Buy Tax Liens Is Buying Tax Debt
Okay, question: why on earth would you want to buy a tax lien? You¡¦re not buying a piece of property; you¡¦re buying the tax debt of the property. In essence, you are loaning the owner the money they need to pay the taxes on their property. After that, your payoff comes in the form of interest on that debt, or the profit realized from the sale of the property after taking it via the foreclosure process.
Of course, that method does have a down side: more than likely you¡¦ll have to hold the real estate for a while before being able to sell it for a profit. And, even then, your return will be substantially impacted by the costs of maintaining the property between the time you take possession and the time you sell it.
Still, the process does hold the potential for profit. So, if you elect to try it, there are some steps to follow:
1. Check your city, county or state website to get all the information you can on the process; it varies from one municipality to another. In some cases, you won¡¦t be buying a tax lien certificate; it¡¦ll be a tax deed. Hey, a rose by any other name.
2. Take care of any registration needed for the sales you¡¦re interested in, as far in advance as you can. 3. You need to find out what methods of payment the municipality allows. It can vary, so have a check, money card and/or credit card available. 4. Go and attend a tax lien sale, and check the property listings to be sure all the information is accurate.
5. Make sure you find out what the laws say about redeeming the tax lien, what kind of timeframe is involved. Do you have to wait a month or a year to foreclose? This is important. Next, here are some tips to keep in mind:
„h Tax lien sales are normally held once a year, and ¡V usually ¡V it¡¦s required that you come to them in person. „h Go look at the property before the auction. You don¡¦t want to find out the parcel is a swamp, or a burned out hovel.
„h Arizona now holds tax lien auctions online. Check and see if your state and/or county are doing this as well. „h Before attending the auctions, learn what kind of sale will be held. They generally fall into one of four: bidding down the interest rate, bidding up the amount, a round robin or a lottery type of sale. „h Learn all you can! Talk to the other bidders and find out all you can about the process. In conclusion, if you know what you¡¦re doing, buying tax liens holds the potential for turning over a tidy profit. Yet, like any other business venture, it holds risks. So, learn all you can before testing the waters, and you just might find it both fun and profitable.
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