When I started investing in land, I knew that the more amenities the location had to offer, the more potential the investment had. What I didn't know, however, was which amenities were better than others. My experiment and research has led me to believe that Lake View Land offers a unique investment opportunity. Great Water Front Land can be found for ?ok? prices. Good Ocean-Front Land is extremely hard to find at good prices. However, Lake View Land is extremely affordable, even when compared to Ocean View Land. So how to spot the good locations from the bad?
If your looking to invest in Lake View Land, find an area that is growing, or that may have significant development in the future. If a huge city is getting overpopulated, I would expect that nearby Lakes ? beautiful Lakes ? would seem like a great place to live to many people. So Water Front/View Subdivisions and Towns near huge cities are always a great investment.
Before continuing, it is important to address a few details of Lake View Land. First, make sure your land is not in the flood plain. You don't want to buy land, build a house, and than let the water ruin your investment. Call the county. Make sure your land is secure from floods. Make sure your land is also build able, has utilities, no liens, and all the other good stuff you should be looking for when buying land in general.
So lets say you were to buy a couple Lake View lots in a subdivision with only a few houses, but near a huge city. If you wait a couple of years, and your lots become surrounded by houses, your investment has paid off and you have multiple choices when it comes to liquidating. You can simply sell the land, which would be worth way more than what you paid. Or, you can build a home, wait a little bit longer, and make a huge profit.
Investment is a skill learned through analysis and experience. Always use your best judgment before going into any investment. Make sure your skilled enough, and have done enough research, to be confident your investment will yield a profit
The opportunity is in tax lien certificates, and here is how it works.
In this country, anyone who owns property is obligated to pay property taxes. However if for any reason the owner fails to pay the tax, the state still needs the money to pay its own expenses. To solve this problem, the state turns to citizens like you and me and offers us tax lien certificates, in exchange for payment of the taxes due.
When a property owner has failed to pay his real estate taxes, anyone who agrees to pay the taxes is awarded a first lien on the property. Then, if the owner still does not pay the taxes due within a specific period of time - usually 18 to 24 months - the holder of the tax lien certificate is awarded ownership or the property, free and clear, regardless if there were any mortgages.
However, suppose the owner does in fact pay the taxes within the specified time. If you have a tax lien certificate on the property, you will still come out significantly ahead. That is because the state will tack on a 10 to 50 percent surcharge that the delinquent property owner must turn over to you, as a penalty for late payment of taxes.
So there are two ways to win with tax lien certificates. If the taxes don't get paid, you get the property, and if they do get paid you get the interest penalty!
If this sounds like money in the bank, or something even better, that is exactly what it is. However there are a couple of catches. First, not every state offers tax lien certificates as described above. At present about 30 states do, which narrows the field of opportunity a bit. Second, in the states that do have the certificates, they are offered at auction on a county by county basis. With up to 2000 counties holding auctions across America, some time and effort may be required for traveling and gathering the necessary information. On the other hand, this may keep other people away, which can work to your advantage.
The actual mechanics of a tax lien auction are very simple. The actual amount of taxes due is based on the assessed value of the property. The tax bill could range from a few hundred dollars to a few thousand, depending on the value of the property.
At the auction however, you are actually bidding on the amount of interest the certificate will pay. If you are willing to accept the lowest rate of interest, you are the winning bidder.
To simplify things, lets say a typical state will pay a 25% interest rate on their certificates, which is very common. You would bid at the auction on a tax lien that is $1500. You are actually bidding against other people for that tax lien certificate, and the person who agrees to accept the lowest interest rate, gets the certificate. So, in our example you would pay $1500 for the taxes due and lets say the rate you agreed to accept was 16 percent, you would receive your initial $1500 investment plus 16% of that amount.
If the property owner does not pay within the specified time period, you would foreclose on the property. Once this foreclosure takes place, all liens prior to the property tax lien, including the mortgage, are erased and will not be your responsibility. You own the property outright.
It is very rare that the property owner loses the property by not paying the tax lien. So you are basically loaning your money to the state for 18 to 24 months at a rate of return of anywheres from 15 percent to as high as 50 percent, in some states.
Banks have been buying tax lien certificates ever since they have been offered, that is how they make a great return on the money you and I deposit into our savings account. When ever you can get a guaranteed rate of return of 15 percent or higher, you are investing your money very wisely.
You can purchase tax lien certificates for as low as a few hundred dollars to a few thousand, so really the opportunity is there for any level of investor. With tax lien certificates you really cannot lose unless you buy a certificate on a junk property that is not even worth the taxes. However this is a rare incident. You are usually buying tax lien certificates on property that the owners have just fallen behind in their finances and it takes them a little more time to come up with the funds to pay their property tax.
This is a no lose situation for the investor, you either get a great interest rate of return on your money, or you acquire a valuable piece of real estate for literally pennies on the dollar.
Both Grega & Howard Platt are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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