So... you're interested in investing in taxliens or deeds at tax sale. You're one step ahead of the pack. I'm referring to the beginners chasing after mortgage foreclosures. Perhaps you've been there yourself recently, and are just now breaking into investing in tax delinquent property after getting sick to death of all the pitfalls you encountered dealing with mortgage foreclosures.
Taxlien investing is a good strategy if you're looking for a good interest rate on your invested funds. In some states you can collect interest as high as 18% when the owners of the property for which you hold a lien pay you off- and if you buy the right property, they do usually pay you off (I've read statistics that say 95% of all tax liens get paid off before the property is lost to the lienholder). The best way to gamble here if you don't want to end up with a deed to the property is to bid only on very nice properties. These owners will usually find a way to avoid losing their homes.
Unfortunately for you, you're up against some heavy competition at the tax lien auction. There are mega tax lien investment companies with representatives bidding on all the best stuff, and good properties usually end up being bid up close to retail value- and sometimes higher. Who cares, if all you're looking for is the interest? Well, in the event the owner doesn't pay you off, you'll end up with a deed to a property you don't want. Another drawback is that you sometimes have to hold these liens for YEARS before you see a dime.
Investing in tax deeds poses similar problems- namely, that the intense competition at the sales usually results in any property you'd have a desire to buy being bid up so high that you can't make any money off of it. And frequently, there is a period of time where the owner can STILL pay off the taxes- so you might end up jumping for joy over a rare great deal, and then find the property redeemed even after you bought the deed.
So, what's the solution?
I got lucky. After no luck at the tax sales, I was bummed out and trying to think of another way I could make some money off these properties. I really wanted to be a real estate investor. My mind was wandering, and I started thinking about the owners losing the properties, and what a bum rap that was.
Suddenly the thought struck me: what if I found out who these people were, and gave them a call when it was getting close to the time they'd lose their property, and all their equity with it, and see if maybe we could work out a deal to save them from losing everything?
It took ONE phone call to ONE owner, and that was it for me- I knew I'd found a gold mine. And it had so many side benefits- first and best, NO ONE ELSE WAS DOING IT!! I also had the warm fuzzies every night when I went to bed because sometimes, when I contacted owners, for a variety of reasons, (like the county didn't have the right contact information for them) they hadn't received notice their property was going to tax sale, and I saved their butts!
But the majority of the time, I encountered owners who were ready to walk away from their tax problems, and were overjoyed to see the property going to a hardworking young guy like me instead of to the tax lien holder. (Who may well have been another hardworking young guy, but seemed like a monster to the owner!)
Since almost all of these properties had no mortgages (or else the mortgage company would have bailed it out to stop from losing it to the government), I was getting deeds to properties for as little as $10 (no joke) with equity in the tens of thousands of dollars- all because these owners no longer wanted to deal with the property.
This, my friends, is known as "deed grabbing."
Want to learn the secrets of deedgrabbing? Go to deedgrabber.info.
Olliver Kennedy is a successful entrepreneur and real estate expert.