Q: What happens if people don’t pay the property taxes on their land or home?
A: In the United States, if someone does not pay the property taxes on their property, the State through the counties has the right to ultimately take that property away. The Counties rely on that tax revenue for much of their infrastructure, like schools, firefighters, roads… So if you don’t pay they can get their money by either selling what is called a TAX LIEN CERTIFICATE to investors or by selling the property outright. Both usually happen in an auction. In a Tax Lien State, the state only sells the TAXES owed to investors in exchange for them getting a very substantial and attractive interest rate that can go as high as 18% and in some cases even 36%.
Q: What Can I do to learn more about investing in tax delinquent Properties?
A: You can sign up for my newsletter and receive FREE weekly educational emails about the different subjects in the area of tax delinquent properties. I also recommend you get my www.Landforpennies.com course that includes descriptions of the Tax Delinquent Property processes and focuses on highly effective but little known way of investing in Tax Delinquent Property worth Tens of thousands of dollars for literally as little as $100.00 to $500.00. If you are interested in investing in tax liens, I am currently writing a Detailed Investment Manual that is specific to tax lien investing. You can send an e-mail to firstname.lastname@example.org to be notified when this Investment Manual is completed. In the meantime you can e-mail me your questions and I will be glad to answer them.
Q: When going to a Tax Lien Sale, should I get a title company to run a Title search on the property or properties I want to bid on?
A: No, that is WAY too expensive and too early to do. Who knows if you are really going to be the winning bidder in the Tax Lien Auction? If you are not you would have wasted the money it cost to run the Title search. However you DO need to do a quick title search on the properties you are planning to invest in, but Instead of hiring someone to do that, you need to learn how to do that yourself. It is not difficult to learn and at this point it does not have to be a very thorough search. The same is true if you go to a Tax Deed Auction, only here the title search needs to be a little more thorough and include a few more steps.
Q: You said you could show us how to buy tax Delinquent Land directly from the owner for pennies on the dollar. Why would they sell if the property is valuable?
A: There are hundreds of reasons why people stop paying their property taxes on perfectly good parcels and are willing to sell these parcels for just some nominal amount of money, fully well knowing that the buyer (you) will make a profit on them. One reason is that they have moved away and don’t want to deal with the hassle of a long distance sale. Another is that they have inherited the property and have no emotional affiliation to it. They have no interest in becoming landlords, don’t want to be responsible for the upkeep and just see the property they own as a burden. YOU are their solution!!
Q: Why would I want to buy a property that someone else is letting go for taxes, particularly if it is land outside of town and perhaps doesn’t even have utilities?
A: the short answer is “One man’s junk, is another man’s treasure.” What I mean by that is some people just don’t see what others see. They might see such a piece of land as worthless and they don’t want to (in their mind) throw “Good money after bad” But for someone else this same piece of land if their sanctuary, their place away from it all where they can relax, use their ATVs, feel FREE and in touch with nature and the are willing to pay a premium for this. Particularly since the internet has opened the world to you, selling such properties for full market value is as easy as counting to three and almost as fast.
Q: At Tax lien Sales, sometimes people pay a “premium” or “bid the interest rates down”!!! What is all that about?
A: Yes, some states have different rules about Tax Lien Investing. I some the bidding is on the down payment and the bidding actually goes downwards from the Max. of let’s say 18% down to 0. In states that use the Premium system, the bidding is actually for the $$ amount of the Taxes owed and the bidding goes beyond the actual amount owed. The winning bidder then gets the highest interest amount on the Lien amount (but usually 0 interest on the premium).
Q: Why would anyone bid the interest in a Tax Lien Down or bid a premium for a Tax lien?
A: The main reason that some investors are willing to bid and accept a lower than maximum interest rate (in many cases even 0%), or that they are wiling to pay a premium above and beyond the actual Lien amount, is because they expect this property to have a high chance of NOT being Redeemed and actually going to Tax Foreclosure after the redemption period is over. Therefore, they are willing to get as little as 0% interest for on that invested amount, or increase the invested amount for a lower interest payment, in exchange for the chance to get the actual property. If they do get the property they then get a HIGH multiple on their investment. The other reason is that the winning bidder at a Tax Lien Sale, in most states has the first right to pay subsequent taxes and get the highest interest rates on these subsequent taxes. How EXACTLY to identify properties that have a LOW likelihood of being redeemed, is covered in my Step by Step manual called TaxLienManuals (soon accessible here and through www.TaxLienManuals.com).
Q: How do know if a property is worth investing in?
A: there are several Steps in going from start to finish in the Tax Delinquent Property Investment Arena, depending on your Investing Goals and the Investing Channels you ultimately choose, all of which are meticulously described in my products (www.LandForPennies.com is already released, the other two www.TaxDeedSecrets.com and www.TaxLienManuals.com are coming soon), and in each of these strategies several of the steps consist of the different part of “doing your due diligence.” For example one that is part of all three methods is to drive by the property and see what it looks like. Another one is to do a preliminary title search.
Q: How long does it take if the investor in a Tax Lien Certificate can actually foreclose on the property?
A: Each state has different rules which change over time. But as an orientation usually the time frames are 2-5 years, again depending on the state. In Arizona the time frame is 3 years worth of Tax lien Certificates, which means since the auction in usually in Late January or early February and the next year’s taxes can be purchase as soon as June 1st, an investor has to wait less than 2.5 years. In Other states it is 2 years yet others require the investors to wait 5 years. Usually there is also a ceiling to the time you can wait to foreclose, in Arizona this is 10 years in other states it can be higher.
Q: I live in an area with a lot of growth and I am looking to get a beautiful $500,000 semi-custom home in a certain subdivision at tax Sale or through your third method by buying directly from the tax delinquent owner. Am I being realistic about this?
A: NO, I don’t believe you are realistic in your expectation of being able to pin-point that ONE property down the road or that one high dollar subdivision and do only ONE deal in a TAX DEED auction. As a general thumb rule the higher the value of a property the less the owner (or the bank holding the mortgage) is likely to let it go for taxes. I am not saying it can’t happen and actually I have made more than $150,000 in one Tax Deed Sale Transaction (several times actually) but my approach has always been to instead of making $500,000 in one transaction why don’t you work on making $5,000 to $10,000 in 50 to 100 transactions (something easily done in a year or two depending on your efforts and focus). Then you can go and BUY that dream home. And in the process of pursuing that goal you most likely will come across a few “home-Runs” netting you way more than the 5-10K you are targeting.
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