subject: Tax Lien Auctions - More Than One Way To Profit Big [print this page] If you invest at tax lien auctions, you're probably buying tax liens. Duh! But while you're sitting around waiting to see if the owner pays you off or not, you could be making a lot more money, a lot faster, with these very same properties you're bidding on at the tax lien auctions.
First, property. If you hate the thought of owning property, you'll probably want to focus on overages (explained below). But if you're willing to look into property ownership - and you should be - the tax auction is a great way to buy property. Not by waiting to see if maybe you get one when an owner doesn't pay off the lien, but by studying what happens at tax lien auctions and then investing accordingly.
The bids at tax lien auctions will tell you everything you need to know. First, if a property makes it all the way to the auction, it's probably free and clear. Otherwise, the bank would have stepped in and paid off the taxes. Second, you can see what happened at the auction. The properties that got lots of bids are the nice ones, and the ones that got no bids are trash. Let other bidders do the research for you!
Those nice, free and clear properties are prime targets for you to invest in. Right now, not before the auction, is the time to locate the owners and buy their properties from them. At this point, owners know they have to sell, or risk losing everything. This is a time when golden deals can be made - and then you can pay off the lien and keep the property, or find another buyer, make a profit, and let them deal with the lien.
If you hate the idea of property ownership, the tax lien auctions produce another little gem - tax sale overbids! This is when someone bids more for a property's lien than is owed in taxes. The overage is due back to the owner, in many cases, if he or she can't pay the lien off.
Unfortunately for them, most owners don't realize they have any money coming and move on. Due to a legal loophole, a money finder - you! - can find these owners and offer to help them collect the overbid for a contingency fee, or a percentage of what's collected. That loophole allows you to charge whatever you like, and most money finders in this particular niche charge 40-50%.
These overbids are often for huge amounts, and there are a lot of foreclosures happening right now. There's a ton of money to be made in this little subset of the tax sale biz, so if you haven't looked into it yet, it's worth a shot.
