When considering real
estate investing strategies, the difference between a tax deed and a tax lien
is an important distinction to make. Many people confuse the two and if you’re
considering making money with real
estate, be sure you understand the difference.
Tax
Liens
Although they’re related, there’s a big difference
between tax liens and tax deeds. When investors purchase tax lien certificates, they’re entitled
to earn a fee or interest. The amount earned corresponds directly with the
amount invested in the purchase of the tax
lien. These fees are paid either by the property owner or another party
with interest in the property.
If the debt isn’t paid within the prescribed timeframe,
the tax lien investor has the right
to foreclose on the property and take ownership. There are considerations: just
as certification, license and legal matters differ from state to state, so do
guidelines governing tax lien
transactions.
Tax
Deeds
A tax deed,
on the other hand, refers to the actual title to a property. Either the local
government or the tax deed investor,
upon assuming ownership, may foreclose on the property. Again, details vary by
state.
Who
Can Buy Tax Lien Certificates?
Got money? If so, you’re probably qualified to purchase tax lien certificates. Depending on where
you live, there may be a few exceptions. Remember, rules may differ across
state lines.
Before you assume that just because you have some extra
cash, you can jump in pockets first with both wallets. First make sure the
shoemaker’s kids have shoes. (An
old but accurate cliché). How do your own books look?
If you happen to be bidding in the same state in which
you live, your own property taxes must be paid before you can purchase someone
else’s debt. Makes sense, doesn’t it? Of course it does. So, get your own house
in order before you decide to invest.
In addition, when it comes to investing in tax deeds, some states require a tax
I.D. number or even a social security number.
You can invest
and make money—if you do your homework. Each investor has his/her own set
of objectives and in order to get the most out of the experience; financially
and otherwise, knowing the direction you want to go in when exploring real estate investing will help you
discern the appropriate choices. Understanding the characteristics of both tax liens and tax deeds will help you make the right real estate investment
decisions from the beginning.
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Ted Thomas, is internationally recognized as America’s Tax Lien and Tax Deed investment authority. He’s trained thousands of novice investors and professionals to invest and make money buying tax lien certificates and tax deeds. Learn how you, too, can make money with real estate investment strategies Ted has been teaching successful investors for decades. Visit http://truthabouttaxliencertificates.com/
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