Unless you have been under a rock, you’ve heard about foreclosures and what a great investment they can provide. But what if I told you there was a new type of foreclosure opportunity that has only existed for a few years which very few investors truly understand or have taken advantage of.
Most people know that they can loose their house if they fail to make their payments in a timely fashion, what very few know is that the same thing can happen if the home owner fails to pay their property taxes to their local county. When you are unable to pay your mortgage within the terms defined, your property will be foreclosed. Likewise by not paying your property taxes your property will become a tax lien or deed sale.
The internet has revolutionized the way in which tax liens and deeds are sold. Before the internet counties only published information about the tax sales in their local newspapers. As a result the local government auction turnouts were terrible, and there were many more tax liens for sale then investors attending the auctions to purchase them. Over a span of many years, the number of unsold tax liens grew dramatically.
So these liens were placed back into inventory where they sat for years. Now there is a back log of thousands of liens available. Tax liens are sold with a specified redemption period which is the length the time the property owner can still pay the overdue taxes without the risk of losing their property. Once the redemption period has passed, who ever purchased the lien has the right to foreclose and take ownership of that property. The important point here is the redemption period starts on the day the lien went up for sale at the government auction, regardless of whether the lien sold or not. Redemption periods can range anywhere from 6 months to 4 years.
Prior to the internet all these liens also had to be researched at the government auction itself, so this also made it difficult as you couldn’t do any due diligence beforehand which increased the risk of the investment. Now with government auction web sites providing information in advance and many of these liens having surpassed their redemption periods, you can purchase a lien and immediately be eligible to foreclosure the property.
In summary you can now research online and find lien properties that you like and if the redemption period allowed for the home owner to pay their taxes has passed, you can purchase that lien to in turn receive full ownership of the property.
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