Three Points To Keep In Mind – Tax Deed Sales
Investors today are facing the toughest economy in decades and, as a result, low returns on hedge funds. So, how is one supposed to make the returns of yesterday in today’s economy? What will be the next big source of investment income? These are the questions that top practitioners are asking. However, the answer may be right under their noses.
Since one hundred-fifty years ago, this country’s counties and municipalities have been in the business of selling tax liens, which provide high yields for interested, knowledgeable investors. This type investment fits very well with the multi-strategy hedge funds, as well as those focused on the credit and real estate markets.
The process Basically, the tax deed sale process is simple. If a homeowner owes taxes a property, the government takes the home and puts it up for sale. This means they want to not only get the money owed, but also there could be court fees, interest, and other costs tacked onto the property. The government will announce that they’re having tax deed sales, bidders will come out to the event, and the person that bids the highest gets the property.
– If a home is owned free and clear, the owner should follow the above step, as well. Just because there is no monthly mortgage payment doesn’t mean there will be lots of money available for the large yearly bill. Plan ahead to protect your investment. A paid off house is a huge asset and well worth a bit of forethought to protect.
Locating the events There are a variety of ways to find out about tax deed sales. One of the first ways is to get in touch with the tax collector in your county. He or she will be able to give you the information you need or at least point you in the right direction. Also, the newspaper tends to keep that kind of information available.
The Downfall: At this point, the tax lien market suffers one major drawback. That is the lack of a secondary market or a uniform process for the resale of outstanding liens. For now liens are sold only once and the buyer assumes responsibility for collecting the debt due or following through with the foreclosure process. However, if a secondary market was developed, this could become a true source of investment and more would consider it as a type of hedge fund. They could, should they do it correctly, buy low and sell high and reap the rewards more quickly without having to bother with the mess of collecting the taxes due. This is not to say that they do not offer a high return opportunity as is, but it is to say that they are currently not ideal for hedge fund type investment.
Risks Although buying property at tax deed sales events can be lucrative, it is important to be cautious. This means being careful in obtaining the correct information. For instance, some places claim to have the latest and greatest information or lists regarding these events and they want you to pay a fee in order to get them.
This is true for a personal escrow account and a general emergency fund, as well. Giving oneself incentives and rewards when certain savings goals are met is a good way to keep the bank account multiplying.
Harris Smith offers advice on home equity line of credit and obtaining credit