subject: Investing In Tax Lien Homes [print this page] What do you know about tax lien homes? To give you a better understanding, it is when a homeowner fails to pay his due taxes, then the government or state will put a lien on the property. After it will be sold to the highest bidder, the investor gets the certificate that allows to collect the due taxes and interest but it does not grant any him any rights to the property.
Many people are facing mortgage and tax foreclosures due to economic downfall. It is a sad reality for homeowners to lose their rights on the property they have invested on for so many years but it is unavoidable for some. And this will assure the investor of gaining profits as property owners will still end up paying their taxes.
Those who are interested in tax lien homes, usually go to a tax lien sale, which can be quite difficult for other small investors. As it will be sold to the highest bidder, you are expected to pay upfront and you will get the lien on the chosen property. But one can hardly get a good deal on tax lien homes this way. The property that is worth owning will be bid up to its near retail price and will given to large and average tax lien companies. Just expect that you will be outbid by the agents of these firms since they have enough resources to get the property they want.
There are actually two types of tax investing. One is deed investing and the other is certificate investing. For the deed sales, when the homeowner has not paid his taxes after a period of time, the government will hold an auction and sell the property to the higest bidder. And this will give the investor full rights to claim ownership of the property.
With certificate investing, the investor will only get the lien certificate that allows him to collect taxes debt only that you paid for the owner but does not give him any rights on the said property. It is like you are lending him the money until he can pay up his debt to the government. When his debt is completely settled, the investor will get his initial investment along with the interest that the government will charge the owner.
However, do not expect to actually ever owning tax lien homes as there is a high percentage of property owners who gets to pay off their taxes. And if youre only after your moneys interest rate, it will also pose a problem if youll end up owning a house you dont want since theres no chance for you to inspect the house ahead of time. If you don't want to go through all the trouble of bidding against bigger firms and you really want to purchase tax lien homes, just go ahead, locate and get in toouch with the owners yourself before the deadline redemption or the tax sales. The advantage if you'll personally deal with the owners is the chance to inspect the property and be able to negotiate your price.
Do some research the day before tax sales so you will be ready during auction. This of investment is a great for you to bring in a profit but you must familiarize yourself with the auction process. This is a good chance for you as an investor if you know how and what to do in order to be successful on tax liens.
