So far, we have covered three ways to acquire your rental property, either from a real estate agent, a foreclosure, property seized and auctioned by the Feds. A fourth way is by bidding on property sold because an owner didn’t pay the property taxes (a tax deed sale). These properties usually come up for sale once a year. (Some states don't offer tax deed sales.You can check the status of your state by going to http://www.taxsale.com/Buyers/.)

To bid on tax auctions, you will need to find out what properties are going up for bid. You can call your county tax department to find out this information. You will want to check out the property carefully to make sure it meets your criteria as a good investment. Some counties guarantee clear title to properties they put on the auction list, others do not. Be sure and check on this before you bid.

Generally speaking, the properties that you will be interested in buying as a rental investment will be mortgaged and whoever holds the mortgage is going to make sure you don’t glom onto their investment for pennies on the dollar.

Tax lien sales are different from tax deed sales in that you are bidding on the lien, not on the property itself. These sales have redemption periods up to three years. They can earn a good rate of return and take precedence over mortgages when it comes to who gets paid first. If you win a tax lien bid, you are basically loaning the property owner the money to pay back taxes. Your rate of return can be excellent, and the loan is secured by the property, but if the property owner goes bankrupt, you risk getting zip. Also, there are very large companies with lots of cash on hand that bid on these making them more difficult for the small investor to cut teeth on.

One option you might consider exploring is getting the list of properties that are due to go on sale then contact the property owners. Who knows, maybe the owner will be willing to sell the property if you can make it work to the advantage of everyone involved. I personally like win win deals. Kinda’ makes me feel all gooshy inside.

There’s a great deal more that can be said about purchasing Tax lien type investments, and if I get a lot of feedback requesting to know more, I’ll make this a topic of its own, but for right now, we are looking at buying, owning, managing and selling rentals.

One point I will make before moving on, is that a duplex can be an excellent way for a couple to both own a home and possess an investment property at the same time. Think about it, the interest is deductible on your taxes and the tenant pays most or all of the mortgage payment. Of course, you have to declare the rents as income, but hey you can’t have it all. Besides, you get to deduct a portion of the utilities, insurance etc.

Anyway, the duplex is just a thought for those of you out there currently looking to buy a home and have an interest in real estate as one of your investment options.

Next time we’re going to discuss property managers.

If this is your first time, be sure and check out the following hubs on the subject of rental property.

http://www.hubpages.com/hub/The_Irreverent_Guide_to_Buying_Seized_Property_1

http://hubpages.com/hub/The_Irreverent_Guide_to_Rental_Terminology

http://hubpages.com/hub/The_Irreverent_Guide_to_Rental_Property_Investments_The_types

http://hubpages.com/hub/The_Irreverent_Guide_to_Buying_Rentals_1