Zack Childress review – Tax deeds and tax liens are a lucrative opportunity for real estate investors. If you are laying your hands on it, then it is important that you are aware of the set of laws. Whether you purchase at a live or online auction, potential investors must do their homework in advance to avoid getting burned somewhere in the middle of the process later. Property taxes are the essential component of any county, city, or municipality and it supports all sorts of public services. In general, there are laws to assure that the government collects those finances, be it the delinquent taxpayer or a potential investor with a financial interest in the property.
When a taxpayer fails to pay his/her taxes for a continued period of time, then the taxing authority or entity will place a tax lien on the property and sell the right to collect on that lien to the winning bidder at public sale. An investor who has won the bid will take over the lien and collect the back taxes, plus penalties, and interest accrued for the period from the delinquent taxpayer. The delinquent taxpayer does have any rights to sell or refinance the property until the debts are paid off. Having said that, when the taxpayer fails to pay the taxes, the lien holder can foreclose the property and benefit from that! As far as Florida and other few states are concerned, bidders at a tax lien auction tender interest rates on the certificate down, with the winner being the bidder who consents to agree to the lowest interest rate. Whereas, in other states, the taxing entity advertises the real estate outright at a tax deed auction, with an opening bid of the sum of back taxes owed plus fees. Tax auctions take place at a designated location, live or online and the winning bidder should pay the full amount immediately.
- Protected by the local government tax code, compared to other types of real estate investments, the biggest advantage in buying tax liens or deeds is that they are safe and less risky. With no commission to pay out of the profit margin, it involves direct dealing with the government. Having said that it is very rare that the taxpayer or property owner will not pay the back taxes owed, however, the tax lien investor gets a good return on investment in the form of interest accrued for the tax amount paid. Depending on the state, and the interest rate, a lien holder can enjoy making greater profits, for example, in Georgia tax lien certificates pay 20 percent, while in Illinois they pay 36 percent, and the interest goes up to as high as 50 percent in the subsequent years.
- While the concept of buying a property for as little as the back taxes payable is smart, it is not as easy as it seems and if it was that easy, then everyone would be doing it. Even though they are less risky, there are certain potential pitfalls that are worth to note; hence, it is important that you do your due diligence. Before attending an auction with the intention of bidding and buying, experts recommend that you observe one of them, in order to have a clear idea about how it functions. Tax liens and deeds, apart from being available on residential properties, they are also available on commercial and other types of properties like ranches, vacant land and so on.
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