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Tips for Buying Non-Traditional Real Estate

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Tips for Buying Non-Traditional Real Estate

Tips for Buying Non-Traditional Real Estate

Investing in real estate is a perfect way to create a diversified portfolio and develop additional streams of income. No matter what the economy is doing, real estate tends to trend upwards in value and provides a tangible asset that you can either retain to increase equity or sell to free up needed cash. When most people think of investor real estate, they think of traditional options like buying homes to rent or flip or buying commercial space to lease, that are actively listed on the market. However, there are other options available to motivated investors who are willing to explore non-traditional options such as off-market properties, or as we like to refer to it, non-traditional real estate.

What is Non-Traditional Real Estate?

Non-traditional real estate can be considered anything that isn’t a “traditional” property purchase such as a new home, condo, or commercial building purchased off-market. Some examples of non-traditional investor real estate include wholesaling, buying land, getting involved in real estate crowdfunding, or investing in a real estate investment trust (REIT) structure.

If you want to invest in real estate but don’t want to deal with physical property, you may also be interested in the non-traditional real estate option of investing in tax liens. Tax liens can be high-interest investments that help you diversify your portfolio and increase your wealth.

a man working on a table

What Are Property Tax Liens?

A government-taxing municipality can issue a tax lien against any property owner who has not paid his or her taxes. For the municipality to collect money, they sell the tax liens to those who are interested in buying investment real estate. When you buy a tax lien, you do not buy the actual property.

The property is retained by the original owner and that owner then has to pay you the back taxes they owe with interest. Depending on the state in which you are buying a tax lien, you will usually get anywhere between 3 to 7 percent interest on your investment. In some cases, your interest can be as high as 18%, making investing in tax property liens a very profitable endeavor.

In some cases, you will not be able to collect the taxes from the property owner within the time period allotted by the state. In these cases, you will be able to foreclose on and gain the title to the property. If you do gain ownership, the property is then yours and you can choose to remodel and flip, retain the property for your own use, or sell the property as-is.

black-wood theme living area

Tips for Buying Property Tax Liens

Do you want to venture into the world of investing in tax property liens? Here are some tips that will increase your chances of success.

Ensure you have a budget. Tax property lien certificates are sold at auction. In some cases, if you are lucky enough to catch the open deadline for the list and registration to be a bidder, you will have the opportunity to bid on the certificates against other interested private investors. However, if you are not the type who is patient enough to complete the bidder’s application, read up on the process, bid on parcels, and wait out the redemption period — Dior Realty Group is here to help you. Our investors have already placed a bid on the properties and waited for the redemption period to expire to be able to offer mature tax certificates for sale. Before bidding on a property, ensure you have the budget to purchase and be willing to be aggressive as there are other buyers.

Know the state and local laws. Tax liens vary depending on where you’re located. Before you get involved with this type of investor real estate, do some research to see what the interest rate is, how to obtain tax liens, and any other information that will affect your purchase.

Do your due diligence. It is your responsibility as the buyer to do your due diligence. Look up the back taxes, whether or not the property has certain variances or penalties against it, liens, or even if it is occupied. Your tax attorney can assist with this. In any instance, a property cannot close without a clean title, but know what you’re venturing into to avoid pitfalls.

Understand it’s your responsibility to collect the back taxes. Buying tax property liens is an active investment and it is the buyer’s responsibility to pay any unpaid back taxes

Understand there is a risk. No type of investor real estate comes without its risks, and buying tax liens is no different. If you buy a lien on a property that has very little value, you could end up losing your investment, and you end up with a property you can’t sell.

Work with an experienced investor real estate agent. If you want to pursue investing in tax liens, it’s vital that you work with an experienced agent who has helped clients buy this type of investment. When you work with Dior Realty Group, your agent will know the state and local laws and regulations will be able to help you find liens that are available for purchase. Coupled with the experience of your tax attorney, your agent will see you through to a successful investment closing.

Do you want to diversify your investment portfolio and get into the world of tax property liens? Reach out to an experienced investor real estate agent like those at Dior Realty Group for expert assistance.

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