Tax Sales? Tax Liens? -- Can You Really Purchase Property For Less Than $1000?
I have seen plenty of "get rich quick" programs for sale on late night T.V. or on the internet. I am interested in something I saw the other night that is a program where you can buy a property for "pennies on the dollar". Plenty of the houses they showed in the infommercial where said to be purchased for under $1000 and worth up to $60,000 plus one property was said to be purchased for something like $340(I think) and sold for $40,000. I am just wondering if this is possible. If it is then is it through tax liens, deeds, and tax sales? Because here in Louisville Ky. If anyone purchases liens the property still has to go through the auction before anyone can purchase it. So what is the scam? Or is it a Scam?
There's a really good book called "The 16% Solution " that will answer every question about tax sales & tax lien certificated, state by state. Florida is the same as KY - even in default the property goes to auction. But you can purchase tax lien certificates from other states where the don't insist on auction. Even so, statistically speaking, only 2% of tax liens actually go all the way through the default. You get into tax lien cert's for the interest rate (in FL, it's 18%), not the property.
Maybe..if the property were owned free and clear, but if the property has leins (mortgage against it) then the bank isn't going to get themselves wiped out over a few grand in taxes owed. The bank will pay the taxes up to date to save THEIR interest in the property from being wiped out.
While it is possible, you probably won't get rich doing it. These kinds of scenarios are quite rare, but it does happen.
Property tax liens are typically senior to all other liens, including mortgages. So when a county auctions off a home there can be some great deals to be had. But realize that these are public auctions and oftentimes there is a lot of bidding competition. In some markets, ignorant bidders will bid property above market values.
Some programs advocate that you buy the tax lien certificate and foreclose yourself if it's not paid off. Here in Calif. that's not even possible. One attorney and investor in Sacramento took such advantage of the system that the legislature banned the practice.
In short...not necessarily a scam, but if you want to get rich you'd better have other investing avenues to pursue in addition.
Thanks for the in put. I have heard about the book "the 16% solution" and I have been a little skeptical about purchasing it becasue it seemed like the book would not have the information that I was looking for.
Thank you guys, but there is one more question I have about this scenario. If the program that I am talking about costs me just $40.00 do any of you think that it would be a good investment just for the knowledge and find out what states I could get these properties without going into auction?