Have you ever wondered what happens when someone does not pay their property taxes? Well if you know government officials then you know they are not going to give a slap on the wrist and say ‘that’s okay, but don’t let that happen again’. Rather the government has the power to foreclose homes and commercial property when taxes are not paid. It does sound like the ultimate nightmare for the homeowner but it is not bad at all. In fact as Alec Baldwin would say in one of his notorious movies, it’s a ‘win-win’ situation. Let me explain.
County governments hold what is referred to as ‘tax lien sale’ which is a public auction where people can bid on these tax sales in lieu of the property. What this means is the public is bidding on the debt of the homeowner. In exchange for buying this tax lien and paying off the homeowner’s debt, the homeowner will then pay the winner of the auction back, with interest, by the redemption date as predefined by the government. This redemption date can be a length of time between 6 months and 4 years.
Now here’s the catch for the homeowner. If they default on the loan terms then the lien purchaser (let’s assume that is you) has the right to foreclose and take title of the property. So it is a ‘win-win’ so long as the homeowner continues to pay you, as the lien certificate owner, all loan payments. For you it is a good way to make a high interest rate while helping someone from losing their home.
Being the shroud business person that you are, however, you would actual prefer that the homeowner defaults on the lien loan terms in order for you to take control of the property. Obviously the homeowner will do everything in their power to make sure the debt is paid off in full, however, because they were financially incapable of paying their taxes initially it is quite possible that their financial situation will not improve enough to pay off this loan.
Does that sound like a sound investment? Well listen to this! When a tax lien is not sold at the government auction, the redemption starting date becomes the date of that auction and by default the government reluctantly becomes the loaner. This was a common occurrence just a few years ago before the government leveraged Government Auctions Sites (like this website) to increase access and awareness of these tax properties auctions. Because of this there is a very large inventory of tax liens
What this means to you is that since the original owner did not pay the loan by the redemption date, you can foreclose and take ownership of the property immediately simply by paying off the defaulted taxes and penalties. Often this amount can be less then $1000 or $2000. So if the property is valued at $200,000, well you can see the extraordinary opportunity here. For more information on this virtually 0% risk, high return ‘expired liens’ investment visit Tax Lien Investor Secrets or to see a list of a local auctions in which these liens sales are available visit Government Auctions Site.
Tax lien sales differ from tax deed sales, which are government auction sales as well. These are like tax lien sales, except that the government is conducting a forced property sale and the winner of the auction will obtain immediate rights to the property. This is the nightmare scenario for the homeowner has by this time they have surrendered their house. Once this happens, the new owner will be clear of
These are just a couple of ways that someone can profit at government auctions. Tax lien sales and tax deed sales can be a life-saver, or a death-sentence for the homeowner. Either way, homeowners are given ample opportunity to pay their taxes, and failure to do so, creates a profitable opportunity for someone else.
As mentioned above for more information on property tax lien and deed opportunities go to Tax Lien Investor Secrets or to see a list of a local auctions where these are available visit Government Auctions Site.
