Have anyone seen or heard about those late night paid programs about free and clear real estate. This is where you can buy a house for 300 dollars or 600 dollars or something or whats left on it to pay, not really sure how it works but if you heard about it please let me know is this real and how. Also they said you could purchase land for like $15,$10 dollars or whatever is thi possible.
real estate question about free and clear
- Thread starter dwayne00
- Start date
yeah that from tax lien sales.
this is how it goes.
Every county in america has a tax base that supports essential services.
In a lot of these counties a good portion of that money comes from taxing properties on a yearly basis. In baltimore they call it ground rent. it has different names but its all generally the same.
If you own a property and cant or wont pay the taxes due to the county, the county will seize your property and sell it for the back taxes hoping to get it back on the "tax rolls" ie the list of properties paying the tax to help essential services.
The counties will normally due this once a year, somne do some dont, and not all counties due this it is TOTALLY under the control of the county. Now some states like michigan and georgia i think will not do tax lien sales for the price of the taxes as tehy have gotten hip to the game and will sell properties for 20-80% of there retail value after they have taken ownership of the property. I know for a fact that virginia does this.
states like iowa utah and the midwest states will sell for back taxes as well as some of the sothern states.
Be warned though a lot of states have a redemption period where the owner of the property can repay the taxes and reclaim the deed. also you CAN NOT move into the property until your secure a quiet deed. ie you go to court and receive the deed to the property. this can take up to two years. you cant even so much as go on to the property to inspect it. only from the street.
hope that helps.
this is how it goes.
Every county in america has a tax base that supports essential services.
In a lot of these counties a good portion of that money comes from taxing properties on a yearly basis. In baltimore they call it ground rent. it has different names but its all generally the same.
If you own a property and cant or wont pay the taxes due to the county, the county will seize your property and sell it for the back taxes hoping to get it back on the "tax rolls" ie the list of properties paying the tax to help essential services.
The counties will normally due this once a year, somne do some dont, and not all counties due this it is TOTALLY under the control of the county. Now some states like michigan and georgia i think will not do tax lien sales for the price of the taxes as tehy have gotten hip to the game and will sell properties for 20-80% of there retail value after they have taken ownership of the property. I know for a fact that virginia does this.
states like iowa utah and the midwest states will sell for back taxes as well as some of the sothern states.
Be warned though a lot of states have a redemption period where the owner of the property can repay the taxes and reclaim the deed. also you CAN NOT move into the property until your secure a quiet deed. ie you go to court and receive the deed to the property. this can take up to two years. you cant even so much as go on to the property to inspect it. only from the street.
hope that helps.
well i did a couple of investments when my people died.
took 20k and turned it into 30k a year for the last 8 years.
i bought notes and then some land usin the method above. but my time on my notes is runnin out so ima start flippin if i can get the info i need.
took 20k and turned it into 30k a year for the last 8 years.
i bought notes and then some land usin the method above. but my time on my notes is runnin out so ima start flippin if i can get the info i need.
fatninja said:
On the money. Just to add.
Before these properties are put up for public auction for tax lien they are posted giving notice to the public. To find out when and how these properties are posted you need to go down to your local tax collectors office.
Because these type sales are done by auction it is important to understand how much the property is worth before you go into make a bid. Most counties have tax appraisal value online or on public record. Depending on your location tax appraisal value may or may not be a good indicator of property value. Find out from the tax assesor's office the valuation method of the property. Sometimes the tax assesed valued is based on 80% of appraisal value but once again this depends on the locality.
Just to add to what fatninja said. Basically in most localities when you buy these tax liens you are not actually buying the property. What you are buying is the counties right to foreclose on the property. After you purchase the lien (by paying the back tax) you now have a right to foreclose on the property if you are not paid by the owner in a specific amount of time. Once again check your locality for the statutory period.
Most of the properties that go up for tax sale do not have a mortgage. This is because mortgage companies know that county tax lien have priority over mortgage liens so if the taxes aren't paid the mortgage company will come in and pay them then foreclose themself. Since these properties don't have a mortgage when you pay the tax lien and foreclose you have the property free and clear with little money out of pocket.
There are two ways to make money out of these tax lien situations. One through note creation and one through property acquisition. Depending on the competition in your area for these kind of purchases you can choose one or the other.
Note acquisition works like this.
Once you find out how much the tax lien is for and how much the property is worth you approach the owner and offer to pay the tax lien in exchange for a promissory note for the tax amount plus fees and interest. Make sure your note does not go over the maximum allowable interest rate or that your fees are not exorbitant because it is crucial that your note stand up if you need to foreclose. You will secure your note with a lien on the property. If the property does not have a mortgage you will be first lien holder so if the owner does not pay you on time you can foreclose.
The pros of this is that you avoid the sometimes very competitive auction situation. The cons of this is that you may not get the property you may just get the interest and fees due on the note.
Property Acquisition.
This depends very much on how the locality conducts tax lien auctions. I suggest anyone who is interested sit in on one or two to see the level of competition. How much collusion is happening (many times big or frequent buyers will make agreements before the auction about what properties they will be bidding on so that the bidding does not go up past a certain point.)
Essentially if you can buy the tax lien at a price way below market value of the house the owner then has the opportunity to pay you back before you foreclose. Once this period has passed you can foreclose and you now have a piece of real estate purchased way below market value.
Now if the competition is heavy and properties are being bid up almost to market value you may want to try different locations or go with a note acquisition strategy.
Hope this helps.
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