The Savvy Investor's Tax Lien Investing Guide - Tax Lien Properties
Brent Crouch
When you're presented with a plethora of options, it's easy to become overwhelmed. When you're unfamiliar with tax lien sales, it's understandable that you might just decide it's too complicated, too much work, meant for professional investors, not mere mortals. Put such self-defeating thoughts aside-there's no reason why you can't achieve financial freedom and a well developed tax lien portfolio. You just need to educate yourself so you can make informed decisions.
First things first-what is a tax lien, exactly? As you may have noticed, the government likes to receive tax money from its citizens in a timely manner. No one works for free-without money to pay government workers, mail doesn't get delivered, roads don't get built, teachers don't' keep our kids in line while we pay our dues at the old nine to five-you get the picture. So if a property owner fails to pay their taxes, the government places a lien on the real estate and holds a tax lien auction to get the money they need. You purchase the lien, loan the government the money they need. If the owner does pay up within a fixed period of time, you are reimbursed for your investment and also earn interest. If the owner cannot pay their taxes, you become legal owner of the property and can then sell or rent it at a great profit.
Redemption periods vary from state to state and can range between 6 months to 3 years. The shorter redemption periods make the smarter investments. It's harder for the homeowner to pay in a shorter time, increasing your odds of taking ownership of the real estate, and the penalties and interest rates are fresh and unpaid, which means more money in your pocket.
Homes and Tax Lien Sales
A widespread misconception exists, to the effect that the homes available in tax lien sales are condemned or dilapidated, located in seedy neighborhoods. This is not true. Many homeowners borrow to improve their homes and then fall on bad luck and get behind in their tax payments afterward. Particularly in the present economy-many people have suddenly lost their jobs or had their finances damaged by the credit crunch. And surely we all have at least one acquaintance who built a huge, fancy, show-offy brand-new home they really couldn't afford in the long-run. Some homes in tax lien auctions are in need of major of repairs, but many are nice houses that simply became too expensive to keep. This is an excellent opportunity for the investor who has done some research to make smart, safe investments on quality properties.
If you are looking for a get-rich-quick scheme, you might want to continue your search elsewhere. If you are looking or a get-rich-smart investment, tax liens are your game. Keep reading and researching to learn the rules of your prospective area and to learn how investigate homes you're interested in bidding on.
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