Tax Liens and Deeds

Some people who want to get involved in real estate investing look into tax liens and deeds. It can be a good way to start real estate investing. So what are tax liens and tax deeds?

Tax Liens and DeedsWhat is a Tax Lien:

A tax lien is an encumbrance on the title to a piece of real estate. It is created when a property owner doesn’t pay their real estate taxes or other municipal charges like water and sewer bills. The governmental authority files a lien against the title. If the property owner tries to sell or mortgage the property the lien will show up on a title search. In order to sell the property the lien must be paid.

What is a Tax Deed:

A tax deed is created when a municipality or county has a property owner who is delinquent on their real estate taxes and they actually go through a foreclosure procedure and take ownership of a property. The governmental authority then auctions the property to recoup their taxes and fees. The property is sold for the amount of the delinquent taxes and legal fees.

Buying Tax Deeds:

Buying tax deeds at auction is a great way to get into real estate investment, especially if you don’t have a lot of money. It is a lot of work, but there isn’t a lot of competition. The one thing you must be is educated on the ins and outs of investing in tax deeds. One thing you have to investigate before an auction is whether the tax deed is the only lien on the property. Depending on the jurisdiction, a tax deed may not extinguish a lien like a mortgage.

Go See the Target Property:

Another thing you should do is be sure to go past the property and inspect it. A Google Earth search may show it as a nice property. Google Earth images may not be completely up to date. Many properties that have gone to tax deed status have been abandoned and are in bad shape. At an auction you are agreeing to buy a property “as is” meaning if it’s been scavenged for metals like copper, you might just end up with a property with no plumbing. Suddenly that “cheap” property investment just got a lot more expensive. Go into tax liens and deed investing with your eyes open and get educated.

Find out more on this AMAZING Tax Leins and Deeds webinar!