| The Issue: | | | | homeowner the amount of the taxes owed for the |
| Ever thought it possible to consider property taxes | | | | redemption period. If the homeowner has still not |
| as an investment opportunity? When someone | | | | paid the amount owned by the redemption expiration |
| defaults on these taxes it's not taken lightly by the | | | | date then the government will foreclose on the |
| local government. Obviously they need these taxes in | | | | property and sell it to the public, usually for the |
| order to subsidise local schools, police, infrastructure, | | | | outstanding amount owed. This is often called 'Over |
| etc. They also realise that if one person is excused | | | | the Counter Tax Liens' because they are usually sold |
| from paying taxes then everyone will expect the | | | | at the local office or bank rather then at a |
| same break, so they will always enforce a zero | | | | government auction. Obviously since these are done |
| tolerance when it comes to paying taxes. | | | | rather quietly they don't attract as much competition |
| The government has three methods for retrieving | | | | so you can find properties priced ridiculously low (i.e. |
| defaulted taxes. The method used and laws | | | | under $2,000). |
| pertaining to each vary from state to state. They | | | | Property Tax Deeds: |
| are Property Tax Liens, Expired Property Tax Liens | | | | In some states rather then selling a Tax Lien |
| and Property Tax Deeds: | | | | Investment Certificates the government will actually |
| The Opportunities: | | | | foreclose on the house and auction it off to the |
| Property Tax Liens: | | | | highest bidder in order to collect the amount of taxes |
| These certificates sold at government auction where | | | | owed. Where a Tax Lien certificate may be sold |
| you as an investor, can step in and loan the | | | | shortly after the homeowner defaults of their taxes |
| homeowner the total amount of taxes, interest and | | | | these tax deeds are usually implemented years after |
| penalties owed. In return you are paid a high interest | | | | the homeowner first defaults. Both are sold at your |
| rate (12%-18%) for a predetermined time called a | | | | local government auction. |
| redemption period. At any time before the | | | | The Bottom Line: |
| redemption period expires, if the homeowner | | | | Real estate professionals are aware that not only can |
| defaults on any payments (as determined by your | | | | property tax sales be the most profitable real estate |
| terms and conditions) then you also have the right to | | | | investments available they can also be the most |
| take immediate ownership of the property. If the | | | | versatile. Where a tax lien can provide a consistent |
| total owed to you plus all interest has not been paid | | | | secure annual return, an expired tax lien or tax deed |
| in full by the end of the redemption period, you have | | | | can present a large profit per transaction type of |
| the choice to renegotiate and continue the loan or | | | | investment. |
| exercise your first right to the immediate title | | | | With housing prices and interest rates so low there |
| ownership of the property. | | | | has never been a better time to start nibbling in |
| Expired Property Tax Liens: | | | | property tax sales. The advantage tax sale investing |
| If the government was unable to sell a tax lien | | | | has over other investments is that a little common |
| certificate then they are forced to loan the | | | | sense is all it takes to be instantly successful. |