Investing in tax deed is basically the same deal with tax liens. Homeowners who do not pay their property taxes would also face the consequence of losing their home. But instead of the county placing a tax lien on their property, the government actually sells the deed. That is why in tax deeds investing you do not get interest on your money but acquire ownership of the property, free and clear. You can then make more profits by selling the property at a market value.
If you do your due diligence, finding tax deed properties can be rewarding before they even get to a county auction. You can purchase these properties directly from the homeowners for pennies on the dollar. Avoid the hassle of joining a tax deed sale.
The interest rates are quite high for some states that hold tax lien sales. How high you ask? Is twenty-four percent every year high enough for you? Though, it varies from state to state. Also, with tax lien investment, you either get a high rate of return on your investment or acquire the property. That is a lot better than the stock market.
Another good thing about tax lien sales is the prices. You can get bang for the buck properties which are usually in the range of a hundred up to a thousand dollars. This is easily within the reach of an average property investor. Furthermore, in tax lien investment, there are no special licenses or requirements needed for you to begin.
Now that you know the nice interest rate and prices in tax lien sales, the next thing to do is find out when and where the auction is going to happen.
There are procedural requirements in a tax lien sale that must be followed by the authority holding the auction. First, a notice must be provided to the homeowner. The notice would give a warning to him that his property is going to be sold. It also gives a chance to pay any unpaid tax debt, fees, and other charges that have accumulated in the process. Satisfying the tax debt to the government would give the homeowner an opportunity to avoid foreclosure, and losing his property.
Another procedural requirement that is worth noticing is the right of redemption by the homeowner. A lot of states have redemption laws. Such laws provide the homeowner a fixed period of time to pay any tax debt he owed. The time period starts after the property is sold at the tax lien auction. If the homeowner is able to pay up, he remains the rightful owner of the property.
Have you ever consider investing in tax deed properties? Investing in tax deeds is a great way of owning good properties or getting profits. However, for you to be as successful as possible, you would need to know the right properties to purchase. Do this before making lots of mistakes.
Tax deed properties are able to beat every other type of real estate investment for some reasons. One of these is mortgage. Tax deed properties usually do not have one. If mortgaged properties go delinquent because of non-payment of taxes, the mortgage company is going to pay its taxes. So, when you purchase a tax deed property, all you need to pay usually is the taxes and then it is free and clear. No mortgage means that all the equity in the property is yours for the taking, no matter how much it is worth. This is why tax deed properties possess good potential for big profits.
Tax lien certificates are in large numbers today because property owners fail to pay their tax obligations to the government. When this happens, the government would put a lien on the property without hesitation. They need to do this in order to recover lost revenues which in turn provide public services to the people.
If the property owner fails to pay back his tax debt within the redemption period, the government can sell off the property in the form of a tax lien certificate. They can also foreclose it and sell the deed at a public auction. Through this the investors can get a chance to take control of the lien, and earn an interest when the government sells off the property.
Investors that are interested in investing their money in tax lien certificates need to know when and where the sale would be held. These tax sales are normally advertised in the public. It also helps to take a visit in the county office to know more about this lucrative real estate investment.
Tax liens are placed on properties to guarantee that its taxes would have to be paid by the delinquent homeowners. If there is a lien on a property, it cannot be refinanced nor sold until the taxes are paid.
Real estate investors can purchase tax liens as investments that pay interest rate as profits. Liens are bought at a tax sale auction. The investor who is willing to take the lowest rate of return gets the lien certificate. Once the property is sold, the investor gets back his initial investment plus interest rate. The amount is usually bigger than the investor could make in the stock market. If the property is foreclosed, then the investor would get the right to own the property.
The economy is in trouble which as a result turned many financial balance sheets to a downward spiral. Tax deed sales, tax lien auctions, bankruptcies, and foreclosures are getting common than ever before. Why are homeowners going down these paths? Here are some explanations:
Bankruptcy is a legal action by the government where a delinquent taxpayer is going to eliminate his tax debts. This usually happens after a job loss, divorce, or medical payment problem.
Tax deed sales are quite different in the case that it is not the bank that’s the holder of the bad debt but the government instead. The amount due is a percentage of the assessed value of the property and is paid annually. Payments do not only include taxes but insurance as well. If the homeowner fails to pay his tax debt, the government steps in to seize the property after the redemption period. The property is then put up for sale and sold to the highest bidder.
Tax lien sale is similar to tax deed. Homeowners who fail to pay their tax debt also lose their property to the government. The winning bidder at the auction gets the deed to the property free and clear.