The Basics of Local Government Foreclosure Investing

Local Government Foreclosure investing can become very profitable. It’s a little known wealth secret the rich have been employing to make money and build wealth for years. It’s a form of investment that, unlike the trading on Wall-Street, is accessible and potentially profitable to everybody who is interested. The problem is that most people don’t realize how investing in local government foreclosures work and how they can make money with them. Getting started is easy when you have a ment. My student partners who have become successful at it, it became their sole source or an additional stream of income as they make more money.

There are four investment strategies in the local government foreclosure investing niche. You have the option to invest in tax liens, tax deeds, tax sale overages and redeemable deeds depending on the marketplace you choose. All four have core differences and the returns will vary on each investment. Each form of investing has its pros and cons as far as profitability, risk, extra costs, and other factors. It is important to do your due diligence and determine which investment method is right for you. The opportunity within the local government foreclosure investing arena are available for you because countless property owners around the country do not pay either their monthly, quarterly or annual municipal bills, causing a revenue shortfall the local government has to absorb. The city or county has budgetary obligations that they have to meet regardless if those bills are paid on time or not. So to make sure that they get that income, they hold auction and future sales that allow you to “buy” the property owner’s municipal debts, which the owner will have to pay back to you, plus interest.

The big difference between tax deeds and redeemable deeds is that with redeemable deeds, there is a redemption period after you purchase the deed. During this period, the original owner of the property can buy the property back from you, at a cost of 100% of what you paid plus a state determined penalty percentage. Tax Deeds on the other hand can be different depending on the municipality’s laws and rules. In most cases once you buy the tax deed to the property, you are the property owner and can move into the property or rent it out to others. These are the concepts behind tax deeds and redeemable deeds.

With a tax lien, depending on the state you choose to invest in it can take anywhere from 30 day to five years before you realize a return on your investment. But with tax deeds or redeemable deeds, you can get your money much faster. Once you own the house, you can rent it out or sell it to others who are interested. In the case of redeemable deeds, the owner might quickly buy the property back from you within the redemption period, plus the penalty money.

Tax sale overages are the spreads between the amount the city or county needed for the municipal liens and the bid amount they receive which is known as “excess proceeds” many municipalities do not alert the property owner of the excess funds and depending on the marketplace if these funds are not collected within a certain timeframe those funds go to the local government. The opportunity for you here is to invest in marketing campaigns that will get you in touch with these property owners who have lost their properties and inform them of the law and the spread between what was owed and the actual winning bid. You can look to make a consulting fee up to 35% of the net spread or whatever fee you negotiate.

I”ll See you at the closing table,

Marcel Umphery the “R.E.I. Successmaker”