Investors can own a home simply by investing in tax liens.
Tax liens can be a lucrative way of making a lot of money and diversify your investment portfolio. When a homeowner defaults on taxes owed to the state or federal government a lien is placed on their home. You are able to purchase that lien and a customer has to pay you the money you invested, plus a percentage called a penalty, which varies based on the state the lien was purchased. If the customer does not repay the lien within a certain amount of time, you can own their home.
Instructions
1. Speak with your financial planner or look at your budget to determine how much money you have available to invest in tax lien certificates. Tax liens are attractive to people regardless of their income level as you can find inexpensive tax liens in different states. Tax liens can increase in value if the county that is selling them offers an auction style format for purchasing tax liens. Make sure you have enough money to invest in tax liens, as well as to bid with other investors competitively.
2. Invest in a state and counties that offer the highest penalty percentage, as well as states that offers tax lien auctions more frequently. For example, Georgia offers a interest rate penalty of 20 percent. Georgia also offers monthly tax lien auctions on the first Tuesday of any month.
3. Locate a county that allows you to purchase tax liens online. Use websites that tell you the state, how often tax lien sales are held as well as a list of all the counties within that state (see resources). Contact the treasurer or tax assessor of each county you are interested in to determine if they offer tax lien sells online or visit the National Association of Counties (see resources) to obtain information on specific counties.
4. Download the lists of any available tax lanes that are up for sale from the county's website or by getting instructions from the county tax assessor's office. The list will provide the address of the property, as well as the cost of the tax deed or the minimum amount at which the bidding will start.
5. Use websites like Trulia and MLS.com to research the properties you are interested in bidding on. Unfortunately, you do not have the advantage of physically visiting the property. Using a MLS website allows you to see how much the houses were and possibly determine if there is any damage or other issues about the house that will make it a good or bad investment.
6. Pay any deposits necessary to join any auctions for online tax liens. To ensure the investor is serious, a deposit is charged for those that will join an auction online. Deposits vary from state to state, and if you do not bid or purchase any tax liens the money is refunded to your account.
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