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As of July 2020, my optimism for real estate investing has become more challenging every single day. The optimism has kind of gone down for the following reasons. Massive unemployment due to COVID-19, partial to no rent, and mortgage payments to banks and landlords. The trickle down theory which states that tax breaks and benefits for corporations and the wealthy will trickle down to everyone else. Well, the same applies when businesses are closed temporarily, are for good applies to the United States economy. If foreclosures are implemented in the coming months that means not only the banks and homeowners will lose money, and incentives to grow business. But counties, states, the federal government, construction workers, insurance companies, property management companies will be in jeopardy of cutting corners to remain stable, or go out of business all at the same time. Here is an overview of the number of jobs in which are affected by the real estate industry:
Now with all of the uncertainty that the real estate investment industry, one opportunity that has been in existence for investors will most likely accelerate in the coming months. And that opportunity is known as Delinquent Tax Liens. Now, what is the definition of a Delinquent Tax Liens? A Tax Lien is when a property owner fails to pay their property taxes, to the local government agency, which could be the city or county, can place a lien against the property. This lien clouds the title, stopping the property owner from refinancing or selling the property until the lien is satisfied. A property Tax Deed is similar to a tax lien but with one big distinction: The public auction conducted by a government agency transfers ownership and interest by deed to the winning bidder at the auction. When one places a bid at a tax deed sale, one is bidding to gain title to the property itself, not to receive a specified rate of return. Now in my opinion for new investors, it’s best to invest in tax auctions in cheaper cost of living states, such as Indiana, Pennsylvania, Maryland, and Arkansas etc. It is definitely in one best interest to purchase Tax Liens in areas that have where redeemable tax liens are no longer than nine months. Redeemable meaning the waiting period for one to gain the tax deed to the property, or obtain the money that they invested in plus 10 percent interest. And if one has between 400 to 3000 dollars then one has the opportunity to purchase real estate investment properties. Most real estate investors like myself who utilize Tax Liens to purchase real estate investment properties take the following measures.
- Wholesale the property as-is for a profit
- Fix/Flip and sell the property for a profit.
- Renovate and rent the property.
Obviously, these measures are easier said than done. However, with the right training, execution strategies, and lessons learned mentality. One can create a significant, and life-changing empire.
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