Researching for tax lien properties beforehand is a must to be guaranteed of profits after the auction ends. However, some people are under the impression that only little research is needed to get paid on a lien. They just go out to the nearest county with an auction, purchase any lien, and expect to be paid in the future. Well, that is now how it works.
The interest rate in your lien is guaranteed by the government. It must be noted however, you are not guaranteed to get paid. The property is your guarantee. So, better make sure that the property you’ve bid and won is valuable before buying its lien. Make sure that you can sell it to make profit.
There are lots of various ways to make a profit out of investing in the U.S. property tax system. Four ways immediately pop out and they are:
a. Tax liens
Tax liens are an awesome choice of investment for investors who has a lot of cash to spend, since it is necessary to invest huge sums of money to get a good return. Luckily enough, you might stumble upon a tax delinquent property that only requires small investment. There are tax lien states that offer high interest rates. You may get lucky and even acquire the deed to the property of those homeowners who failed to redeem. The downside though is that you may have to wait up to 2 years to get paid because of the redemption period.
b. Tax deeds
This is a straightforward type of public bid auction. You would potentially own the deed to the property of your own choice. Tax deeds are an easy investment since they are just picked up for taxes owed.
c. Deed grabbing
In deed grabbing, you do not have to bid for the deed because there are two ways to profit from this method. First it to work numerous tax deed sales in advance by looking to contact the homeowners. Then, send out huge numbers of mails asking the owners to “Quit Claim” the deed over to your before the tax sale comes. Once you get the deed to the property, you’re the new owner.
d. Tax deed overages
Overages occur after the auction of tax deeds. It is also known as excess funds which are overbids on tax sale properties during a sale. The way to do this strategy is by finding the former owners of these properties that were left behind. The government notifies them by mail but some has already left. So, find them and offer to help recover their funds and charge a finder’s fee for your hard work.