I'm brand new to this kind of investment. I want to learn more about the laws on tax lein investing. Where do I look for this info? How long do I have to wait on my investment before I see any return?
In New Jersey the holder of a tax certificate receives 18% interest per year or until redeemed and the owner of record or other interested parties in the property may redeem within a two-year period following the tax sale. In addition there can be penalties added to the interest depending on the amount paid for the tax certificate.
As the owner of the tax lien certificate you have the ability to foreclose on the property. This means that the holder of the tax lien certificates take possession of the property.
Foreclosing on the property means that you are exercising your right to acquire the property that you are entitled to. Foreclosing on tax liens does not happen often.
For the past two years, buying tax liens in New Jersey in not at all profitable.
Most tax liens are bid to zero and than "premiums" are bid to see who gets it. There are about six companies who go to all 530 municipal tax sales to invest pension fund money and they drive the prices to recredibly low levels. It's impossible to make money on these liens, unless the property is really bad and you can foreclose on it. Then it doesn't matter what you bid because you don't get any interest at all...... you get the property.
That only happens one out of a hundred times in New Jersey because of rapidly rising property values. You can foreclose after 2 years, but usually you're bought out (at very, very low interest rates) before that happens.
Does what they're doing make sense? No it doesn't, but until the pension funds catch on, these companies will continue to pull large fees for the privledge of losing money for the pension funds.
Many muni tax lien certs are bid down to zero percent... and often cash premiums are paid by the winning bidder to be held by the tax authority & returned if the lien is redeemed (I once attended a sale on a $30,000 tax lien for which the winning bid was zero percent, plus the bidder paid $135,000 cash premium...ouch!)
By buying a lien at zero percent, then servicing the lien, the investor can earn at least 18% on subsequent taxes paid.
In New Jersey the holder of a tax certificate receives 18% interest per year or until redeemed and the owner of record or other interested parties in the property may redeem within a two-year period following the tax sale. In addition there can be penalties added to the interest depending on the amount paid for the tax certificate.
As the owner of the tax lien certificate you have the ability to foreclose on the property. This means that the holder of the tax lien certificates take possession of the property.
Foreclosing on the property means that you are exercising your right to acquire the property that you are entitled to. Foreclosing on tax liens does not happen often.
Go to http://www.thecreativeinvestor.com/modules.php?op=modload&name=FAQ&file=index&myfaq=yes&id_cat=5&categories=Tax+Lien+Questions to learn more at TCI.
And
http://www.thecreativeinvestor.com/ViewTopic30084-16-5.html
Take careful note of each property you find and do as much research as you can either on-line or at the local municipal offices.
[addsig]
Thanks John, I will begin some of my investigation. Jay
For the past two years, buying tax liens in New Jersey in not at all profitable.
Most tax liens are bid to zero and than "premiums" are bid to see who gets it. There are about six companies who go to all 530 municipal tax sales to invest pension fund money and they drive the prices to recredibly low levels. It's impossible to make money on these liens, unless the property is really bad and you can foreclose on it. Then it doesn't matter what you bid because you don't get any interest at all...... you get the property.
That only happens one out of a hundred times in New Jersey because of rapidly rising property values. You can foreclose after 2 years, but usually you're bought out (at very, very low interest rates) before that happens.
Does what they're doing make sense? No it doesn't, but until the pension funds catch on, these companies will continue to pull large fees for the privledge of losing money for the pension funds.
Tony, you are correct... to a point.
Many muni tax lien certs are bid down to zero percent... and often cash premiums are paid by the winning bidder to be held by the tax authority & returned if the lien is redeemed (I once attended a sale on a $30,000 tax lien for which the winning bid was zero percent, plus the bidder paid $135,000 cash premium...ouch!)
By buying a lien at zero percent, then servicing the lien, the investor can earn at least 18% on subsequent taxes paid.
Thanks guys. I will keep this info in mind.
Not being fully knowledgeable of the in's & out's of the Tax Lien purchase, what is the likelihood of collecting initial investment plus % bought at?
Is it common to always have to go to foreclosure process to seek payment or do most people actually pay back before that point?
Thanks!
-FrankSoprano