Tax Deed Sales for the Investor
By holding tax deed sales, county governments can help to generate lost income from those properties whose owners failed to pay real estate taxes. Purchasing a deed to one of the delinquent properties not only helps the government keep within budget, but it also stands to be a wise investment for the buyer. For those prospective investors interested in this form of investment, this article offers tips on what to research before beginning the bidding process.
County governments earn their money through property taxes. Without these fees, a county would struggle to, among other things, employ firemen and policemen, and maintain schools, roads, parks, and other county territory. Under the circumstances when someone has become delinquent to the county, often tax deed sales will be held in the form of an auction to help the government recoup the money and stay within budget, hopefully keeping hikes at bay for those who do pay what is rightly owed.
Everyone who owns property is responsible for some kind of real estate tax, and though it is usually payable through an escrow account with a mortgage company, some deeds can go to auction without a foreclosure on the home. When this case presents itself, an investor can go to auction, bid on the deed, and essentially own the rights to the land or home because he has paid all the outstanding dues, interest, and fees. In tax deed sales, the starting price is usually equivalent to taxes owed, although situations do exist when the county government will auction for less.
For a fraction of the market price, the deed holder now owns all rights to the purchase free of liens and mortgages. The original owner will now have a set amount of time to repay what is owed including all associated fees and interest to the person who won the auction. Though the owner may have up to seven years to pay, after a two year period, the deed holder has the right to sell. Interest rates are said to be anywhere from fifteen to fifty percent annually, so it is a bargain even for the least savvy investor.
Though it sounds easy enough to make guaranteed money on this type of investment, it is highly recommended that a prospective bidder do substantial research on each individual case up for auction. A cost benefit analysis for each situation should be studied in order to ensure profit as the person on the other end of the deal could be willingly giving up possession. This could be the issue if the owner stands to lose more paying the fee than if he loses the home or land completely. In such a case, a buyer will want to be sure that the deal will work in his favor.
To find a listing of these deeds being auctioned, the pertaining county office can be contacted. This information is considered public, and should be readily available and willingly disclosed. It may also be helpful to contact a real estate agent who is fluent in tax deed sales in order to help determine market values and identify prospective fair investments.
Source: Free Articles from ArticlesFactory.com
ABOUT THE AUTHOR
Tax deed sales can be a sound investment. CivicSource can help to inform you on the bidding process. For more information on their purchase, please visit: http://www.civicsource.com/