Is now the time to invest in tax liens?
It’s a buyers market these days: market values are down, appraisal values are down, short sales and foreclosures are on the rise. If you happen to have ready cash available for a down payment (long gone are the days of 100% investment loans), now is the time to invest. But say you don’t have $20k – $60k liquid cash to plop down right now? Well say hello (again) to tax liens!
With the mortgage situation going the way it is, numerous homeowners are falling behind on their mortgage payments. Chances are those same homeowners have an escrow account set up with their lender for home insurance payments and tax payments. If a mortgage falls behind, that could mean that the taxes on the property have not been paid, and so, the state can issue a tax lien against the home. These tax liens go up for auction to any willing bidder in an effort for the state to receive the funds that they would have normally received from the homeowner. Those tax liens can start out as little as a few hundred dollars, upwards to a few thousand, but definitely less than the price of home– even in a down market. And almost like winning the lottery, the winning bidder gets to own a piece of property for an incredible discount! But not so fast, Tonto! Some states offer a recovery period for delinquent homeowners, in which case, they pay their taxes, any late fees, PLUS interest back to the winning bidder and get to keep their home.
Tax liens? Yes! Yet another way to diversify that portfolio!
[phpbay]tax liens, 5[/phpbay]