Tuesday, 09 September 2008 17:00
The New Foreclosure Opportunity in Tax Lien Foreclosure Properties
Written by Eddie Stewart
Tax Lien Foreclosure Properties have been hot topic for real estate investors for years, and they are typically the first place new real estate investors look when they wish to get started. With so much publicity and competition is it still possible to make money investing in government tax foreclosure properties? The short answer is an emphatic "YES". There will always be money in government tax foreclosure properties.
This is important because it is the basis for one of the best real estate opportunities on the market today. Imagine the opportunity to foreclose on tens of thousands of properties for less than 20% of their market value. Imagine a wealth of opportunities held back by their location and accessibility.
Tax Lien Foreclosure Properties
Counties need a source of revenue. The number of services the county government provides might surprise you. Services such as Police and Fire Departments, public education, road construction and maintenance, and the county government itself. Property taxes are the county's primary source of revenue. We've established the importance of the services the county provides with these funds, as well as the steady funding most of them require. The county must have a way of enforcing property taxes. Consider the effects delinquent property taxes could have if not collected.
Depending on the size and population of any given city annual expenditures are likely to be in the millions or billions of dollars. Each state government has statutes and laws regarding the collection of property taxes.
Property Taxes are enforced through Tax Liens and Tax Deeds. A tax lien is a claim made by the County Government against a property within county boundaries due to delinquent property taxes. This claim prevents the property from being sold until the delinquent taxes have been paid. The lien itself is sold at public auction to local investors.
Is it possible to pay your taxes late and not pay some kind of penalty?
Delinquent taxes always have some kind of penalty attached to them. The individuals that purchase tax liens are guaranteed a set rate of return when they purchase the lien. In order to remove the impending tax lien against his or her property, the property owner must pay all delinquent taxes, penalties and fees.
Upon receiving payment in full the county will cut a check to the lien holder for their initial investment plus the total rate of return accrued to that point. It benefits counties to sell as many liens and deeds as possible. Many counties have had no choice but to sell liens and deeds directly to the public following the sale due to a low turn out for the annual tax sales. It's not uncommon for counties to have more than 5000 liens or deeds available for a sale, but begin the bidding with less than 20 bidders in the room. In the past there have been far more delinquent taxes than investors in attendance to purchase them in many counties.
This has created a backlog of tax liens that have sat on the books for years. The Redemption period for a lien begins on the day the lien is offered at the annual sale, whether the lien sells or not. This means that liens can be purchased directly from the county with a shorter redemption period than the county's standard time. It's actually possible in many counties to purchase liens that are beyond the redemption period and eligible for foreclosure immediately after being purchased.
What does all of this mean?
The Internet has made small counties just as accessible as large counties, regardless of location. There are literally thousands of opportunities to foreclosure on properties that are eligible for tax foreclosure right now.
No Risk Investor is the ultimate resource and tool for investing in Tax Lien Properties, tax deeds, and real estate strategies for investors all over the world. No Risk Investor takes incredible pride in its ability to help students take action, get into properties, and begin the journey to financial freedom. No Risk Investor provides county lists, property lists, online auction lists, comprehensive training and education, an auction calendar, and online auction center, an investor community and much more for its members.
Last modified on Monday, 28 June 2010 09:02
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Tax Deed Investing
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