The Tax Sale - 3 Things You'll Want to Know

Whether you're looking to make some extra income, find financial freedom, or simply buy a house for less than you would on the open market, a tax sale offers a number of advantages for the wise investor. There are few ways to get a grasp on property for so much less than you would pay when going through traditional means. They aren't for everyone -- you need to have capital on hand before you start investing, and it takes a lot of research and work to do it right -- but they can be amazingly profitable for those who know what they're doing. Here are the three things you'll want to know to get started.

Categories

The tax sale will generally fall into one of two categories. The first type involves purchasing a lien against the property and the other involved purchasing the deed outright. If you're looking at liens, you're involved in a situation where the local government has placed a claim on the property due to unpaid taxes. Once you have purchased the lien, it will fall to your responsibility to collect the back taxes. If the homeowners don't pay, you may be able to take full possession of the house. In a deed sale, the government has already foreclosed and now wants to get what they can out of the property. When you buy the deed, the home is yours.

Advantages

There are a number of advantages to buying a home through a tax sale. While it may seem predatory to take benefit from someone else's misfortune, you must remember that you aren't contributing to the homeowner's plight. They are in the situation regardless of whether you bid on their home. Buying a home at a fraction of the market value can prevent you seeing a similar situation in your own future. Becoming financially independent is not an easy thing to achieve in today's America, but it can be done. By taking proactive steps towards that goal, you can avoid becoming another statistic of the economy.

Location

If you're trying to get into the tax sale game, you will probably be best off starting locally. There are a number of hurdles to cross if you want to bid on properties outside of your immediate county. While they can be overcome with various resources, you will need to focus a lot of attention on your first purchase. Don't try to run before you can walk. Take it slow, learn from your experience, and ask as many questions as you can think of. After you've successfully purchased and sold a few properties, you can begin thinking about expanding your investing empire.