There comes a time when a homeowner is financially unable to contribute the needed property tax to the government. When this happens, he becomes a delinquent taxpayer, and the government places a lien against his property. This can happen both at the state and federal level.
To attend to such tax delinquency, the government offer various ways of gaining back the lost revenues. One of these is by auctioning tax lien certificates to interested property investors. The winning bidders get the tax lien certificates, which the homeowners must pay the debt in order to get back the properties. Through this, the government can regain lost income and continue to provide services to the citizens.
Tax lien auctions bring about a chance for you to make decent profit or owning a new home. It is one of the most lucrative forms of real estate investment nowadays. It is open to all, no matter what your status in life is.
With tax lien certificates, the holder of the lien should make the needed payment on the property tax in behalf of the homeowner. And in return, the homeowner is going to pay the lien certificate holder, the agreed tax amount plus accumulated penalties. Hence, all you need to get is a high interest rate or the opportunity of acquiring the deed to the property.
Purchasing tax lien is a well kept real estate investing secret in the past but not for now. However, many people are still not aware of the profit it brings, and the big potential of such investment.
The tax lien certificates you buy earn 18% to 50% or more annually. This also depends on the state where you buy the lien certificates. And if the homeowner fails to make the payments, you still have the court to act upon the foreclosure of the property. These are the reasons why buying lien certificates allow you to have the opportunity of a higher yield from the interest, or the actual title to the property.
A lien in its simplest meaning is the term utilized to indicate any charge or duty imposed against a property. It is also used as a security for payment of obligation or some other debt. The government imposed this so that they can collect money to carry out public services.
There are certain liens that can jeopardize your asset protection goals. This is one of the methods that creditors can seize your assets if you fail to keep up with the tax dues. It is why it’s very important to have a thorough understanding of the various types of liens, in order to know how a certain type of tax lien can affect your property.
Buyers and sellers of properties from tax lien auctions must familiarize themselves with the overall process of the public sale prior to choosing a tax lien expert lawyer. The lawyer can help simplify the negotiations. It is because learning the formal steps in each transaction can assist buyers and sellers, in choosing the proper lawyer in order to proceed with trust.
Buyers and sellers should know that a tax lien expert lawyer should be able to deal with a variety of responsibilities. This includes consultation before the signing of contract, document examination, contract approval, and closing of transaction supervision. Choosing the right lawyer to handle the situation is really a big help in a good tax lien investment.
Finding tax lien properties can be quite a challenge. However, if you know where to look, earning huge amount of profits would surely come your way. Here are some ways to help make your successful investment dream come true:
You can find affordable tax lien properties for sale in many websites. Just type your keywords in the search engines such as Google, and it would produce lots of results.
It is a great source of information for hunting down tax lien properties. Believe it or not, the classifieds might hold your next big property deal.
You can buy good deals at online tax lien auctions. However, familiarize yourself first with the rules and procedures before bidding. Also, set a final price on the target properties and never go beyond it.
Did you know that “defaulted properties” can bring in profits to your investment endeavors? The homeowners of this type of properties have not paid their tax dues in three months. They have been informed that their properties might be sold at a public auction, which is if they do not act on their loan.
You are aiming to buy the property before the auction. Once you’ve find out where the properties are located, make contact with the homeowners. Contact your escrow or title company for vesting data and comparable sales.
It is crucial for you to not only know the market value of the property but also to speak with the homeowners. Then, you may request for a preliminary title report after you are satisfied of possible purchase of the properties. The report is going to contain important information about the properties such as tax lien, judgments, outstanding loans, and court actions.
Investing in a tax lien property require due diligence and extensive research. If you already have narrowed down your searches, then it is time to conduct deeper research on the prospective property you have in mind. You should try to learn more on the neighborhood values, title, obligations, and other liens it may have.
Zillow is a good website to start on neighborhood values. You can see current photos of the property. As for the obligations, it would be best to research what the laws of your state require. Lastly, for the title, contact the records office or county court for pertinent information.
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.