If you are keen in purchasing property for its back taxes, then consider yourself a wise real estate investor. Investing in back taxes of a property is the most profitable task you can do. However, as more people are going to find out about this lucrative investing method, tax sale on delinquent properties are getting crowded with competing bidders. Furthermore, it is getting difficult to acquire good deals anymore. So, if you want to be successful at getting tax delinquent properties, here is how you can purchase them for the back taxes, without the hassle to compete against other bidders at the sale.
There is a “loophole” strategy that allows you to exploit tax deeds or tax lien properties for profit. You can do this before they end up in public auctions. After the property is sold at the sale, purchase it directly from the owner. In most places, you can legally pay of the tax bill on the property, during a specified redemption period. As you may already know, most property owners are emotionally exhausted from dealing with their financial problems. They are willing to just move on and let go of their properties. It is during this time that you can make an offer on their property for a modest price. Simply pay off the property’s tax bill and you’ve got yourself a return of investment.
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.
Buying tax deed properties at foreclosures is surely one of the best methods to get bargain homes and profits. Most property owners want to avoid a foreclosure because of its financial consequences that can leave a negative credit posting. That is why you must approach these property owners with the intention of helping them get out of a bad situation.
However, it is not your responsibility to solve the financial problems of the homeowners. You are there to buy their properties and make profits. Acquiring the tax deed properties at a fair price is the goal. Get the facts and check their accuracy prior to making any formal offers. Create a back-up plan to keep you from unanticipated issues that may arise along the way. Always check the title before, during, and after dealing with the seller. Set a desired budget for each property you’re interested. Prepare the necessary requirements and do research whenever you can.
If it is your first time to get into the lucrative investment of tax deeds, then try to visit as many websites on tax sale information as you can. Also, check out every book on the subject that you can get your hands into. There are many great resources that you can take full advantage of with the free information they can give.
The key to a successful tax deeds investment is to conduct your homework on the properties you’re interested. Then, talk to someone who has vast experience in purchasing tax deed properties. Having an experienced real estate investor’s tips, strategies, insights, and knowledge would also help you reach that investing goal further.
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.
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.
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.
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.
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.
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.