Welcome!
Hi Everyone! Welcome to the tax foreclosed property forum.
This forum is designed to educate and inform those who want to learn how to make money investing in tax foreclosed property.
Let's start at the beginning.
Think of your local government. Property tax revenues are the life blood of local government.
The major funding for schools, highways, police fire, etc. is the property tax.
If someone does not pay their property taxes, the government comes down on them hard! They have to. They have to make it very hard on people who don't pay their property taxes. Otherwise they will have to raise taxes to compensate or cut services, neither of which are attractive options to local politicians, obviously.
In about 30 states, the government places a lien or judgement against the delinquent property owner for the sum of the back taxes.
The government then sells the liens, typically by auction to investors. This way the government immediately receives a replacement for the delinquent tax revenue.
What does the investor receive? He receives a lien against real estate, guranteed by the government!
Typically, the lien carries an interest rate of from 8-25%, fixed by law, unlike a stock market investment.
The property owner typically has a period of from 6 months to 4 years to pay the back taxes plus the interest, fees and penalties assessed by the government.
So the investor gets a very healthy return on his money in a relatively short period of time. With proper structuring, it may even be tax free!
OK! Great! But what happens if the owner does not pay? Well, the government says that if the owner does not pay the investor everything he is owed in the specified period of time, the government transfers the title to the property to the investor, free and clear of all mortgages, liens and encumbrances!
Re-read that last paragraph! If the owner does not repay the investor, the investor can take over the property, free and clear. In other words, he gets the property for the back taxes, which typically are 3-6% of the market value, literally, pennies on the dollar!
In the states that do not issue tax liens, the government, after a period of a couple of years, will foreclose on the property, taking it from the delinquent tax payer.
They then sell the foreclosed property at auction. The properties (actually the deeds to the properties, tax deeds) are sold free and clear.
There is typically no redemption period for the delinquent owner. You own the property once you get the deed from the County.
Anyone can purchase properties at these tax auctions for anywhere from 10% to 110% of market value!
Remember, these are auctions and newbies sometimes get carried away by the heat and excitement of the process.
Your best chance of getting a bargain are to attend auctions far from major metropolitan areas at off times of the year.
The fewer bidders the greater you chance of getting a bargain.
That is it for our introduction to tax foreclosed property.
Using our proven methods, you will learn how to make money in this field whether you have money or not.
Knowledge of this industry is in such demand that you once you acquire a decent amount, you will have what we call, "Cash Knowledge."
This is knowledge about how to make money. People will pay you money if you can show them how to make money with tax liens and deeds.
This knowledge is more important than having money or credit.
I look forward to helping all of you make more money than you ever thought possible, safely and swiftly.
For those of you who want to learn fastest, I would suggest subscribing to our free ezine, "1st Foreclosure Alert" the webs most comprehensive foreclosure publication, covering both tax and mortgage foreclosures!
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Bill Young
Hello Bill,
I just wanted to know if after you purchase a home for pennies on the dollar, how can you immediately make money on it?
Dr Knight! That's a tough one. Let's see now, I think I can come up with a couple of ideas.
1-You can sell the house immediately, assuming there is no redemption period.
2-You can sell for cash or you can sell for a higher price and sell with owner financing, holding the mortgage for monthly income.
3-You could also refinance the property, pull tax free cash out, and rent it, letting the tenants pay off the mortgage at which point you would do the same thing again, and again and again. Your grand kids will love you!
4-Or you could just rent it without putting any financing on it and wrestle a big fat check into your bank account each month!
5-Or you could lease option the house at a higher price than you could get on a regular sale, generating upfront cash, monthly cash and back end cash.
6-since you own the property free and clear you could sell parts of it! Sell the land for a lump of cash. Sell the building to someone else, taking back a mortgage. Sell the mortgage.
7-Put the house in a land trust. Lease the property from the trust and do a sandwich lease for monthly front end cash, monthly cash and back end cash. Sell the monthly income stream, sell the back end balloon. Sell your interest which yields a share of the pay down of the mortgage and a share of the appreciation. Did you ever hear the old expression the parts are greater than the whole? You would make far more money selling it piecemeal than selling the house whole.
8-Exchange the house for another piece of property, tax free if it is larger.
9-Exchange if for an airplane or a boat or a home theater!
10-Become a Big Dog and donate it to charity, maybe the Philharmonic will reserve a box seat for you for life. Of course you will retain the income from the house for life.
11- If your IRA had purchased the original tax lien, the title to the property would now be inside your IRA and any profits derived would accumulate tax free, inside your IRA until you retire!
As a matter of fact, this is exactly what we prescribe to our baby-boomer clients whose IRA's are a little on the anemic side with retirement closing in on them.
Hope I've answered your question!
Bill
[addsig]