Have you always wanted to invest in tax liens in Detroit but you’re not quite sure where to start? Investing in tax liens can be a lucrative source of real estate income and it’s certainly worth looking into.
In this post, we will examine four key reasons as to why you may want to try this.
What is a tax lien?
First, you need to have an understanding of what a tax lien is. A lien is placed on a property that the owner has fallen behind on their tax payments in order to secure the property as collateral for the unpaid taxes. Then there is an auction held for the tax lien to the highest bidder. The investor who offers the lowest rate of interest or who will pay the highest premium is awarded the lien.
Four Reasons to Invest in Tax Liens in Detroit
- High Return on Investment– One reason to invest in tax liens in Detroit is the fact that it gives you the right to the tax debt that the owner has not paid. The holder of the lien certificate collects interest on the property for the tax lien until the owner pays up on their taxes. So this may allow you to make a sizable amount of interest on the homeowner’s tax debt until they catch up.
- Property Ownership– If you want a chance at owning a property at a fraction of the cost, investing in a tax lien may be a way to do this. If the owner is not able to make good on their tax debt, the property can be passed on to the holder of the lien certificate, saving you thousands of dollars while becoming the owner of the property. If the owner does not pay, the deed reverts to you.
- Property Value Investment– As long as you check out the value of the property that you are investing in, you may be able to secure a good investment in a nice property for a fraction of the market value. If the owner cannot make good on their tax debt, you own the property. But this will only be an advantage to you if you invest in a high-value property. Make sure to do your due diligence to ensure you are investing in a tax lien of a property with promising value.
- Passive Income– Another no-brainer reason you should consider investing in property tax liens in Detroit is that it creates an automatic passive income for you. As with any passive income opportunity, the work is at the front end. Once you get it set up, you’ll see regular income from your investment, provided the tax debt stays on the books for awhile. If you end up owning the property in Detroit, you can resell the property for added profit if you choose or rent it out for recurring income.
Are Tax Liens in Detroit a Good Investment?
Tax liens are an interesting way to make money on real estate. But if you are interested in getting into real estate investments, tax liens should not be the primary way you invest in real estate properties. That’s because they are riskier investments if you don’t know the property or the value of it before you buy. This is why you need a good real estate investment expert to help you make the best decision on any type of real estate investment.