Alternative Investment ... a 20 billion market ....
“Approximately $ 20 billion to $ 25 billion in local property taxes go unpaid each year, hindering local governments’revenue base”. Brad Westover, executive director of the National Tax Lien Association, told WPC News.
WHY HAVE I NEVER HEARD SOMETHING ABOUT TAX LIENS?
Outside the US, this form of investment is usually unknown to experienced investors. The reason is obvious: Banks, other financial institutions and brokers, which usually trade financial investments and investment products are not allowed to take part in this business area as regulated by law. In taxed states, the counties keep the tax liens and wait for the debtor to fulfill his obligations. If he does not do so, the county can then begin with the recovery.
Many offer this property at the value of outstanding liabilities, i.e. below 10 % of current value. Redeemable Deeds states that, after purchasing a property the debtor still has 2 years to settle his debts after the acquisition of the property. This is interesting because classical tax liens cost a few hundred USD, but with the redeemable deeds, the investor acquires a property for several tens of thousands USD and he gets interest on this investment.
If the tax liability is not paid within the legally stipulated amortization period, the tax lien owner may apply for judicial foreclosure and thus become owner of the estate or property.
The return on an investment in U.S tax arises from the statutory penalty tax and is between 8 and 36% per year. The returns of tax deeds can be much higher. These properties and real estate can be sold by the investors at the market price after the purchase.