Plenty of time is needed to learn the beginning steps of tax lien
investing, let alone real estate investing. But, if you take your time
to learn then you will be granted the riches you need through one of the
most safe, prevalent, and gratifying investment opportunities out
there: tax lien investing. If you master one area of real estate
investing (tax lien investing), then know that there are still many more
avenues that you can employ in your trip to create multiple streams of
income.
But before you explain how to start using tax liens and/or
tax deeds as a path for real estate investing, let's find out exactly
what tax liens are. Several forms of government (local, county, or
state) use taxation as a way to receive revenue used to finance their
operations. One of these forms of taxations is called property tax. In
short, the government charges a fee to the owner of a property. The fee
is based on an amount determined by the local government.
This
taxes, are used to finance the local government (typically the county).
But what if the property owner cannot pay the tax, for any reason? The
government puts a lien on the property for the amount of defaulted tax
amount, hence the term 'tax lien'. In other words, the property will not
be sold until the government is paid what it is owed, and this amount
is recorded by using the tax lien certificate.
However, a tax lien
certificate is not a source of revenue, and therefore no money goes to
the government after placing the tax lien. So how does the government
get the money that it requires to give to all of it's voters the superb
service we have come to associate with government workers? The local
government sells the tax lien or tax deed.
In case you weren't
paying attention, this happens to be where we take our first step into
tax lien investing: obtaining the tax lien. When you invest in the tax
lien, the government gets paid instantly Financial budgets are met and
the government is ecstatic. However, we have traded your hard earned
money for a document in hopes that investing in the tax lien will earn
you a handsome return. Before we learn why you would want to buy one of
these documents, let's talk little more about how you would get one.
Several
people don't even learn that tax lien investing exists, let alone how
to locate a tax lien certificate or even buy one. So think of all the
other would be tax lien investing advocates out there as rough
competition. Regardless of what most 'gurus' will teach you, these tax
liens are very desired and sought, so keep your tax lien investing
methods to yourself!
What is it the tax lien investors know? These
investors recognize that there are many counties that use tax liens or
tax deeds. Every one of these counties have their own government, and
each of these governments does things a a little differently than the
others. Begin by examining the different counties in the country using
naco.org
I recommend you begin with tax lien investing if you have
a small amount of funding and, like me, would like a stable ROI for
your money. Doing this will also limit the locations in which you can
buy, and thus let you focus your research.
But, if you would like
to purchase real estate property cheaply, then tax deeds are a stronger
pursuit. In any case, as you familiarity with one you can and will begin
learning about the other and eventually do both.
Let's return to
buying the first part of tax lien investing, the tax lien itself. To
begin, we're going to need to create a plan of action. Here is one that I
recommend:
Contact the local tax collector (or treasurer) and
find out when the next tax sale will be. After you find this out, you
will need to find out where the sale will take place and plan to be
there. Then, create a list of tax liens that are going to be sold by
getting a list from the office (if available) or searching the local
newspaper that lists government announcements and sales.
We should
now have a list of future tax liens, where and when they will be sold.
However, you're only part way there. We need to find the rules of the
sale for the tax liens. This can, again, be located by talking to the
local tax collector (treasurer).
Now you will need to find out what the interest rate for the tax lien will be and how it was determined.
Once
you have obtained all of this information, you can then get the answer
to the juiciest question of them all. Are there any unsold tax liens? If
the answer is yes, then start there!!
Typically you will get a
'yes' to the last question and you will then get a list of the unsold
tax liens and look it over eagerly. Some say that there are counties
with many more certificates than available investor reserves. How simple
would this be for you if you're wanting to begin tax lien investing?
What
if the list is not existent? Typically other departments maintain the
list and you can be pointed in that direction instead. Regardless, if a
list exists at all, find it. It will be the simplest cash you will get
from most real estate investing strategies.
Try contacting several
counties and obtaining the answers to all of these questions. A lot of
them will be similar and several of them will be different. Yet you will
start to learn this side of the real estate investing industry, namely: tax lien investing.
You
will probably find several counties with zero unsold tax lien
certificates before you find one that has a list. But when you do locate
this gold mine, hold on to it and watch your money grow.
Get a free report on Tax liens at http://tiny.cc/lady
Get a free report on Tax liens at http://tiny.cc/lady
Author is a writer for Beginner Investing and Stock Market For Beginners, a joint blog about personal investing and development of passive income.
Article Source:
http://EzineArticles.com/?expert=Shandon_Lewis
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