| You have probably heard about the investment | | | | property. This means that if you win the auction, you |
| opportunities in tax liens and deeds. They can be quite | | | | become the rightful owner of the house or lot in |
| lucrative - possibly the most lucrative and safe | | | | question. With tax deeds, you have to do more |
| investment you will ever find, if you have the | | | | meticulous research because you want to be sure |
| necessary knowledge. This article is going to cover the | | | | you don't end up with a worthless piece of real estate. |
| first lesson you will need to learn when it comes to tax | | | | You also have to be careful with tax deeds because |
| lien and deed investing... the difference between the | | | | certain states, such as Arizona and New Mexico, do |
| two investments. So, let's start with tax liens. | | | | not extinguish the liens after the auction. This means |
| The definition of a lien is: a claim against an item by | | | | that you- the new owner of the property- have to pay |
| another party, which utilizes that item as security for | | | | them off. All you have to do to avoid this is check with |
| repayment of a loan or other claim. A tax lien is placed | | | | the county you're bidding in, and do the proper |
| on a piece of property by the government when the | | | | research on the property before bidding on it. |
| owner fails to pay their property taxes. Now here is | | | | Tax deeds are more challenging to deal with, but the |
| where the investor comes it... the government sells | | | | returns can be phenomenal. |
| these liens at county auctions to investors. The | | | | Some state use a hybrid system that includes both the |
| investor who wins acquires a first position lien on the | | | | lien and deed protocols. Here is how it works. At the |
| property. Then, the property owner has a fixed period | | | | auction, when you win the bidding, you become the |
| of time to pay off the principle and all interest and/or | | | | rightful owner of the property - just as with tax deeds. |
| penalties accrued-ALL of which goes to the investor. | | | | However, the owner has a set period of time after this |
| If the owner fails to pay the taxes, interest and/or | | | | to pay back all taxes, penalties and interest owed in |
| penalties you get to foreclose on the property. | | | | order to reclaim the property. This system is potentially |
| However, this happens about 2% of the time with liens. | | | | the most rewarding of all. |
| So, most of the time they are a hands-off investment | | | | So, there is your first lesson in tax liens and deed |
| and the interest and penalties are often time very | | | | investing. I suggest learning more about this amazingly |
| hefty. | | | | profitable and safe investment, however, before you |
| Now when you are bidding at an auction for a tax | | | | jump into it. Good luck! |
| deed, you are actually bidding for ownership of the | | | | |