Goal setting for tax foreclosure investing. Goal setting for tax foreclosure investing is very important and one of the most important steps to take before you purchase a tax lien or a tax deed.
First off, what is the outcome you would like to see from your investment? Do you want the lien to be redeemed or do you want to own the property?
If you want to invest and get paid off, then a tax lien is the way to go. You pay the taxes and then put a lien on the property. After a pre-determined period of time if the lien is not paid off, you have the right to foreclose on the property. Most of the liens with homes are redeemed so you probably won’t have to worry about the foreclosure process.
The interest rate on tax liens varies from state to state, but don’t think that just because one state has a higher rate than another that the higher rate will be more profitable. At tax lien auctions investors bid down the rate rather than bid up the price. If the rate is 18% to start, it could get bid down to 5%. Always check the results from past auctions if available so you will have an idea of what to expect. With more counties turning to online tax lien auctions there are more investors bidding because of the simplicity of the process.
If you want to own the property, then you will want to buy from a tax deed auction or a redeemable tax deed auction. A regular tax deed auction will give you title with in 30 days in most cases. The redeemable tax deed auction may take six months to two years before you obtain the title, but cause the owner has the right to pay off your investment plus interest.
When you are goal setting for tax foreclosure investing, always know what will be your purpose of the investment. If you don’t want ownership, buy a lien. If you do want ownership, by a deed.
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