How to Invest in Tax Liens?
16 Sep, 2020
An investor’s main aim is to check for novel opportunities followed by evaluating the risks vs. rewards. Though tax lien investing has been around for quite some time now, its popularity is on the rise among investors of almost every skill level. Buying tax liens, however, is not for all as this needs up-front capital as well as a minimum of 4 months to see an ROI. Its returns can be immense dependingon the available property.
An Excellent Investment
A tax lien certificate is truly an excellent investment that you can add to your portfolio. Akin to other investments, the key here is to analyze the property, the town, and the neighborhood in detail.
Though there is some uncertainty when it comes to tax lien property investment, in comparison to other types of investments, it has a lower risk profile. Take a look at the different pros of tax liens:
- Low Capital Requirement
- Good Rate of Return
- Fixed Sum of Payment
Tips to Invest in Tax Liens
- Get familiar with real estate auctions and tax liens: You can benefit in two ways by investing in tax liens – taking property ownership or through interest payments. Most importantly, this is vital to have a thorough understanding of the auction process prior to making a bid on a tax lien.
- Choose a target area: A tax lien is generally assigned by a county that helps to narrow down the target area prior to investing in the same. For best results, keep track of public records to discover the nearby county’s financial status and check the areas that represent the utmost promise.
- Watch different properties: An auction can help in preventing buyers from seeing a property’s inside before sale. So, it is vital in doing some homework and also scouting out prospective properties before attending the auction.
- Establish maximum bid: It is vital to establish a maximum bid to accidentally overpay. Ensure to conduct proper research on the payment needs of the county to remain prepared if the bid is accepted.
- Inform the homeowner: After you obtain the tax lien, follow the laws that pertain to your area. You may also need to notify the owner of the property through a certified letter. This letter will inform the homeowner regarding the tax lien investment and also shed light on the amount which they will owe in taxes.
Last but not the least, after the parties have a thorough understanding of the lien agreement, as an investor, you will need to collect the interest when the homeowner makes the back payment.
Connect with our expert team for a proper evaluation of your property today. We specialize in buying any property in any condition “as is.”