Properties with tax liens hovering over them represent a unique opportunity for savvy real estate practitioners.
These troubled properties can be purchased at significantly reduced prices through tax lien sales or actions, leading to high returns on investment once the property is cleared of liens and resold or rented.
Tax lien certificates can provide investors with a claim on the property that takes precedence over almost all other liens, meaning the investor essentially pays the property taxes owed in exchange for a lien on the property, a pathway to ownership if the original owner fails to repay the tax debt within the redemption period.
A tax lien list may also be appealing because of the low entry cost. This makes it accessible for new investors or those with limited capital. It’s a trade-off. Although there is risk involved, there is considerably less competition than in the broader real estate market. Predictable returns from interest or penalty fees on tax clients can also diversify an investment portfolio.
Make no mistake, this is a niche that requires specialized knowledge, but seasoned investors and agents who understand the nuances of tax liens will assuredly be set apart from competitors.
