CREPN # 134 - Real Estate Investors Cash in Buying Tax Liens with Ted Thomas

CREPN # 134 – Real Estate Investors Cash in Buying Tax Liens with Ted Thomas

J. Darrin Gross Podcast, Real Estate

Real Estate Investors buying government backed tax liens take little risk and can make great returns.

 

Every property in the United States has a property tax owed against it to support local government and services provided.  An estimated 2% of all property tax bills are in default and go unpaid every year.  Meaning, every year, there are more opportunities  for real estate investors to buy tax liens.   

Ted Thomas is a former commercial  airline pilot and apartment investor.  After he lost big in the crash in 1986, Ted got into tax liens, deeds and certificates and has never looked back.

What are Tax Liens

Every property, residential, bare land, and commercial has a property tax assessed against it.  

The taxes go to support the local government and services provided by the local government; schools, roads, police, fire, etc.  In some jurisdictions, they are liens and others they are certificates.  In both cases, they represent tax that is owed.

The tax rate and percentage of value varies by municipality.  At a minimum, for residential property, the property tax represents 1% of the value of the property.  

When a property is sold, or a change is made on title, the tax lien is the first lien that must be satisfied.  Tax liens have priority over any first mortgage, second mortgage, or lien.  

When the property tax does not get paid, the government sells the tax bill to willing investors.  If after a determined amount of time the property owner does not pay the taxes due, you, the investor, become the owner of the property.  

How do Tax Liens Work?

The local municipality has the authority to tax and sell the unpaid tax liens to a willing buyer.  If the property owner does not pay the tax owed, the tax liens are sold at an auction.  In many cases, the opening bid is for just the tax owed.  

The annual interest rate charged against a tax lien can be as much as 18%.  When the property owner elects to pay the tax, refinance, or sell the property, you get paid the tax plus accrued interest direct from the local municipality you purchased the tax lien from.  

For more go to:

www.tedthomas.com

About the Author

J. Darrin Gross

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J. Darrin Gross is known to his clients & prospects as the most trusted insurance adviser for commercial real estate insurance. He is famous for helping apartment building and commercial property owners get high quality comprehensive protection at unbeatable rates. Download a free copy of the Real Estate Investors Guide to Commercial Insurance.