The New Foreclosure Opportunity: It’s hard to imagine what life might be like today without the personal computer, the internet, our cell phones and the millions of applications of each that make our lives easier.  The principle which drives the success of most new inventions is its’ ability to make our lives easier. The popularity of these items is a testament to the  incredible impact each has had on society.  The ripple effect continues to expand across every facet of life.  New opportunities are brought to light.   Approximately 5 years ago I was a young Tax Lien enthusiast and investor. The investment strategy was fatally flawed and I knew it.  It simply required too much time, travel and effort to ever be an affective investment strategy.  I was ready to throw in the towel and move on.  It was at this time that I began to see county websites regularly.  With county websites came online property lists and property record search tools. The strategy changed overnight.  What used to require extensive time, travel and effort could now be completed with just a few clicks of the mouse.   My business partner and I were amazed by what we saw taking place.  Counties that had failed to draw enough investors to their annual sales for decades suddenly had all of their past records available online.  It was like the floodgates had been opened.  Imagine the Foreclosure opportunities that exist with millions of Tax Liens that have been sitting on the books for years.  There are more Foreclosure opportunities than you could imagine.  Do you know what the best part is?  No one knows anything about it.  It’s like having the worlds biggest gold mine in your backyard.               Foreclosures have been hot topic for real estate investors for years and they’re typically the first place new real estate investors look when they wish to get started.  With so much publicity and competition is it still possible to make money investing in Foreclosures?  The short answer is an emphatic “YES”.  There will always be money in Real Estate Foreclosures.  However, the question you should be asking yourself is, “are there easier ways to make money in real estate?” The wealthy have always been ahead of the curve.  They manage to predict market trends and stay well ahead of them.  The continuing growth of their wealth depends on it. The wealthy have always been trend setters.  They actually manipulate the market direction through the decisions they make.  The old saying, “buy low and sell high” is the principle their wealth is built upon. How does an average middle class investor get ahead of the curve?  That is the question hungry investors have been asking for centuries.  You get ahead of the curve by acting alone, making investments that go against popular opinion.  A New Foreclosure Opportunity The title is actually a bit misleading because this investment strategy isn’t new at all.  In fact, it has existed for decades.  What qualifies this as a “new” opportunity has less to do with the strategy itself and more to do with how the internet has changed it over the past 5 years ago.  Foreclosures are fairly simple and easy to understand.  Financial lenders loan money to individuals that wish to purchase real estate.    In return the debtor pays the lender a monthly payment that includes a interest rate return for the lender.  To secure the investment the lender keeps the deed to the property until the loan has been paid in full.  If the debtor fails to comply with the terms of the contract governing the loan the lender will execute the foreclosure process.  The term “foreclosure” is actually an accurate description of word’s definition.  To foreclose on a property is to foreclose on the debtor’s ownership rights to the property.  The property deed that the lender holds gives them foreclosure rights.  The terms of the contract and the deed to the property act as a lien against the debtor’s real estate.  Mortgages aren’t the only example of liens that we see everyday.  Even automobile loans operate the same way.  If you don’t believe that, try not making your car payment for a few months.  Why is all of this important? This is important because it is the basis for one of the best real estate opportunities on the market today.  Imagine the opportunity to foreclose on tens of thousands of properties for less than 20% of their market value.  Imagine a wealth of opportunities held back by their location and accessibility. The County Government Chances are if you own property you are familiar with property taxes.  Nearly every property owner in the U.S. pays annual property taxes.  What purpose do property taxes have, and how does it have anything to with a New Foreclosure Opportunity? The Federal Government doesn’t collect property taxes.  Property taxes are delegated to the state level.  Furthermore, every state delegates the responsibility to individual counties.  Why? Counties need a source of revenue.  The number of services the county government provides might surprise you.  Services such as Police and Fire Departments, public education, road construction and maintenance, and the county government itself.  Property taxes are the county’s primary source of revenue.  We’ve established the importance of the services the county provides with these funds, as well as the steady funding most of them require. The county must have a way of enforcing property taxes.  Consider the effects delinquent property taxes could have if not collected.  Depending on the size and population of any given city annual expenditures are likely to be in the millions or billions of dollars.  Each state government has statutes and laws regarding the collection of property taxes.  Counties set annual budgets based on the expenditures they anticipate for the coming year.  When the budget has been  determined the County Assessor is responsible for proving a value assessment for every parcel of privately owned land within the county boundaries.  Once all land has been assessed the total value of assessed property is added together to equal the total value of all property within the county.  Next, the county takes their total budget amount and the total value of all land and determines what percentage they need to multiply the property value by in order to meet the budget requirements.  In most counties this rate ranges from .5% to 2% or even higher.  If your home had an assessed value of $100,000 according to the assessor and your county’s tax rate was 2%, then your annual property taxes for that year would be $2000.  Obviously this process has been simplified here, but you get the general idea. When a property owner fails to pay the mandatory property tax by the set due date, a budget deficit ensues.  If left unpaid this shortage would dramatically affect public operations and services that depend on county funding.  Imagine Police and Fire departments sending officers home due to the inability to pay them because of budget shortages caused by delinquent taxes.  Having the foresight to see this potential dilemma. early writers of state law found a way to satisfy the funds needed to operate cities and counties.  The solution they came up also gave the public a unique opportunity to invest in high yield liens that were backed by real property and enforced by the government.  Property Tax Enforcement Property Taxes are enforced through Tax Liens and Tax Deeds.  A tax lien is a claim made by the County Government against a property within county boundaries due to delinquent property taxes.  This claim prevents the property from being sold until the delinquent taxes have been paid.  The lien itself is sold at public auction to local investors.  These locals purchase liens because they pay out a high rate of return and they’re secured by real property. Is it possible to pay your taxes late and not pay some kind of penalty? Delinquent taxes always have some kind of penalty attached to them.  The individuals that purchase tax liens are guaranteed a set rate of return when they purchase the lien. In order to remove the impending lien against his or her property, the property owner must pay all delinquent taxes, penalties and fees.  Upon receiving payment in full the county will cut a check to the lien holder for their initial investment plus the total rate of return accrued to that point.  The rate of return accrues monthly with each portion of a month counting as a whole.  As an example, lets say you purchased a lien for $1000 at an 18% rate of return.  The property owner pays the county all delinquent taxes and penalties after 9 months.  An 18% return equals 1.5% per month.  1.5% multiplied by 9 months equals 13.5%.  13.5% of $1000 dollars equals $135.  If you add that amount to your initial investment of $1000 the county will be mailing you a check for $1135. How long does the property owner have to pay off the taxes and remove the lien?  The tax system used by counties and municipalities today offers property owners a grace period following the date taxes are due.  This grace period is referred to as the redemption period.  It is the time period property owners have to redeem all property rights by removing the impending lien.  The duration of the grace period is set by state statute and ranges from 4 months to 4 years. So the property owner could just wait until the very end of the redemption before paying off the delinquent taxes and I won’t see any return until he or she does so? That is also correct.  However, you never stop earning a return.  Lets say that you purchased a lien for $1000 at an 18% rate of return and the redemption period is 4 years.  If the property owner waited to pay off the lien until the very last month, you still earn your set rate of return.  18% annually multiplied by 4 years equals 72%.  When the lien holder pays the county the delinquent taxes the county will cut you a check for your initial investment of $1000 plus a 72% return for a total amount of $1720. What happens if the property owner doesn’t pay? Tax liens are secured by real property, meaning the property itself stands as collateral. Tax liens issued by state or federal officers  are known as “first position” liens, and hold precedence over all other liens or encumbrances including mortgages.  With the exception of a few rare types of government liens, which do not supersede the tax lien but are equal to it, tax liens are superior to all other liens and obligations.  If the redemption period passes and the property owner fails to pay the amount due in full, the lien holder may begin the process of foreclosing on the previous owner’s right to redeem.  This process removes all redemption rights from the previous owner, and reassigns the property title making the lien holder the legal owner of the property. Why waste your time acquiring property for 80% of its value at crowded auctions when you could be purchasing it for 20% with almost no competition? You’re saying that I can foreclose on a property and own it free and clear? That is correct.  With Tax Lien investing there really only 2 possible outcomes.  The property owner pays off the delinquent taxes and fees in which case the county removes the lien and cuts a check to the lien holder for the initial investment plus the set rate of return. The property owner doesn’t pay off the delinquent taxes and the redemption period passes.  In this case the lien holder initiates the foreclosure process.  If the lien isn’t paid off within the foreclosure period then the process is finalized and the lien holder is awarded the deed to the property and full ownership rights. Tax Liens are first position liens.  They have priority over almost any other lien.  However, prior to the end of the redemption period a Tax Lien has no ownerships rights.  It only carries foreclosure rights after the redemption period passes. If that is the explanation of a Tax Lien, what is a Tax Deed? In states that utilize Tax Deeds the local government sells tax deeds to recover the lost revenue of delinquent property taxes.  Tax deed don’t sell liens annually.  Instead, they begin the redemption period and foreclose on the property themselves once it has passed.  The county initiates the foreclosure process following the redemption period and obtains a deed which it sells at a public auction.  The sale will generally occur 2 to 5 years after the property was first delinquent.  Investors are not purchasing a lien against real property.  Tax deeds carry full property ownership. Tax Deeds require a larger investments for investors due to multiple years of delinquent taxes. The minimum bid will start at the combined total of all taxes, penalties and fees accumulated over the period of delinquency.  Because property taxes represent only a small percentage of the property’s market value, investors can acquire full property rights at a fraction of the market price.  How are Tax Liens and Deeds purchased? There are several ways that Tax Liens and Deeds can be purchased.    They are as follows:  At the Tax Sale: Most counties conduct Tax Sales annually.  These sales are usually open to the public and conducted in the form of an auction.  There are several ways an auction might be conducted.  Competitive bidding determines the winning bidder.  Some counties bid up the lien or deed amount awarding the lien or deed to the highest bidder.  Other counties bid down the interest rate with the lowest bid winning.  Some smaller counties either select bidders at random while others work down a list of registered bidders offering each person an equal number of opportunities to purchase liens or deeds.  Tax Sales offer some of the best opportunities available.  Liens and Deeds are typically offered at a Tax Sale before being offered direct to the public.  The downside of Tax Sales is obviously time and travel. You must be on site to participate.  This might work for a local sale, but with over 3300 counties and municipalities that collect property taxes chances are you’ll need to travel if you plan on attending auctions.   The second way you can purchase Tax Liens or Deeds is after the sale.  This is commonly referred to as “Over the Counter” investing, or “Assignment Purchasing.” It benefits counties to sell as many liens and deeds as possible. Many counties have had no choice but to sell liens and deeds directly to the public following the sale due to a low turn out for the annual tax sales.  It’s not uncommon for counties to have more than 5000 liens or deeds available for a sale, but begin the bidding with less than 20 bidders in the room. There are usually far more delinquent taxes than investors in attendance to purchase them.  There are several advantages to Over the Counter (OTC) investing.  First, OTC investing can be done at any time, and in many cases anywhere with internet access.  Second, OTC liens earn investors the highest rate of return possible in the state the lien is purchased in.  Third, the redemption period for liens begins on the date of the sale whether it sells or not.  This means  that you could purchase a lien that is 1, 2, 3 years or more into the redemption period.  Some liens can be purchased after their redemption period has passed.  You could initiate the foreclosure process immediately after purchasing it.  OTC Deeds can be found in many counties and represents some of the best opportunities acquire property for less than 20% of market value. OTC Tax Liens can be purchased to acquire property or to earn a high rate of return.   The third way that Tax Liens and Deeds can be purchased is through online auctions. Online auctions were nonexistent just 5 years ago. Since that time the number of online auctions has doubled every year. They are becoming more and more common as counties sell record numbers of liens.   The auction experience is simple enough to learn, but must be experienced to fully understand. Think of it like reading a book about scuba diving.  You’re only going to learn so much without getting in the water. Instead we will focus on the strategy that has opened a floodgate of foreclosure opportunities.  We will discuss how internet based research and investing works.  We will demonstrate step by step exactly how to locate lists and identify potential investments.  Would you like Free ebooks?  No strings or commitments attached... just fill out a registration form (which we keep confidential) and you'll be directed to a page of Free Tax Lien and Deed Training materials. CLICK HERE to see