Benefits of Tax Lien Certificate Investing Over Regular Real Estate Ventures

Article Written By: tedthomas

Why should you buy tax lien certificates versus conventional real estate investing? They are the same things, correct? No big deal, until you comprehend that they are far from the identical thing. Let's take a look at the advantages there are to investing in tax lien certificates over regular real estate schemes.

When buying homes for pennies on the dollar, you are never sure that you are going to be able to move them in a reasonable amount of time. You end up paying taxes on that property plus any other that you own, paying more out of pocket than you anticipated. Plans for selling that property at a markup may not happen with the existing real estate market problems.

When acquiring tax lien certificates, the only money you put out is for winning the auction bid. When the debtor pays his/her taxes, you get that amount from the government and you are out no other funds. The taxes and the money you earn are not tied at all to market decline. The tax payable by the defaulter is the tax owed.

Any time you acquire a property in foreclosure, you take a chance obtaining a 'lemon'. You could end up with a property that is termite infested, one that floods the cellar each time it rains, the ceiling may be falling apart, or it might require a new hot water heater and other devices. This equals your pennies on the dollar acquisition end up costing you more funds than you may possess. The more time it takes to sell the real estate, the more money you will be dropping into this venture. You then have to decide at what point an investment becomes a detriment.

Tax lien certificates have no such messes. You are not purchasing the land or home itself, you are investing in the taxes that have not been collected by the homeowner. Once those remittances plus interest are made by the defaulter, you have more profits than you began with, and you are clear and free of this venture, ready to make a subsequent acquisition at another tax auction.

When real estate are leased out and you are acquiring the foreclosed dwelling, you may be dealing with some fairly repulsive things. Some individuals are not as solicitous for other's residences as they would be of their own, and there may be some damage. You also have to take into regard how an occupant would feel when being told that they have to leave since the landlord is foreclosing on where they dwell. It's not rare that the occupant will take exception to this and demonstrate their scorn by 'trashing' the house.

With tax lien certificates, you will not have to bother with that scenario unless the property owner doesn't repay the certificate. Most probably that will not come about. There are more defatulters that satisfy their taxes than not, and you will be bringing home dollars instead of putting it out to restore occupant damage.

You should now be able to see the benefits of tax lien certificate investments over real estate investing. Be certain you contemplate all the benefits and burdens before deciding which venture you want to go with. An conscious investor is a canny investor.

About the Author

Ted Thomas - Visit Ted's website at www.tedthomas.com.

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