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Delinquent Tax Sales: A Sound Investment Strategy

Written by: Ralph Moore

Property Tax Liens Are the Result of Unpaid Property Taxes
There is a way for municipality of county governments to assure that a resident pays applicable taxes if the person who failed to pay owns a home. Homeowners who canít pay their taxes find a tax lien on their property until the time the tax arrears are paid in full. If this does not happen, then the homeowner faces losing the property entirely.

Investors Can Profit From Property Tax Liens
So what does this mean for investors? It is because of this relationship between homeowners and the government that investors can stand to make great gains on delinquent tax lien sales. Interested parties are allowed to purchase, via auctions, the outstanding liens. In this way, the government makes back a portion of the lost funds, and then, as the homeowner pays down the tax arrears, the investor reaps substantial gains. If the homeowner fails to pay within a specified period of time, it can actually be good news for the investor that bought the tax lien, as it will often mean that title to the property will be transferred to that individual.

There Are Some Risks When Dealing With Property Tax Liens
The downside of these investments is that, as with any high-gain investment, they come with a level of risk and also a sizeable upfront payment. Delinquent tax sales must be paid in full and in cash. As a result, this is not the type of investment that should be taken on by just anyone.

There Are Some Risks When Dealing With Property Tax Liens
Few people would be able to swing the initial expense in order to collect on the gain. However, anyone who can legally own a piece of property in this country, and who can come up with the sum needed to buy at these tax auctions, can purchase a tax lien certificate. As with any purchase of a property, it is wise to thoroughly inspect the property before buying. After all, it could belong to that person in the end. There is no guarantee that the tax arrears will be paid on time.

Review All Properties You Plan to Invest In
Review of the property might include brining in a licensed inspector and a surveyor to ensure that everything is as it is stated to be. It will also include inspection of the surrounding neighborhood. Even a great property is worthless is a bad area. If the property transfers to the investor in the end, he or she wants to be sure that it can be flipped for a decent profit.

Build Your Network
This method of investment is becoming more popular, but it is not something that everyone knows about. The auctions are not well advertised. So, to be successful in this investment game, one must know people who can alert him or her to possibilities as they arise. One such source can be local real estate agents or mortgage brokers. It is worth the effort to become well connected, when one considers that people have acquired very valuable pieces of property in this manner in the past.

 

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