Just like any other potential income generating venture to succeed, vital information is needed in tax lien investing. That is why you need to collect the following details in order to find worthwhile bargains.
a. Outstanding current loan balance
b. Other property liens
c. Ownership history
d. Property market value
e. Other expenses like repairs, mortgage, insurance, etc.
These are the crucial information that can predict the outcome of your plan if it is successful. Do keep these in mind when buying the right properties and respective tax lien certificates.
Are you buying tax lien properties right now? Hold on. Do not do it yet. You need to read this first before proceeding to an auction.
You need to get a home inspection first. This is a very important task that you must do. You should be aware of the issues confronting the property you’re going to bid on. There are investors committing the mistake of buying a tax lien property and not inspecting it. And in the end there is a big structural issue. The property was sold at fair market value but because of that problem, it would surely sell way below. In short, they were screwed.
You also need to go through a title company. It is because buying tax lien properties without the help of a title company can be a huge mistake to make. Plus, do not be too confiding in transactions because you may never know that there’s a construction lien against the property. Remember that a title company would only transfer title to a new buyer of the property if it is clean.
Maybe you have been thinking of tax lien investing for a while now, but you are just not sure if it is really for you. You might have joined a tax sale and probably lost hope of gaining profit which was crushed by the competition. Now, you are not sure yet if you can compete against the big players such as banks and large real estate investment companies. Well, do not worry too much. There are other ways of investing in tax liens, and one of these is by bidding online.
Many states nowadays offer online auction which you can take advantage especially if you are tech savvy. There is less competition in this strategy which makes tax lien investing a worthwhile opportunity to take. So, start browsing the internet now and visit the websites of the states, and counties that offer this chance to own a property just for its back taxes.
Before investing in tax lien, it is highly suggested to evaluate your level of credit, liquidity, access to investors, as well as tangible assets. Start setting aside cash right away. Also, start seeing those who are in your network that can be of assistance to your financial plans. It is also good to refresh your credit score.
In tax lien investing, you can never expect the properties for bidding would fit your budget all the time. So, always check your finances. Furthermore, do not go into a property investing venture if your wallet is empty. This is one of the basic rules in tax lien investing. However, if you are ready and has followed the suggestions above, then it is time to find the nearest tax sale to bid for affordable properties.
Currently in the real estate market, there are lots of properties that face foreclosure due to unpaid taxes. While this is a bad situation for the owners, on the other hand it is good if you are a tax lien investor who is looking for a property at a bargain price.
Here are some tips to take into consideration when you’re thinking of joining a tax sale, and purchasing tax lien properties:
a. Make sure you do due diligence or research ahead of time.
b. Look for an experienced real estate mentor who fully understands the tax lien sale process.
c. Know how long it takes to redeem the lien certificate for each state so that you can collect return of investment.
d. Conduct a title search.
e. Keep in mind that properties in the tax lien sale are “as is”, which means that some may need repairs.
The most basic rule when investing in real estate is conducting a complete investigation process. This would greatly help in knowing the auction process which includes terms of payment, forms needed, schedule of the sale, location of the properties advertised, and fees.
You must also find out if the properties can be bought online or in person, people in charge of the sale, and availability of over the counter liens. Remember that these are mandatory information that must be accomplished before you are ready to invest in tax lien properties.
There are times wherein you can find gems in left over tax liens. It is because tax sales sometimes have so much competition that it would be best to forego the auction, and buy left over liens instead. The county has plenty of left over liens which were not sold during the sale, and buying them can give you the best returns.
Left over tax lien investing is a practical way of avoiding the competition. The big investors sometimes overlook those tax lien properties offered during the sale. It is now up to you to grab those properties. You just need to be keen in doing your own research on those sold over the counter. Get the most maximum interest rate from these properties, and make a decent return on your investment.
Now that you’re the holder of the tax lien certificate, you need to know the following in order not to waste precious time and effort. If the homeowner is able to pay promptly, you can earn the interest rate set by the county. The interest is counted monthly. So, the amount of interest you’re going to receive would depend on how many months you’ve waited within the redemption period. Wait until the homeowner has paid off his tax debt.
In the event that the redemption period has come to pass, and still the homeowner hasn’t paid, you can foreclose the property and apply for the tax deed. This way you can get your return of investment.
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.
Is it possible to buy tax lien without the necessary due diligence and going to the sale yourself? There are ways actually, and one of these is by acquiring the services of a tax lien investing agent. The agent can do all the work of purchasing tax liens and managing your portfolio.
The agent can take care all of the tedious tasks for you. Making the list of tax lien properties, researching, bidding at the sale, managing your portfolio, and taking care of any redemption or foreclosures, he can accomplish these things for you. You would just sit back and collect the profit afterwards.