Networking is important when you engage in a tax deed sale investment. Familiarize yourself with other investors in your area. It is a must to exchange leads that meet each others criteria, which helps in building a possible buyers list. Keep in mind that it would be difficult to do everything yourself. You should seek advice from someone more experienced in the field of real estate. That person would guide you if you’re just starting in tax deed property investment.
Getting experience from a professional real estate investor can help you shave years off from the learning curve as well as avoid pitfalls. Furthermore, specialized knowledge and education are two crucial key factors to a successful real estate portfolio. You must also take action on what you learn along the way. This way you would be more knowledgeable in tax deeds.
If you plan to purchase a tax lien property at a public auction, understand that in some states, the law sets a specific time frame called redemption period for foreclosures to become finalized. Now, if you consider investing money in these types of properties, it is recommended to find out how the laws would affect the ownership, and possession of the property in your area.
You may end up thinking of owning the property, when in fact you’re just paying for the tax debt of the homeowner. You are the tax lien certificate holder as of the moment. You would only get ownership if the homeowner fails to pay his debt. So, study the laws of the tax lien states where you’re planning to invest in liens, and how much interest you get when the homeowner pays up.
With lots of foreclosure in properties today because of homeowners unable to pay their taxes, how would you purchase one? There are some things to consider though when purchasing a tax lien or tax deed property. Here they are:
In most U.S. states, you purchase the property at a tax lien sale or tax deed auction. You are not allowed to access the property before the sale. You would just have the address in advance and at least drive-by to get a glimpse of its condition.
There are times when you drive-by you would see that the property is either occupied or vacant. If it is occupied, you would need to evict the current residents in accordance to the local laws. You must not forget this because the people living there might not move out, even after you buy the property.
All liens on the property must be recorded. Check with your municipality or county to understand the rules in your area. Ensure that you know the liens imposed upon the property. You can search for this through the county office that conducts the property registration in your area.
Same with other businesses, there are some risks associated with purchasing tax lien properties online. However, you can reduce these risks by conducting some important things first. Make sure the seller would issue a warranty deed on the property you’re going to purchase. Ask him if the title has any liens, back taxes, and judgments. It won’t be that bad if there are any. Just analyze the amount owed into the property’s price. Lot of times, the seller would lower the price of the property in order to get move on before the assessment of more penalties.
You need to be prepared also of another risk. There are times wherein sellers won’t have any photo of the actual property for sale. Sometimes, this happens with parcels that are cheaper. Maybe because the seller do not live in that area, and is not financially reasonable to travel there just to take photos. When this is the case, better check if the property exists. Do some due diligence on the area to confirm.
Anyone who can legally own a property in the United States may buy a tax lien. These tax lien sales are conducted by the county and winning bidders can pay by cash either on the spot or within 48 hours. Before the schedule of the sale, there would a pre-registration for those who want to join the bidding. Also, there are rules to be observed which may vary from state to state.
Investing in tax liens is best done locally which may take a lot of time, labor, and money out from you. You can acquire a list of available tax liens from the county office for a fee, or do your own research online to get them for free. That is why due diligence is expected from this lucrative investment.
You may be hesitant at first, thinking to yourself if a deal sounds too good to be true, then it probably is. However, the principle behind investing in tax liens and deeds is based on the fact that counties charge its citizens with taxes to pay for their public services and goods. It does not get more solid than that.
When citizens fail to pay the required taxes, the government takes their property and sells it to interested investors. If the homeowner does not pay the lien within the allotted amount of time called redemption period, then the owner forfeits the property to the investor.
Moreover, the amazing part about this investment is that the lien supersedes any other judgments against the property. The property’s deed would go to the holder of the lien before anyone else does. This includes the bank that holds the mortgage. This also means that lots of times the bank itself would purchase the lien from you, together with the interest, just to protect their precious investment in the mortgage.