How would you find the best tax lien deals? You would be surprised to find out that it can be quite easy, especially in the current real estate boom. But first, you need to be methodical in your actions as well as diverse. Deals are all over the country, however it is highly recommended to specialize in an area you’re familiar with.
Then, how are you going to find an inventory of these tax lien properties? Lots of companies offer foreclosure lists. You can also find these lists on the internet or with the help of a title search company. Make sure that you find only the fresh leads. It is because you might buy information that is outdated. Do not commit this mistake as it may cause you to not succeed.
What is the legal implication of having a lien filed against your property? Certainly, your property is subject to legal liability for unpaid taxes. The county would file the lien, and can claim a legal interest in your property. Worst, if you are unable to pay your tax dues within the redemption period, the property might be foreclosed.
When the redemption period comes to an end, the county places your property up for bidding in a public sale. The county has the legal right to sell the tax lien certificates to a third party during the event. The winning bidder can then, enforce the lien if you still fail to pay up, or sell the certificate to another investor.
Tax lien is a document that is recorded with the county office, which the property owner resides. This document affects a taxpayer’s credit and hampers all assets as well as the rights to it. This includes personal and real estate.
Federal tax lien on the other hand, arise when a citizen liable to pay any tax, fail to pay it after a demand by the government. In a federal tax law, a citizen is defined to include all associations, corporations, companies, estates, individuals, partnerships, and trusts. The filed lien is effective from the date which the government assess the tax. Then, it is considered to relate back to the date of the assessment.
Taxpayers are given an official document called a tax return, wherein they can list their tax contributions for a certain period of time. This document must be prepared and submitted as soon as possible in order to avoid penalties, and the possibility of losing one’s property to tax lien.
Taxpayers can personally prepare a tax return, which is if one has the time to do the tedious task. However, there is computer software that is specifically designed to make this chore easier. A tax attorney can also assist in the type of matter.
Wholesaling tax lien properties is a good source of extra income these days. But first let’s define what the wholesaling term means; it is acquiring a property at a discounted price, and moving the property to another interested buyer for a price well below the market value. It is usually with little or no rehab work done.
Wholesaling not only cover selling the properties you’ve acquired to buyers but also finding a motivated seller in your target niche. The motivated seller could be someone who lost a job, in credit card debt, needs cash, tax lien, in dire need of a short sale, going through divorce, avoiding foreclosure, and many more reasons. Locate them and explain the benefits of selling their properties quickly to a real estate investor such as you.
Investing in tax lien property without inspecting it can be a big mistake on your part. Some of these for auction properties may look valuable on paper because of well planned advertising. However, not all are that good, and it is not uncommon that these properties may have some damages that need repairs. Do not go into tax lien investing without prior inspection.
Bear in mind that it may cost you lots of money to pay for the repairs on a property with foundation issues. This is especially true if you are low in cash and may have to take a loan to conduct the needed renovation. Hopefully, you may not end up with a property thinking it was a bargain at the beginning but isn’t cheap at all after taking the expenses into account. So, it is best to inspect first before investing.