OfflineOne of the best foreclosures to buy is the tax lien foreclosure. Why? Because tax liens have first priority over all other liens regardless of when they are filed. They even have priority over the 1st mortgage and the HOA fees and the water bill. When a city forecloses on a property for lack of paying property taxes, the sale wipes off all the other loans on the property and the purchaser receives the property free and clear of liens. In the foreclosure process, when junior liens are foreclosed on, the bidder/buyer of the property still is responsible for all other senior liens on the property, such as a 1st mortgage, mechanics liens, and tax liens. But since property tax liens take 1st priority over all other liens it clears off the liens behind it which is everything else. There may be some rare exceptions, but this is generally the case.
The other nice thing is that tax liens are usually for only 2K-10K and the bidding can start as low as 100 dollars and doesn't have to cover the taxes to sell. I picked up 17 homes for a total of 54K (3k each) in an auction in Michigan and the only thing owed was the current taxes due for the year. All the past taxes along with all other liens where wiped off and the houses became mine free and clear. I rehabbed them for 6k-8k a piece and rented each out for between 600 and 700 monthly. It is a slick deal, but make sure the properties have a market value that is well above the auction price and the rehab cost or you won't get your money out of them when you sell.
Buying tax lien foreclosures
Posted on: Tue, 09/17/2013 - 01:54
Buying tax lien foreclosures
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- by jcplumb123
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I go to my city's tax lien auction every month an a half but the way it works in my city is you buy the property at the auction but the owner who owes the taxes have 6 months to pay the city back, if the owner doesn't pay the city back within the 6 months then person who bought the property at the auction could take possession of the property. Now if the owner pays the backed up taxes before the 6 month period ends, owner gets property back and the person who bought the property at the auction gets their money back plus 15% interest on their money. Me personally don't like buying from my tax auction because you can have a lot of money tied up within a 6 month period and may not end up getting the property.
Reynold Orozco
Yes, to add to that, check with your city, state and even county because the rules are all different. I worked in Vermont, and it's one year the former owners have for the redemption period.
- Tom
i have bought them here in ny and you CAN get some sweet deals .for instance i bought a trailer and lot for approx 1,000 and sold in 2 weeks for 8500 cash so coach is def right on how lucrative the tax lein sales are !! heck even if i made 15 % on my money in 6 mnths if the property did go back to owner.....thats not to bad a return so partnering with another investor with THEIR $$$ can be something you can do .remember opm and opt
other peoples money and other peoples time can make YOU rich !!!
jay
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As mentioned above, there is a redemption period where the owner can pay off the back taxes plus interest and get the house back. During this time, the buyer cannot take possession of the home.
Interestingly, a vast majority of homeowners will redeem the property - but this can still be as lucrative investment since the annual interest rate can be as high as 24%. You are going have to look really hard to find a similar place to invest your money where you can find such financial security, low risk and high returns.
Tax lien may be an advisable for some people. Just recently, a case has been lodged against Chase bank for supposedly giving a Texas man cardiac arrest after property foreclosure notices were delivered to him. Harry Engel's fatal heart attack (which Chase denies responsibility for) makes him another victim of foreclosure. You can use an installment loan to pay your mortgage this month if you need help. Article source: https://www.personalmoneynetwork.com
Philly the tax lien sheriff sale is great. You can get a property free and clear for as low as a few thousand dollars. The process is simple, there is a listing that comes out at the end of every month for the next month sheriff sale auction. You get the list free at the sheriff office or find it in selected newspapers, then you go check out the properties and if you find something you like, you go to the auction and bid on it. The only way you don't get a property that you want is if the property is stayed at the beginning of the auction, if it's not then the bidding will start. Auction starts at a 100 dollar increments from what ever the starting bid price was. Once you win, you have to pay 10 percent up front and the remainder has to be paid in 30 days. Simple as that.
I wish I could get them as cheap as they are in Michigan. If so, I would have 1 or 2 by now.
Stan
Entrepreneurship - Is living a few years of your life like most people WON'T, so that you can live the rest of your Life like most people CANT!
Great to see people that are looking for opportunities to create income in ways others consider off the beaten path.
When ever you go in and look at a Tax Lien make sure that you find out the following about the county.
-What is the process A-Z, How to buy, were to buy (online, in person), what is the redemption period, are there any other fees?.
-What happens to the Liens that do not sell at the auction? When does their redemption period start?
Keep investing and posting your success!!