The past few years have been volatile for the stock market and have left some investors scratching their heads about whether they should invest or look elsewhere to strengthen their portfolios. Throughout the pandemic, we have seen historically low-interest rates, which have caused many to turn from the stock market to investing in real estate. However, with a global, active pandemic on the horizon, low-interest rates aren’t enough. The real estate market took a hit as property listings became scarce, causing major bidding wars in a market saturated with buyers. Many agents and purchasers are now turning to non-traditional real estate to satisfy their clients’ needs and to increase their portfolios. Others want to delve deeper into the real estate investing situation to find options that provide even higher returns on investment. If you fall into this category and want to buy in the Chicago and NW Indiana areas, you should take a look at investing in non-traditional real estate.
What is non-traditional real estate?
There are many definitions of non-traditional real estate. Technically, it can refer to any type of property that doesn’t fit within the “traditional” category of homes, complexes, or commercial structures. However, what we will be talking about in this blog is non-traditional real estate that is acquired through investing in property tax liens.
A tax lien is a claim made by the government when the property owner cannot (or will not) pay their property taxes. Once a lien is established, that lien is then sold at auction. If you know what you’re doing — and work with an experienced Dior Realty Group Broker — you can obtain a tax lien property that will pay high dividends and possibly lead to the purchase of more property in neighborhoods such as Bronzeville and Wicker Park. You can then decide to flip it either without making any improvements or after renovating it to make a profit, or you can hold on to it to build equity before eventually selling.
Investing in tax liens
Those interested in purchasing tax lien properties, commercial or residential, can buy them through the Cook county auction. The auction is held both online and in person. However, you have to be in the know to know when registration opens and when the opportunity to purchase the list of properties opens, so purchasing through the auction is not that ideal. However, working with an experienced Dior Realty Group Broker is one of the best ways to obtain tax lien properties. Not only does Dior Realty Group have a list of tax lien properties readily available for download on their website, but they’ll also coach you and walk you through the entire process, and help you maximize your investment after acquiring it.
What to be aware of
Though there are similarities between buying a regular or foreclosed home and buying a tax lien property, there are some major differences. First, you need to understand that you are only buying the position of certificate and not the actual property. Rights to acquire the actual property come after the tax lien has matured, which for Illinois is 2.5 years. The advantage of purchasing through an experienced Dior Realty Group Broker is that our list only contains matured tax lien properties.
Secondly, understand that a tax attorney and a regular attorney are not the same. A tax attorney is recognized by cook county and is proficient in the knowledge of the process of purchasing tax lien properties/ matured tax liens. The services of a tax attorney are required as they’ll be the ones taking you from certificate to deed, and Dior Realty Group has a list of them, just waiting to help you with your new journey.
Finally, all funds are due in the beginning. Unlike a regular sale, there are no mortgages allowed, and no payment plans — all past taxes and the full purchase price must be paid to take the property to deed, but don’t let that stop you from investing. These properties are sold much lower than market value, so the potential for the return on investment is great.
Why consider investing
While it may seem risky or frightening to step into the unknown real estate world of tax lien investing, there are a number of benefits that continue to attract investors. They include:
- They present the opportunity to enhance and increase your investment portfolio. When purchasing power is limited, tax lien properties create an avenue to purchase high costing properties at a much more discounted rate.
- They are usually a high-yielding investment. You make money from Wicker Park tax property liens. As mentioned above, the tax lien properties are usually sold at a substantially lower rate than the true market value. Thus making it easier to see a return on investment.
- You’re helping the real estate market stay afloat. Because investors like you purchase tax lien properties, you ensure the constant revolving of inventory.
Working with an experienced Chicago investor real estate agent
Unless you have years of experience buying tax liens, you need to work with a knowledgeable agent who can walk you through the complicated process. Your agent will help you find tax liens in the area of interest, whether Wicker Park, Bronzeville, or NW Indiana, assist you in identifying which liens would make the best investments, and help you win the bid. They can also guide you to the right tax attorney to provide you with advice on following all the rules and regulations involved in buying tax liens to ensure you do not get into legal or financial trouble. Your agent can also direct you to other opportunities if you’d like to investigate options other than buying property tax liens.
If you want to diversify your portfolio and make an investment in something that could return much more in interest than most traditional methods, consider investing in tax liens. Ready to take the next step? Reach out to one of the experienced Chicago-area real estate agents at Dior Realty Group for guidance.