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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