The Perfect Conditions for Tax Lien Investments

Article Written By: tedthomas

We all know the economy and the real estate market really had problems over the past few years. Let's pull back the layers of this bank loan setback and see how you can protect yourself and make some real money now. First, let's analyze some history.

Some 25 years in the past, mortgage loan bankers reported a little over 200,000 mortgage foreclosures. That was the end of an era that was regarded by many as the tax shelter period. That business disintegrated into bankruptcy when the government dropped and blocked almost all real estate tax shelters. That business and all the principles dissolved in less than three years, however the financial institutions collapsed.

The tax shelters failed which simply means they didn't pay homeowner's loan payments and the banks foreclosed due to lack of revenue. Regrettably, the financial institutions foreclosed but didn't sell the real estate because the market was awash with low price deals and general overbuilding. The economy continued to get worse.

Let's dig a few more layers down further and you'll see why you need to think about sure and stable investments for the next decade or so. Banks became insolvent because they foreclosed on too many pieces of real estate and then the government made the mess worse. Financial institutions foreclosed then the government (FDIC) foreclosed on the banks. Finally, the properties got sold for 10-20 cents on the dollar. Those low prices further depreciated a bad market and the wealthy got wealthier.

From my experience with this you can assume the economy will get a lot poorer before it gets fixed. My forecast is the market for real estate single family homes will persist to drop as a lot of mortgage holders quit making payments; the drawn out, difficult process is not ending anytime soon.

The economy is plodding along and Obama is saving the banks and the well-to-do insurance people. Struggling Americans are having a hard time. Thousands who regularly made mortgage payments and car payments are walking away and ceding the real estate to the financial institutions. Many speculators who over financed rental and vacation properties are struggling to stay alive. The buy and hold real estate philosophy worked for 50 years but not it's crumbling.

This is not the time to take risks in the market. This current economy will make a few buyers a lot of profits. They are the ones that are calculating and thinking about acquiring at rock bottom dollars. Unfortunately, most people are poorly trained and not prepared for this new venture.

Here's What's Happening And How You Can Benefit

Real estate owners who don't make payments to banker also neglect to pay county or municipal taxes. Bankers who foreclose and take back houses will try to resell, many times unsuccessfully. Meanwhile, the tax clock keeps ticking. In this economy, bankers are low on revenue as they get little or no income from the real estate and they have upkeep and repairs and management costs. That leads to a county tax deed sale which wipes out the homeowner's loan and the home is resold with no mortgage in place. Minimum bid: back taxes.

About the Author

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

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