Government Auctions for Tax Bond Properties and Tax Deeds – Houses Under $2K?
It was one of those nights where TV teaches you how to make a million dollars just by making four payments, don’t make those three low payments if you act now (that’s why you don’t have a phone near your bed). Then the most interesting infomercial came out covering an area I know very well, which is foreclosures and government auctions. In this case it was in the form of what they called ‘property tax sales’. For the more sophisticated audience it would be called “fiscal liens” and “fiscal acts” auctions of government property sales.
In this infomercial, they claimed that if you bought their show, you could run out and buy a nice house in a great neighborhood for less than $1,000. They showed examples of modern executive homes that were purchased for $2,000 to $3,000. They briefly mentioned that this was done by paying someone else’s taxes. But that was all they went into detail, the rest focused on the great houses you would be guaranteed to buy if you just bought and followed their program.
So can you buy a nice house in a good area through a tax lien or tax deed opportunity for a couple grand? Well, the answer, surprisingly, is yes! It’s just that the infomercials aren’t creditable because they don’t provide any insight into how this could be possible. There are actually two possible ways to receive very affordable housing. Is that how it works. It is a known fact that the government, if not an entity you want to default when it comes to paying property taxes. They will always do whatever it takes to recover these taxes as they are counted on to cover the budget of the local community, including schools, inter-urban development of towns and cities, etc.
To recover these unpaid taxes, the county government holds a public auction where they have a “tax lien sale,” and anyone who attends can bid on a lien certificate representing the owner’s debt. Basically, any of the attendees is bidding on the owner’s debt. For a predetermined period of time, the owner will pay interest to the buyer of the lien certificate in exchange for the investor covering his or her debt. So this is where the opportunity to get a cheap house is presented to the investor (let’s assume you are this opportunistic investor). If the landlord does not pay you back in full within a period of time set by the state and local government, then you have the first priority right to foreclose on the property and obtain title to the property. Thus, your investment helps the homeowner as you can delay and hopefully prevent foreclosure, while there is virtually no risk to you as your investment is secured by the property itself. You will get a very good interest rate on your loan with the possibility of having a house in case of default.
Being the astute business opportunist that you are, you obviously want the homeowners to default on the loan. If you feel sorry for the homeowner, that’s understandable, but remember that you helped them by giving them more time to pay their taxes. If they still can’t pay them after the overtime runs out, then it’s in their best interest not to be saddled with home ownership in the first place. Renting would be a much cheaper and less stressful short-term solution for them in this situation.
Tax deed sales are different from tax lien sales, aside from the fact that both are available at government auctions. A tax deed sale is when the government is selling a foreclosed property instead of selling the debt on the property. In the event that you, as an investor, purchase immediate rights to the property. Then, depending on the situation, the government has the option of selling a lien certificate or proceeding with a tax deed sale, to cover the homeowners’ tax debt. With a tax deed sale, the current owner has no choice but to give up the rights to their property.
The good news for the homeowner is that they will be rid of all liens and debts associated with the property. Therefore, depending on prior agreement and local state laws, you, as an investor, upon receipt of title from a tax deed sale, may be liable for liens, mortgages, and other outstanding debts on the home. If there is one thing to take away from reading this, it would be to understand what debt, if any, you will inherit when you buy a tax sale property (or any property for that matter). This information is publicly available and can be easily found at your local government office. Auctions where these tax liens and tax deed listings can be found are on some of the best government auction sites. The following link provides free tips and reviews on how to find these government auction sites.
Tax lien sales and tax deed sales are definitely two of the best investments of any kind that you can benefit from by researching the right government auction sites. A review site will educate you on which government auction sites will successfully provide you with this information and make sure you avoid many of the scams that try to charge for information they don’t have access to.
There is no other investment available where you can earn 10-20% interest and if not paid, it gives you full title to a new home or an investment where you can buy a home outright for pennies on the dollar. So look into tax liens and tax deed opportunities and who knows, you might retire sooner than you think.
