If you've been around Real Estate Investing for more than a few days, you've probably heard something about Tax Liens. Tax Liens are a legitimate way to invest in Real Estate if you know what you're doing.
So to start, what is a Tax Lien? - A Tax Lien is placed on a property by a government body after the owner fails to pay their taxes.
How can you buy a Tax Lien? - Every area has different rules, but they are sold at an auction to the public. In our area, most Tax Liens are sold in large bundles (starting price $1 million or higher) to large investment funds. In other areas, they are sold by the Sheriff, just like a foreclosure sale. You will have to learn how each area handles the sales.
Why Invest in Tax Liens? - The government sells these liens at a fraction of the cost, giving you the opportunity to collect the past due balance and make a profit. In some cases, you can even execute a foreclosure and take possession of the property. In general, it is less expensive than buying properties and the returns can be more stable.
So what are the risks of Tax Liens? - There are a few risks, not getting paid back is one. While a person who owns a Tax Lien can foreclose on the property; Tax Liens that are placed on the property after the ones you own will supersede yours and you can lose the ability to foreclose. Once you buy a lien you may be forced to buy all subsequent liens to maintain top position.
There is a lot to know before you invest in Tax Liens, above is just the basics. If you're interested in more information you can check out the US NEWS Article below, or call us for more assistance.