Tax sale strategies

There are many strategies used by tax lien or tax deed investors. Here are just a few of them.

INTEREST

By far most tax sale investors that I have come across are mainly looking for the amount of interest that they can receive. They’re a couple of ways to accomplish this depending upon the rules of the sale.

At a tax sale that is conducted as high bidder wins, the interest rate is usually set at a certain percentage by the state rules, so the object is to get the bed at the highest amount that the homeowner will be able to redeem his property. This gives you the most amounts of interest dollars in return. It also requires you, as investor, to be able do a quick evaluation of the current homeowners ability to pay back the loan amount (which is your bid) with interest. You must make this amount small enough so that the homeowner is able to redeem the property within the state allowed redemption period and large enough so that your having to wait for that interest is worth it to you. Since these tax sale lists are most often released to the public only two weeks to a month before the actual sale you will have limited time to accomplish your research.

At a tax sale that is conducted as lowest bidder wins, the loan amount is usually the tax amount owed and the attempt made by the investor is to gain the highest percentage amount that is acceptable to him and will still allow the homeowner to redeem their property within the redemption period allowed.

In the next article I will go into another type of investor who is mainly concerned with getting the PROPERTY.