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How To Shop Properties On Tax Sales

May 28, 2012 | Comments: 0 | Views: 139

If you are new to the tax sales industry, there are things you need to consider when you want to participate on an auction and bid, and purchase a property. First shop locally; when you first begin investing in real estate tax liens, stay close to home, so that you as an investor can check out the property before investing. If you are new to investing in real estate tax liens, purchasing liens from across the country may not be disadvantage because it is a difficult time for you as a beginner. Second discover if the state you are targeting is a lien state or a deed state. The process is different for each type because in a deed state, delinquent taxes are paid by auctioning off the property, and on the other hand a lien state is one where the investor purchases a lien on the property. More due diligence is required in a deed state, and the investor's goal is to own the property, whereas in a lien state, the primary goal is to make high interest.

Third, check if there is an IRS or other tax lien on the property, because usually the property lien will trump other liens on the property, and even a mortgage with a bank. If an investor forecloses on a house that has a mortgage, they do not owe the mortgage, as the property tax supersedes the mortgage, but, if it is an IRS lien, that debt may remain with the property. Fourth, avoid buying vacant land that is so unfamiliar because if you pay a lien on swamp property, and the owners don't repay you for the taxes and the interest, do you want to end up owning swamp land, right. Fifth, approach commercial real estate with caution, because the business property might be more likely to have IRS or other tax liens attached. Sixth, go online to the county website for the area you are investigating, because many counties' websites post the procedures for purchasing real estate tax liens, along with list of available properties.

Seventh, do not always expect to end up gaining full ownership to the property when purchasing property liens. Well yes it does happen, property owners tend to eventually repay their taxes before losing their property. Eighth, negotiate the interest you will earn on your investment, because some states offer 16%, 24% 5%, and other rates. And if more than one investor wants to buy the lien on one piece of property they will make a bid and the lowest bid wins, meaning the investor receives less interest than the standard rate, and the government gets to keep the difference as profit.

Source: EzineArticles
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