May 29, 2009
Real Estate Investing : Tax Liens .
Certain measures have to be taken by the government to make delinquent taxpayers to pay taxes that are due, tax lien is one such system adopted in eighteen states, where as the rest of the states use the tax deed system. In states where applicable, county tax lien deed sales are sold to backers for taxes that are over due, and the financier can collect interest from the house owners for the amount invested in the tax liens. If the home-owner fails to pay the tax lien plus interest, the financier may foreclose on the house and gets to have the property without any issues, as it is a first concern claim.This technique of making an investment in property is gaining popularity as financiers are guaranteed a good return on their investment or in extraordinary cases deeded rights to a property. The earning potential is about 16% to 24% and it’s considered a low upkeep investment. These rates are untouched by any changes in the Federal Reserve interest rates. Tax liens are secure investments as they are but a fragment of the property value.When property tax delinquents are given acceptable time as well as cautions to pay the arrears, and they fail to do so for at least a year and a half, the tax collectors will list their property taxes liens and sell them in an auction. The property owner is informed of the intended sale of their tax lien as well as broadcast in the local paper. Once the tax lien is sold, the house owner is given a fixed time frame, the redemption period, to repay the tax lien plus interest. Foreclosure of the house is inevitable if the amount due is not paid within the redemption period. The financier is granted full rights of possession to the property and in case the cash owed is repaid while foreclosure is started ; the financier has the right to charge the price of he foreclosure to the house owner too. Thus they have potential to great profits. Another advantage is that the investor need not worry about redemption as the county is in charge of that and often they need have no contact with the delinquent taxpayer. If the redemption has been paid to the county, the county returns the principle amount plus the interest to the financier on manufacturing the tax lien certificates. If the same house owner is delinquent again the financier has a concern claim on the tax lien.There are firms that offer their services as well as products to help new entrepreneurs run a successful business.
