If your next career move is to buy tax lien certificates, might want to think again.
While there is some money to be made holding tax liens, the risk far outweighs the benefits in most cases...
and there's a much better way to make money in the tax foreclosures game than to buy tax lien certificates.
The tax sale provides a ton of opportunities for making some serious cash, but you have to have a sizable "fudge factor" in place to make it worth it.
You can't inspect any properties you buy at tax sale, and if you're just going to buy tax lien certificates, you run the risk of the owner never paying off the lien, and leaving you with only the choice to foreclose on what might be a total dump.
And let's not even get into the fierce competition to buy tax lien certificates in the first place.
Most of the time, you'll leave the tax sale empty-handed.
If you're looking to acquire property, or just looking to make some money off of your investment, ideally without owning property, then cheer up, you! There's a better way to do both of those things than to buy tax lien certificates.
If you want to acquire property, there's a little known loophole to getting the tax sale property - after the tax sale.
It's simple: buy them directly from their owners, during the redemption period (the grace period after tax sale, where they can still pay the taxes).
It seems obvious, and yet you'll find few investors go after these properties.
Why? Your guess is as good as any, but probably, they just don't realize they can.
In most places, this is completely legal; you just buy the property, and pay the taxes off.
It's a beautiful method, because by the time the property's already been "sold" at tax auction (even though it's really only sort of been sold, since they can still rescue it), the owners feel like they've already lost the property.
You come in and offer to buy what is now, in their minds, a worthless deed for a few hundred dollars.
They're happy not to have lost anything, and you're on your way to making a lot of money.
If you've got no interest in owning property - and this is really the best way to make money; hands-down, overall, in any industry - consider getting involved in the collection of tax overages, another source of funds almost no investors know about.
In about half the states in the U.
S.
, when more is bid at tax sale than is owed on a property, that overbid money goes straight to the government.
The tax property owner loses it all, even if it's $100,000.
But in the other half of states, they at least have a chance to get that money - it's held for them in trust for a year or so.
Unfortunately, since most of them don't know this, and have moved on from the tax property by the time the government notifies them, they never find out about the money.
By law, after a certain period of time passes (different for each state), the owner loses their right to collect the money and the government keeps it.
Forever.
That's where you come in.
Since this money is not at the state level, it's not subject to finder's fee caps set forth in the state "unclaimed funds" code - so you can charge whatever finder's fee you like.
Since these overages regularly run into the tens of thousands of dollars and are very easy to collect, if you can find these owners, you're looking at an easy 5-figure income every month.
It's perfectly legal, but it's not going to be long before the government changes these laws.
For now, so few people work this angle, that it's still flying under the radar.
In the meantime, there's a boatload of money to be made collecting overages.