How Do You Profit From Buying Tax Debt?
Im new at this - Please advise me on the process of buying tax debt? Can a investor really buy the debt and lay claim to the property. I live in Maryland anyone know how it works out here? Please Advise. Thanks I would really appreciate it.
This will get a bunch of posts.
When you buy a tax deed (unpaid taxes), the county will let you foreclose on the property and take ownership---after an amount of time (varies state to state) has passed. Call you county's tax authority. The tax bill is always put into the first lien position. So if a $100,000 property has an $80,000 mortgage and an upaid $2,000 tax bill, you can technically pay the taxes, and in so doing: buy the tax certificate...then follow your states procedure to foreclose on the property...then you own it.
I do not know Maryland's law...call the tax authority...or find their website
the way it works in Maryland is that you can go to the tax sale bid on the property, the process is bid up which means that all interested person's can bid up the ultimate purchase price of the property, with the person who bids the most being able to pay the back taxes in exchange for a tax certificate.....the owner of the property has two years to pay off the taxes plus interest. If the person does not redeem the property than you can pay the bid up amount to receive a tax deed and complete the foreclosure process....be careful most bidders will bid up past market value and sometimes 10 x market value, they are only interested in the interest rate, which I believe is 18% APR, I've seen them bid one million dollars on a property that is only worth 200,000. They do this to get the interest with no intentions of foreclosing, so smart delinquent tax payers will wait and see what the bid up amount is and if it's like what I described they will never pay the taxes because the certificate holder will never finish the foreclosure process and have to pay the bid up amount.......Hopes this helps