Forget Tax Lien Certificate Investing - Go Right For the Deed
Many consider tax lien certificate investing to be a cutting edge strategy for savvy real estate investors.
However, it may not be as effective as you might think.
Even though tax foreclosures do carry a benefit in terms of per dollar returns, there are methods that are capable of increasing ROI beyond the potential found at most tax lien certificate auctions.
For one thing, if you want to try your hand at the tax lien certificate investing game, you've got to have a ton of money and a whole lot of patience.
You will be competing with huge tax lien firms that have lines of credit far beyond anything you can imagine.
The chance of an independent real estate investor getting into a bidding war with these folks, and actually winning the bid is slim to none.
Now, imagine that you actually get your hands on a tax lien certificate at one of these auctions.
Next you find yourself having to wait up to five years to be able to foreclose on the property.
Not too savvy of an investment move after all, tying up your money for such an extended period.
And that's just one of the things that could go wrong.
Here's an alternative to this way-too-uncertain approach: simply secure the deed directly from the owner.
Most tax lien certificate investors don't realize how easy and effective it is to buy tax property directly from the owner.
The majority of these investors have also dabbled in failed mortgage foreclosures, so the idea of dealing with the owner is out of the question, as most mortgage default home owners have a tendency to be rather aggressive and there are other liens and judgments attached to the property.
However, this situation is entirely different when dealing with tax foreclosures.
When we're dealing with tax foreclosures, the mortgage companies will typically take care of all the back taxes in an effort to avoid losing the property at tax sale.
Therefore it's rare to find a property that actually gets sold at tax sale with an attached mortgage.
It is also typical to find that properties are free of any liens if there is no mortgage attached.
So with all of these headaches eliminated, why are owners reluctant to pay off their tax debt in order to keep their homes? The answer may surprise you.
Property owners faced with tax burdens typically don't want the property in the first place.
A great example of this would be an heir receiving his recently deceased grandmother's single family home.
Perhaps it's a landlord who now lives out of state, and no longer has tenants occupying his or her property.
There are a countless number of variables as to why.
The only thing that an investor should concern themselves with is the fact that there is property available at a discount, and without the need for competitive bidding.
Now that's savvy investing.
However, it may not be as effective as you might think.
Even though tax foreclosures do carry a benefit in terms of per dollar returns, there are methods that are capable of increasing ROI beyond the potential found at most tax lien certificate auctions.
For one thing, if you want to try your hand at the tax lien certificate investing game, you've got to have a ton of money and a whole lot of patience.
You will be competing with huge tax lien firms that have lines of credit far beyond anything you can imagine.
The chance of an independent real estate investor getting into a bidding war with these folks, and actually winning the bid is slim to none.
Now, imagine that you actually get your hands on a tax lien certificate at one of these auctions.
Next you find yourself having to wait up to five years to be able to foreclose on the property.
Not too savvy of an investment move after all, tying up your money for such an extended period.
And that's just one of the things that could go wrong.
Here's an alternative to this way-too-uncertain approach: simply secure the deed directly from the owner.
Most tax lien certificate investors don't realize how easy and effective it is to buy tax property directly from the owner.
The majority of these investors have also dabbled in failed mortgage foreclosures, so the idea of dealing with the owner is out of the question, as most mortgage default home owners have a tendency to be rather aggressive and there are other liens and judgments attached to the property.
However, this situation is entirely different when dealing with tax foreclosures.
When we're dealing with tax foreclosures, the mortgage companies will typically take care of all the back taxes in an effort to avoid losing the property at tax sale.
Therefore it's rare to find a property that actually gets sold at tax sale with an attached mortgage.
It is also typical to find that properties are free of any liens if there is no mortgage attached.
So with all of these headaches eliminated, why are owners reluctant to pay off their tax debt in order to keep their homes? The answer may surprise you.
Property owners faced with tax burdens typically don't want the property in the first place.
A great example of this would be an heir receiving his recently deceased grandmother's single family home.
Perhaps it's a landlord who now lives out of state, and no longer has tenants occupying his or her property.
There are a countless number of variables as to why.
The only thing that an investor should concern themselves with is the fact that there is property available at a discount, and without the need for competitive bidding.
Now that's savvy investing.
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