Sunday, January 23

Tax Certificate Investing – Where to Start?

Tax Certificate Investing – Where to Start?

If you are looking to buy your first home, you may have heard of tax deed investing. Not all tax deeds are good deals, and this property is definitely not one.

Tax Demon

The original idea of tax certificate investment may have been centered around the auction and foreclosure sale. It was based heavily on bid up, or bidding down the sale price on the tax lien certificates being offered, to essentially buy the property at the opening auction. The purchaser would bid against other bidders in the same bidding, attempting to secure the first ownership position in spite of any competitors they may have in the specific county where the property was located. The next bidder would then bid, in competition against the prior bidder, until eventually, the property title would revert to the investor who had paid the final amount for it.

rejection pays shopping

At this point, any negative history and prior activities of the property would be erased and the certificate would certified as the legal owner at the closing of the sale. But this was never the case with tax certificates.

You can Uniquely Zestimate This Property

A Tax Lien or Deed of Trust is not a good mortgage investment. In fact, it is not any investment at all. The investor never owns the property.

If you are looking for a tax deed or tax certificate, you are looking for the ‘ proxy’ owner. The system is simple. The county recordership department is assigned the task of collecting the annual real estate taxes, and the county assessor will pay the property taxes to the county. These taxes are then turned over to the assessor and recorded in the county’s property inventory. If the property tax is not due for the homeowner, the county will record a default in the property data, and the title search is performed by the county recordership department. If the property is delinquent, the property title is transferred to the county — after which, a final tax deed sale is conducted in the county recorder’s office by the same government entity that holds title and records the county appraisal. The property is immediately transferred by the conveyance of the property title (in most cases) to the highest bidder and the property owner is notified of the transfer.

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I can’t help but ask how many actual properties are being sold this way?

Aside from the few properties that are purchased this way, numbers above would suggest that this system is too complex and that most tax deeds/deeds are being purchased with the help of a real estate agent. The majority of properties are actually purchased this way. It’s just that the majority of investors are not aware that this process is not as complex, is actually a whole ‘lot easier’ than buying direct land by cash and having to pay market value for the property.

Real estate agent don’t get paid unless they sell something

Of course, the majority of properties sold are purchased through the auction process. Because the sale is open to all, and the faster that property changes hands, the more potential there is for the sale.

That’s a good thing for real estate agents and the investor, right?

Most real estate agents are actually inexperienced when it comes to investing. Therefore, the majority of Realtors are completely uninformed when it comes to how to invest in tax deed/tax certificate property. Some of the items below should be considered when working with an agent.

Cash Down Payment without Real Estate Agents

mineral and physical property down payments ( attendant in due course)

Real Estate Agent Commissions are always a costly additional if they are not included in the purchase price. Most Realtors will not work for you unless you are preapproved by the real estate agent.

They will require a larger deposit or reduced cash down payment from you.

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Real Estate Agent are often not knowledgeable about various sales solutions, and may not be aware of the level of interest they generate in markets not conducive to competitive bidding.

They’ll invest money into advertising, to make sure as many potential buyers can see the property. Realtors are used to doing this type of marketing for other properties for sale, and will not stick to the same promotional model for your property.

Something to watch out for…Market Availability

Who’s going to be hunting the market (that which is usually targeted by tax sale) for your property? Over a million tax properties have been sold nationwide in a very short time which indicates this is actually a more viable path than purchasing the property. Dealing with the government is the longer and tougher process than trying to sell a property at the tax deed auction. And, you cannot attend tax sales – you must bid from the countertops out of your buyer’sseat, at the auction.

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