Last Updated on February 6, 2025
Finding Great Deals on Back Taxes at Tax Sales?
What can a real estate investor do to find a good deal these days? The answer can be found in tax liens and deeds.
Buying a house from the back taxes owed is a great idea for real estate investors. The process is more complicated than some other forms of real estate, but by following state rules and laws, investors can navigate it with confidence.
The Importance of Due Diligence
Whether purchasing at a live or online auction, investors must be diligent. Doing thorough research ahead of time prevents costly mistakes. Mistaken research is no good and can lead to significant losses.
Benefits to Local Communities
Property taxes are the lifeblood of counties, cities, and municipalities. The taxes collected are used for public services such as schools, fire and police departments, and street maintenance.
To ensure these taxes are collected, governments allow investors or those with financial interests in properties to invest in liens or deeds.
Taxpayer Obligations and Investor Rights
Depending on state laws, delinquent taxpayers or anyone with a financial interest in the property can pursue the due back taxes if the taxpayer fails to pay. Most states grant the winning bidder at an auction the right to collect taxes through a tax lien certificate.
Advantages of Tax Lien Investing
In tax lien states, successful bidders collect back taxes, along with penalties and interest, until property owners fully pay the lien. The government directly supports this process, removing the need for middlemen, attorneys, or realtors.
Tax lien investing offers several benefits:
- Low risk with government backing.
- No commissions paid to third parties.
- Opportunities to build a good investment portfolio, even with small investments.
Proceed with Care
Despite its advantages, tax lien investing requires diligence. Investors must:
- Avoid impulsive decisions.
- Learn state-specific rules and regulations.
- Inspect properties and research thoroughly.
No Need to Rush
Take the time to learn and embrace the process. Tax lien and deed investing is resilient, thriving as long as governments rely on property taxes.
If you have more questions about tax lien and deed investing, shoot us an email. We’re happy to help!
-Dustin
