Property Taxes Liens Become Source Of Discount Deals For Investors

Blog April 30, 2024 By Tim

Past due property taxes, liens, are becoming an attractive and much needed source of real estate deals for investors. 


The deadline to appeal property taxes on Long Island are approaching fast again. While high inflation in living costs is resulting in more property owners falling delinquent on their bills, and scrambling to figure out how they can sell their properties before a new round of taxes are due. 


This comes at an opportune time for real estate investors who have been eagerly searching for profitable property deals. After years of inflation in housing prices, investors need an edge for finding deals where the numbers actually work. 


Past Due Property Taxes As A Lead Source


Investors can use several angles around property taxes to find real deals. 


This includes getting to motivated sellers early, by identifying properties where owners have recently fallen delinquent on their annual property taxes. Once late, it is normally very hard for owners to catch up. Most will have to sell. The sooner they do, the better for them. 


Some investors may simply acquire property tax liens instead of going right for the physical real estate. This provides a path to high returns on paper investments, or acquiring the underlying collateral. 


If owners still don’t catch up then properties can end up at foreclosure auctions. Often selling to investors for pennies on the dollar. 


Finding Bigger Profit Margins


In addition to finding discounts on properties via the above methods, there are other strategies investors can use to leverage property taxes for better profit margins. 


One of the most obvious we’ve all seen in the news is working with local authorities to obtain years of property tax breaks. We’ve seen this with both residential and commercial real estate developers, and businesses like Amazon. If you are bringing value to the community, then they may well grant you some sizable tax breaks. 


A more overlooked strategy is to evaluate where property tax assessments and bills appear to be too high, then acquiring properties, and negotiating them down to build in more profit margins and net cash flow. This is a great way to get the edge, and be able to outbid competitors, and make more profit, even if offering more than other investors.