Tax Foreclosure Real Estate – Which Option Is Best For You?
There are two options you can choose from when looking to buy tax foreclosure real estate – there’s tax lien certificate sales or tax deed sales. I’ll give you a quick explanation of each tax foreclosure option, so you can decide for yourself the most suitable for your situation.
Tax lien certificate sales occur when a property owner can’t pay their taxes and a lien is placed against the property they own for non-payment of these taxes. You can then go along to one of these tax lien sales and bid on the lien, which may cost you only a few hundred dollars. You hold this certificate and earn interest on it until such times as the property owner pays off the tax lien, which can range from a couple of months to a number of years. When the tax lien is paid off, you are contacted by a county officer advising you that a cheque is ready for you to collect. This cheque is made up of the price you paid for the tax lien plus interest. The interest rate that the government pays on these can be very lucrative, anywhere from16% per year up to 24% per year or more, depending on which state you buy the lien from. There are approx 30 states in the United States that hold tax lien sales.
If the property owner does not or cannot pay back the tax lien certificate you purchased after a certain number of years (the number varies with individual state law) then you are able to foreclose on the lien and the property will become yours outright. You then own a property that has only cost you the price of the lien plus a small fee.
The second option for purchasing tax foreclosure real estate is the tax deed sale. When property taxes are not paid, the property is auctioned off in order to pay the back taxes. The complete property and full possession rights go to the successful bidder. The tax deed conveys title to the winning bidder, so long as there is no “right of redemption” law in the state you buy in that allows the property owner a certain period of time (varies by state) to pay the back taxes and any penalties so he is able to still retain ownership of the property. Besides live auctions, there are online deed sales that are conducted in some counties of California and Florida.
No matter which way you go in purchasing tax foreclosure real estate it’s best to start in just one state or county. The first step is to find out about the various laws and regulations for that particular area especially in regard to tax lien certificate sales as they can differ from county to county and state to state. Then it’s just a matter of finding out what tax foreclosure properties are available. You can do this by visiting the local county courthouse, doing a search on the internet for foreclosure listing sites or looking in your local newspapers.
To save yourself time and trouble visiting courthouses and phoning government agencies for foreclosure information, have a look on the internet at the listing site we recommend. All the information you need is right at your fingertips and they give you a FREE 7-day trial. Check them out here.
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