There has never been a better time for tax lien investing — ask anybody that’s doing it! This economy has made getting a house from your tax lien investment much easier. Folks just aren’t paying their taxes and the banks are SO heavy in foreclosure inventory that it financially behooves them to write off the note and let the property go!
During a good economy, you can expect to get about a 90% redemption rate from the home owner. This means 9 out of 10 people pay their taxes before you gain ownership of the house. In these situations you get your original investment back plus interest. Which is a pretty wonderful worst case scenario, right?
Now fast forward to 2008; the housing crunch has dropped the redemption rate in many markets from 90% to as low as 50%. This is any amazing turn for Tax Lien investors.
The Scenario On Tax Lien Investing
Back before the current housing crash, I would shop for the highest interest rate, assuming that I would only get one to three houses for every ten liens I bought. With government-secured interest rates buying a few houses seemed like the smartest thing I could do with my money, and it grew fast!
But now…oh my gosh…houses are coming to me left and right! Not only am I still getting my huge interest rates, but now a ton of my liens are magically becoming houses.
Just one quick example: I bought 6 tax liens at my last auction in Indiana (I love Indiana because they have a 4-month redemption period) and it’s looking good for me to get at least half of them. That means 50% of my tax liens will become my houses — houses that I own free and clear for less than $2000 each.
No matter how bad the market is, I bet I can find a buyer for a house that I can make a profit on by selling it for $1 more than $2000. Best of all, if my buyer gives me a $2000 down payment on a house that I bought for $2000, I’m in a pure profit situation!!!
Making Money Out Of Tax Liens
Your best bet to make money may be the Rent to Own market. Creative financing is never more welcome than at a time when the banks aren’t loaning money. There are millions of people in America right now that would kill to Rent to Own a house with me holding the note. No bank involvement means closing a LOT more deals.
This scenario is one of the great reasons for tax lien investing: rent to own your way to wealth! If the Tenant pays off the note, good for them, they get a house for a fantastic deal. If they don’t pay their note down month in and month out, then you evict them and get your house right back on the market. As long as you got enough down payment from the tenant to cover your investment in the house you are in a total profit situation.
This is the secret to making great money from the homes you get from tax lien investing, especially in a “down” economy. There are times in economic history when loans are much harder to get than other times. Smart investors take advantage of these times and can help people out of their troubles.
Leo J. Vidal, JD, MA, CPA is a master of wealth creation. He has helped thousands of individuals gain wealth and financial independence. Learn how to find your own pot of gold through tax lien investing at his website www.thetaxdoctor.info.
[tags]tax lien investing, tax lien investment, tax lien investors, tax liens[/tags]
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