Hiring a Tax Lien Agent

By dhinternational  /  February 22, 2011 / Comments Off on Hiring a Tax Lien Agent

Tax Lien Certificates AgentDo you really want to invest in tax liens that could result in big returns but you’re not sure on how to do it right and you don’t have enough time to learn it fast? Well, how about investing through a tax lien agent?

A tax lien agent is a professional who will buy tax lien certificates for an investor. So yes, the agent may seem like a broker wherein you hand in your money to the professional and he’ll buy the liens for you. The tax lien agent does everything for you – acquire the list of properties on the tax sale, do due diligence on properties, bid at the tax sale auction, and track all your liens and even your deeds.

By hiring a tax lien agent, you don’t have to spend much time to do the tax lien investment process as the agent does all the work. Aside from that, these tax lien agents are tax lien investment experts so they know everything about the business and have contacts for things such as foreclosure process, title search, etc.

But, is it really needed? It actually depends on your current situation. If you have lots of cash and you only have a limited time to learn and do tax lien investment, this might be a good idea for you. But if you have lots of time to learn and you only have just enough money to invest, then it’s better to do it yourself than hire someone else. Now, if however, you are a foreigner and you have little contacts, it’s also recommended to hire a tax lien agent.

If you have decided to have your own tax lien agent, just be sure that you get someone who will not pool your cash with the other investors. You should have your own account and always make sure that the tax lien certificates are under your name or your business, not your agent’s. Also, know which states your agent usually invests in and his average return.

Which is better? Tax Liens or Tax Deeds?

By dhinternational  /  February 14, 2011 / Comments Off on Which is better? Tax Liens or Tax Deeds?

Choose Tax Liens or Tax DeedsWould tax liens be more profitable than tax deeds? Or is it vice-versa? Well, it actually depends on the state that you are residing and your goals. You see, you should go with tax deeds rather than tax liens if you plan to pick up a property under its market value. Chances of foreclosure are actually low with purchasing tax liens on good properties. Also, you have to take note that though the lien may not be redeemed, you are still not able to end up with the property in some states.

Let’s take Florida, for example. If your tax lien isn’t redeemed during redemption period, the property will go into a tax deed sale to satisfy the lien. If you have done due diligence and you have purchased the lien of a good property, you will still need to bid against other bidders at the tax deed sale to get the property. So in short, if you want to obtain a property in Florida, go with tax deed investing instead. Now if you want to get higher returns on your cash rather than own a property then you’re better off with tax lien investing.

On the other hand, if you’re in the West Coast, you will want to choose tax deeds instead of tax liens. Why? It’s because, West Coast states are deed states not lien states. You can travel to the nearest lien state but that will sure cost you a lot. You can also bid at online auctions but you will have to face many other online bidders and higher fees. Besides, you will still need to do an actual due diligence which means physically viewing the property so as not to be disappointed.

If you live in or near redeemable deed states and you are also interested in either obtaining the property or getting good returns on your investment, consider choosing redeemable deeds. These redeemable deeds are actually tax liens and tax deeds in between. You buy the tax deed at the tax sale but there will be a redemption period wherein the previous owner can return and redeem the tax deed from you. They will have to pay off a hefty penalty in many redeemable deed states and the penalty is based on the amount that you bid on at the tax sale. Georgia has a 20% rate while Texas has 25%. Bigger counties with larger cities can also hold tax sales a couple of times in a year.

Tax Lien FAQs

By dhinternational  /  February 14, 2011 / Comments Off on Tax Lien FAQs

Tax Lien and Tax Deed FAQs1. Can I buy tax deeds or tax liens without having to go to the county auction?

Answer: While many states require bidders to attend the auction to join in the bidding, there are a few counties that hold online auctions like large counties in California, Arizona, Florida, Illinois, and Colorado. You can also opt to bid on left-over liens that is usually done over the mail. However, as tax liens and tax deeds have become more popular, good properties left-over after the sale have become lesser.

2. Can I invest in Tax Deeds and Tax Liens even if I don’t live in the U.S?

Answer: Yes, many states allow you to invest in tax deeds and tax liens even if you do not live in the US and even if you are not a US citizen. Though there are states that require you to be a state resident, these states do not hold online sales anyway. In order for you to buy tax liens, you just have to fill the W-8BEN tax form. You also need to apply for an ITIN or an Individual Tax Identification Number in your name. If you plan to use a business name during bidding, apply for an Employer Identification Number or EIN. For tax deeds, you don’t have to do all this.

3. How much cash do I really need to start investing in tax liens?

Answer: What’s so good with investing in tax liens is that you are able to start with small investments unlike other kinds of real estate investing. Actually, you can begin with just a couple of hundred dollars!

4. How many times can you really get the property from tax liens?

Answer: Usually, it is not often that you are able to foreclose on properties. If you plan in owning properties then you might want to invest in tax deeds or redeemable tax deeds. It’s only around 1% of tax liens that will not be redeemed and from those properties, 80% will be redeemed during the foreclosure process.

5. What are the risks with tax lien investing?

If you don’t do proper research and due diligence, you could end up buying a tax lien on a crappy property and you could end up losing money. You could minimize the risks by properly doing due diligence before buying the tax lien. Purchasing tax liens is a safe investment as it is secured.

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