A grand real estate investing opportunity can be found in tax liens. A tax lien is used by the government against tax defaulters to compel them to settle their accounts, or to recoup as much as possible from those taxpayers who do not pay at all. Potential property investing tax liens can be sold to investors who will find the liens rather profitable to invest their money in.
The government can place a tax lien on the property of somebody who fails to pay his property taxes despite repeated reminders, the amount which is equal to the amount of the total tax owed by the tax payer. This is essentially debt belonging to the delinquent taxpayer, which needs to be negotiated with the government before his property becomes a part of those beneath tax foreclosure.
The lien on the property of a delinquent taxpayer can be placed in a tax lien auction off, where many properties under tax foreclosure are offered for sale. These disposals of the “Tax Lien Certificates” in the auctions enable governments to have access to cash. The authorities sells off these tax lien properties in tax sale auctions that are generally held once a year, (providing a great real estate investing opportunity), in a bidding process where individuals can make their selection from the properties offered.
Tax lien certificates tempt property investing investors to buy them as they have a high interest rate of return ranging from 10-25 percent per annum, which are added on the tax lien offered for sale. The property owner needs to act on his problem fast , as the interest on the tax lien starts accruing to his account from the very day the tax lien certificate is truly sold to the investor. The investor who holds the tax lien makes more money if the property owner does not settle his account early enough.
The cost of a tax lien certificate is the total of the delinquent taxes owed by the property owner, the related interest and the cost of marketing the property connected with the lien. An investor holds on to the tax lien certificate which is his legal take on the investment and property associated with it. This certificate when issued to an investor can end up in either of these two possible situations:
1. The first out come of tax lien certificates which happens in nearly ninety-five percent of the time, the amount owed is repaid by the tax defaulter the required sum of money, thus saving his property from being foreclosed. When a tax lien certificate is redeemed this way, the investor gets his initial money he or she invested with on the purchase of the tax lien certificate and the accrued interest thence.
2. During the time allowed the concerned property owner is unable to provide payment for the selinquent taxes, this situation, subsequently succeeding certain legal procedures and paying off the remaining lien amount and other taxes due related to the property, allows the tax lien certificate investor to get to own the entire property in question.
