Tax lien certificates as a superb investment strategy for young and old alike, have seen a rise in popularity over the years. Many see the potential in it because of how to easily to acquire one. Plus, the opportunities of getting high returns which is very attractive.
However, you need to know that there are always risks involved in this type of investment. But the negative effects of these risks can be avoided by doing your research. It also pays to be smart in your decisions when it comes to choosing the tax lien properties included in the auction. Learn as much as you can and get information available no matter how small it is. Study thoroughly the properties you want to bid. Take note that some investors bid blind. They often end up with properties worth nowhere near the money they bid on it. So, take advantage on this situation too.
Knowing the rules and terms in a tax lien sale is very important. These rules specify when and how you would need to register for the sale, where the bidding is going to take place, what the procedures are, and when to pay for any successful bids. Do not forget that you would not be allowed to register for the tax sale if you’re going to forget this information. Plus, you won’t be allowed to place bids if you’re going to miss the registration.
Take note that you are required by the county to follow the correct method of payment. A lot of tax collectors would only accept bank checks or Automated Clearing House (ACH) debit if it is an online tax sale. Also, payments are usually made right after the tax sale which is mandated by counties. Remember that you can be fined or lose successful bids by failing to do so. Worst case scenario is not to be allowed to participate in future tax sales, if no proper payment is made in due time.
Have you heard about pre-auction tax lien investing? It is the option given to real estate investors to purchase tax lien properties directly from the homeowner before it goes to a tax sale. But prior to doing that, a research on tax delinquent properties must be done in order strike a deal with the homeowner.
With pre-auction investment on tax liens, you get the opportunity to get the properties at cheap prices. Little do other investors know, some of these homeowners are letting go of their properties because of personal reasons. They come to the difficult decision of selling rather than get nothing from the government. This is where you come in and land a deal of a lifetime.
If you do not have the time to attend tax lien sales in your area, there is always the opportunity to buy properties online. Search for counties that offer these types of sales and you can register for it. It is always free to register. Take note however, sometimes a deposit is needed before you can actually bid.
Register for the tax sale, read the terms, acknowledge the rules, and don’t forget to do your due diligence on the properties. Even online you can watch what happens to the properties that are being bid on by other investors. This would give you the confidence to bid at the next tax lien online sale. It would also give you a feel of what the competition is like.
When there are more bids for a property at a tax deed sale than is owed in back taxes, the funds or overage amount is originally due back to the owner of the property. Unfortunately for these owners, many have ignored communication with the government. They miss the notice of the overages and just move on and leaving them behind. The outcome is that the overages are permanently lost to the government.
There is a legal loophole that exempts these funds from having finder’s fee caps. You can locate the homeowners and charge 50% in finder’s by helping them get the unclaimed funds. With this method, you can earn a five-figure income just be connecting the homeowners with their overages. The profits are possible especially with the number of foreclosures rising up every year.
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 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.