaluating and acquiring OTC properties efficiently.

7. Tips for Success with OTC Tax Deed Purchases

A. Start Small

Focus on low-cost properties to minimize risk and gain experience in OTC investing.

B. Stay Informed

Regularly check county websites for updated OTC property lists and pricing.

C. Build a Network

Establish relationships with county officials, attorneys, and local real estate professionals to access insights and support.

D. Be Patient

Some of the best OTC deals require time and persistence to uncover.

8. Why OTC Tax Deed Purchases Are Worth Exploring

OTC tax deed purchases offer a unique opportunity to acquire properties at lower costs and with less competition than traditional auctions. By conducting thorough research, leveraging tools like Tax House School GPT, and staying disciplined, you can turn overlooked properties into profitable investments.

9. Take the Next Step in Your Investing Journey

Download the Ebook

Unlock more strategies for successful tax deed investing by downloading the guide at Tax House School.

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With the right approach, OTC tax deed purchases can be a powerful addition to your real estate portfolio. Start exploring these opportunities today!

 
 
 

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