I have noticed that many individuals that desire to get into tax lien investing don’t really have an understanding of what’s involved. They don’t estimate 2 things – the quantity of cash required to invest in tax lien certificates and the amount of time that’s concerned in order to find profitable tax liens.
Let’s discuss in relation to the time involved in investing in tax lien certificates. Tax lien sales in almost all states are often held on weekdays at regular business hours, so you will have to have the time to attend the sale to bid on the certificates that you are interested in. In a number of states you may be able to mail in your bid, it is to your advantage to be at the sale.
However that is less than half of the time that you will need to spend money on purchasing profitable tax liens. Before you can even get to this point you need to do some sort of due diligence on the properties which are in the tax sale. The checklist of properties that you simply get before the sale from the tax workplace, generally, doesn’t tell you anything about the property. Steadily this listing will solely encompass the tax ID, proprietor of file, and amount owed. It doesn’t even give you the location of the property!
So the first thing that you need to do is look up the assessment data on the property and discover the address. You’ll want to physically take a look at the property to be sure that the evaluation info is up to date. You want to make sure that the property is priced significantly greater than the quantity that’s owed for again taxes. Remember the fact that you may have to pay the taxes on this property all through the redemption period (if it doesn’t redeem) earlier than you’ll be able to foreclose on it or apply for a deed.
This brings up the opposite issue that a beginner sometimes underestimates once they get started in tax lien investing, and that’s how a lot cash is needed to invest in tax lien certificates.
ON numerous occasions people inform me that they wish to get started with under $250.00. That is really not enough. Though it’s possible you’ll not need as much to put money into tax liens as you do for tax deeds, you still want not less than $2000.00 to get started. Despite the fact that you could have the ability to purchase a lien for beneath $200, you still need to pay the taxes on that property until the lien is redeemed. In case you don’t, the property might wind up in subsequent years tax sale and another investor could purchase that lien.
Tax lien investing just isn’t like buying a financial savings bond or placing your cash right into a CD.
You can not take your money out when you wish to and you do not get paid any interest payments till the property owner decides to redeem the lien. If the property owner doesn’t pay, than you need to wait out the redemption interval after which you go through a foreclosure process, or deed application period, before you obtain the property.
If investing in tax lien certificates is something that you just wish to do, then I recommend that you have at least $2000 that you understand you will not need to satisfy any of your bills to use for this purpose. I additionally suppose that you will need to have at least just a few hours you could spend money on doing due diligence and bidding at tax sales. If you only have $2000, chances are you’ll only be going to 1 or two sales annually and spending a number of hours of your time each six months or so.
In the event you really wish to pursue tax lien investing aggressively, it is even better when you have $5000 – $10,000, and a minimum of 10 hours per week that you can invest. This way you can attend more sales and buy a few liens per year as an alternative of only one or two. The more time and cash you can make investments, the greater will be your return.
