What Is a Real Estate Tax Sale.  Real estate is taxed in most areas with a property tax. The money raised from property tax can go to the municipalities, schools, hospitals, etc.  When property owners fail to pay their taxes the organizations still need the money to meet their budget to do this they seek the help of investors.

The counties will create either a tax lien or tax deed for the investor.  I will go into more detail on the differences in another post, but I will briefly cover them now.

A tax lien or tax certificate is formed and sold to an investor for the amount of taxes owed.  The investor then will receive the principle back plus interest.

A tax deed is created and sold to the investor which means the investor receives the deed to the property with the voluntary liens, like a mortgage, removed in most cases.

The properties often sell for the amount of taxes owed plus other fees. This can result in a home for pennies on the dollar.  You have probably thought about buying a home appraised at over $100,000 for only a few thousand.  With tax sales it can happen.

Not every property for sale in a tax auction is going to be a gem. I have come across many properties that are in a swamp or out in the desert without roads or utilities.

Proper research is vital to making money and not losing money in tax sales.  There will be some great finds that can make you a lot of money, but there will also be some properties that are worthless.  I will cover research another time, but now you know what a real estate tax sale is all about.

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Technorati Tags: Property tax, real estate tax sale, tax deed, Tax lien

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Another one of the investing strategies that can greatly increase your portfolio is investing in tax lien certificates.  Learning the process of how to do it isn’t so difficult, but learning how to properly research a property can be time consuming.

I found this article that covers how to purchase tax liens as well as much more information on their website.

How To Purchase Tax Lien Certificates

How to purchase tax lien certificates. Learning how to purchase tax lien certificates can take sometime to learn, but can be a very rewarding investment. The process varies from state to state, but the basics are the same.

The first step is learning where to look for tax lien certificates. There are two types of tax lien certificates available for investors to purchase. The first type is through a tax lien auction.

Tax lien auctions are usually held once a year in a particular county. The auctions are advertised in the local newspaper and on the county website if the county has a website. If you are unsure where to look for the list of upcoming tax certificates, contact the county tax collector or county treasurer and they should be able to tell you where you can find the list.

More and more counties are choosing to hold online tax auctions rather than physical auctions at the courthouse. This means that more investors have the opportunity to invest in tax certificates across the country without leaving home.

The downside to online tax lien auctions is more investors turn out for the auctions making them competitive. The interest rates are often bid down significantly.    –more

Technorati Tags: Interest rate, Investment, Tax lien