Investing in tax liens may sound like a piece of cake, but those returns do not come without risk. This article DC Fawcett Reviews about tax lien real estate investing risks will help the investors avoid any potential threats.
Mortgage property and property with history of contamination:
- Watch out for properties with mortgages because the individual lender or the mortgage company might pay off the lien even before you could think of buying it, in order to avoid foreclosure, they might go to any extremes to secure their asset, meaning they might be willing to pay more than an ordinary investor, so it is wise to opt properties with paid off mortgages.
- Having said that, properties with a history of contamination, on the other hand, are also not worth the money you spend, it refers to any physical change in the property like fire, demolition, or cave-ins. In such a case, it is not worth the cost of filing.
Back taxes :
- buying a property with several years of back taxes will leave you cashless and you can’t make any profit from it. Occasionally, property with two years of back taxes can still be a good investment, however, it is worth to note that the number of years accumulated after you have paid a few years of sub taxes together with the fees for filing.
- This should be evaluated with the value of the property. If it is less than the property value, then it is definitely not worth the amount you put in. The only way out is to look elsewhere.
- Trying to invest in dilapidated buildings is like rubbing salt on your wounds, apart from suffering high interest rates, you will have to go through an unbearable risk, so better stay away.
Now that you are aware of the risks involved in tax lien business, the next time when you are bidding at auction for the same, try to do the groundwork to ensure that you are not getting trapped and if you wanted to know more about it, stay tuned to DC Fawcett virtual real estate investing club that equips you with useful real estate information.