Take Advantage Of The Best Housing Economy In History
The collapse of the housing market has made it much more profitable to be in the tax lien purchase industry. A lot of home owners are unable to pay their taxes. The unpaid taxes are necessary to run the governments and schools of our nation. The town, county or state governments provide a tax lien for the unpaid taxes and sell them to investors who want to receive a good income.
If the home owner does not pay their tax bills, which buys the tax lien back from the investor, the house will be legally sold to the investor at the amount of the tax lien. The period of time that tax liens are in effect differ in each state. Some are for a short number of months, while others state may range out to a few years. The interest is paid for the entire time the tax lien is in effect.
If the homeowner is able to pay their back taxes and retain their home, the tax lien owner gets a substantial interest paid on the amount due. This interest is paid for the entire period the tax lien is in effect and is usually paid annually, though some are paid quarterly. This is certainly a win-win for the investor. If the home owner does catch up on their taxes, the investor has earned some nice interest on their investment.
If the home owner vacates, the house has been purchased by the investor for just the unpaid taxes, which may have been as little as $2,000. This allows the investor to either sell the home at what ever the going prices will allow, or to rent the property on a “rent to own” basis. The rent to own makes it possible to sell the property to the renter, while taking back a note. Let’s face it, if you buy a house for $2,000, how hard would it be to sell it making a profit?
With the current climate in the banks, it is almost impossible to get a mortgage and this allows the renter to own a house at a reasonable price. If the renter were ever unable to repay the note on time each month, the house would revert back to the investor to sell or rent again.
During a good economy, the tax liens are mostly (more than 90%) paid back by the homeowner before the end of the tax lien. The interest and the investment principle are still paid of course.
With the current economy, the houses are mostly (more than 50%) being turned over to the investor. This can mean enormous profits on small investments in the tax liens.
There are times in economic history that loans have been hard to get and the smart investors take advantage of these times. The big advantage is being able to help people out of their troubles.
