How You Can Make Money

They say nothing in life is certain but death and taxes, and this is as true in the realm of property as it is anywhere else. Of course, some people don't like to face up to either. When a real estate owner fails to live up to his responsibilities to the government, the authority in charge of such matters will issue a lien on the property. At that point, the homeowner has a certain time period during which he can pay the owed amount. If he fails to do so, the property will be forfeited to the state or local government. This is where you come in. The government will put the home up for auction at a tax sale. This can represent a golden opportunity to make some money.
The Two Ways
Not every tax sale is the same. Generally speaking, you're going to run across two primary types: the lien auction and the deed auction. When you visit a lien auction, you'll find the county government selling off the actual debt to private investors. Once this transaction takes place, it's like a business selling off their bad debt to a collections agency. It is the investor's responsibility to get the owed amount from the homeowner. If the homeowner can't pay, the property itself may pass to the investor. The other type is the deed auction. This is where the government has already foreclosed on the house and now wants to get rid of the property for at least the amount of the back taxes. This, too, can be very profitable for investors.
The Lien Auction
One of the main advantages of investing in the lien auction is that you are guaranteed a profitable interest rates. Investors look to a tax sale of this kind as a chance to become a sort of default lender. They become a legal loan shark, of a sort. The only difference is that investors aren't going to send someone to break the leg of the homeowner should he be unable to come up with the interest. If enough time passes, however, they will be able to take the homeowner to court and sue them for the rights to the property. That said, don't get into lien auctions with the hope of landing cheap properties, as most owners will come up with the money in time.
The Deed Auction
If you want to own property, this is the tax sale you want to look for. While much rarer than lien auctions, they can represent a wonderful opportunity to buy property for a song. The government is only interested in getting the taxes and their overhead off the books. Once that minimum has been met, only the bidding will determine how much the home goes for. Get in at the right time, and you could get a house you can flip for a profit of thousands.