Nov 18

A Basic Introduction to Tax Liens Investing

When it comes to the real estate investing, the power of success lies in being informed and suave in cutting deals. In fact, most successful investors are not after property per se but a deal that will be executed swiftly giving them enormous returns on investment. If you have tried your hand in real estate, you will agree that sometimes, this market looks like an esoteric club where accessing information is very difficult. One of the most hidden secrets of real estate market is tax liens which most moguls have exploited since the property bust in the mid 2000s.
The National Tax Lien Association (NTLA) reckons that sales of delinquent properties have shot by 200% over the last 5 years making this an investment choice worth checking out. A taxi lien sale is conducted by the government or one of its agencies for delinquent taxes in the market. It is a unique way the government has been using to collect delayed taxes in order to run operations smoothly.

With so many counties already in the red due to aftershocks of the recession, this is one way of getting your hands on cheap property and later offloading it using one of the many available exit strategies. Tax liens give you amazing leverage as an investor. If you are looking at this investment option, you can consider common liens such as mortgage, IRS tax liens, and code violation fees.

Tax Liens Sale Procedure

Once a date is issued after which tax is indicated as late, a taxpayer is notified through a letter and if they still do not pay, a sale notice is advertised. Different state statutes give the public various bidding options and the winner gets a certificate or a deed. If a taxpayer does not redeem the lien, most states have a redemption period say 6 months or 1 year but you can elect to start a legal suit to have the courts deed the property to you. On winning this case, you own the property and you can elect one of the following exit strategies;

  • Rehabbing; you can spruce up the property and then place it in the market immediately to recoup your investment. You will have all the leeway to state a market price irrespective of how cheaply you bought the property.
  • Wholesaling; most sophisticated investors opt to sell the property immediately in a discounted resale as they seek for other tax liens sales.
  • Buy and hold; if the property is appealing, you can include it in your portfolio. This will definitely have a high return on investment (ROI) over time.

 

With this basic insight on this unique investment option, you might be wondering what benefits you can accrue from tax liens sales.  For a start, interest rates are very high to penalize the defaulting tax payer while encouraging investors. Additionally, as priority lien, this option is even higher up there than mortgages and trust deeds and this makes it an ideal addition to an investment portfolio. One more advantage is the fact that you get a chance to invest in unique places and even other states where such property lies without any restrictions.

 

Conclusion

Like most real estate experts argue, this is one of the most creative options for making it big in this market without burning your fingers. It is an investment which is ideal for investors starting in the industry and even those who are established.

Nov 12

Important Considerations When Thinking Of Going the Rehabbing Way

Real estate investment is a risky yet very lucrative business venture. There are no guarantees that all deals will go as planned. Sometimes a deal can turn out to be really lucrative and at other times it can be total mess that will eat up your hard-earned savings, making you regret on why you got into the real estate investment business in the first place.
When you go with a clear, prepared and educated mind, though, you will have cushioned yourself against any eventualities that may come along the way, and you will understand that by the end of the day once you know the solutions you have no problems. The first thing you need to know when it comes to real estate investing is the difference between a real estate speculator and an investor.

A speculator is one who buys and sells quickly just to make some fast cash and usually does so through luck but has no consistency, while an investor is one who plans on being in the game for a long time and seeks out consistent profits. In other words s/he doesn’t want to be a one hit wonder.  You ought to weigh your options well to know whether you are a speculator or an investor. If you are new to real estate investing, you might want to study the market well and consult experts in the field who will help get your feet wet without really getting all drenched and soaked.

Real estate rehabbing is a venture that has proven to be a very lucrative and necessary option for real estate investors. As the name may suggest, you get to invest in an “ugly home”, revamp it and put it up for sale. Naturally, the purchase price of such a property will be very low since it is in bad condition and shape. Once revamped, the cost can rise up very fast called forced appreciation.

Even so, there are some important factors you need to consider to know whether real estate rehabbing will be a viable option for you or not. If done correctly, rest assured rehabbing can bring in some tidy profits. Here are the general factors you will need to give serious consideration before investing in an old, run down property and restoring it for resale.

Are you patient enough?

Restoring a run-down property needs a lot of patience. Real estate investment can be a huge commitment than many people have been led to believe, especially when it comes to rehab properties. As such, you need to know if you are patient enough to see the restore process to completion without losing your mind in the process.

Expertise

Restoring an old home means that you should have some rough idea of the building design and construction so as to know the amount of work and money needed to put the house in good resalable shape.

Inspection

You need to have a professional eye inspect the property in question before you commit your hard-earned cash to it. It is important to be fully informed of all the possible pitfalls that may come your way once you commit yourself to a rehabbed property. Be advised, though, that no professional inspector will spot all the problems in a run-down old property, but the most experienced of property inspectors should at least be able to identify the most problems that might cost you a lot.

Conclusion

When all is said and done, you should know that rehabbing properties can go either way. It can be a good deal or might end up costing you a lot and you may be stuck with the fixed-up property longer than you had anticipated. Ensure you weigh all options at your disposal to avoid disappointments later on.

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