Tax liens are levied against houses for non-payment, and:
“property tax collectors stand in the first position of the pecking order of who gets their money when a homeowner falls behind in their payments.” [Fred Cederholm]
This investment has been touted by every RE guru-du-jour in the specuvestard seminars as the investment to get if you want a high return, since they paid such high rates of return (in the range of 8-18%).
Plus, if the homedebtor never makes good on it, you might wind up with the property instead- which you can then sell, perhaps for even more than you are owed on the debt (lien).
You might even consider moving in, but considering the state of most foreclosed properties, better to pass it on to a fliptard who thinks he’s found the way to real estate riches.
In an informerical, John Beck purports tax liens are a way to acquire fabulous homes at unbelievable low prices. Here’s a sample (I’m paraphrasing) of the script, repeated throught the mersh ad nauseum:
“You mean this house was purchased for only $65?!?”
“Yes that’s right, that house your holding (hostess is holding a pacard with a photo on it) was purchased for $65.”
“That’s sounds to good to be true!?!!”
“Yes, it does sound too good to be true!”
What brings this old warhorse up is the record number of foreclosures we are seeing. Have cash?
Many people who would ordinarily invest in tax liens found that the mad rush a few years back left no scraps at the auction table for the few that were available, during what was a unusual market occurence. Investors walked away, and parked their cash in T-bills or money market, or mutual funds, since not only were tax liens over-picked, but real estate prices had risen so high, that making income from rent was a no-go- apart from the appreciation, which, as we all know, is history.
Now in a down market, maybe it is time to revisit tax lien auctions again.
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“Inflation is by design a tax on the working class. The investment class gets to ride it like a pony.” -Paco Bell
