Why Property Tax Lien Investors Still Need To Challenge Tax Assessments

Blog March 25, 2023 By Admin

Tax lien investing is becoming more popular, but even these pros who make money from rising property taxes need to challenge the bills on their assets.

Here’s why this investment trend is soaring again, and the importance of appealing and grieving tax assessments, even if higher bills initially helped you make money…


Tax Lien Investing

When property owners don’t pay their taxes on time then a lien is placed against their property. This blocks the sale or refinancing of the property until that bill is paid, along with penalties and interest.

Investors bid on these liens and collect the interest, which can be as high as 18%.

If property owners still don’t pay the bill and extra charges, then the investor holding the lien can win ownership of the property. Often for just pennies compared to what it is worth. This happens every year.


Why Tax Lien Investing Is Gaining Traction Again

More and more real estate investors are turning to this strategy instead of conventional methods of acquiring property.

House prices and competition is up sharply in many areas. Even though there are concerns about mortgage defaults and other forms of distress, the market seems to be demanding lofty prices.

Those looking for better value, more deal flow, and a cheaper and easier way to invest in real estate are increasingly upping their stake among tax liens.

With a blizzard of new types of taxes and rising taxes, including property taxes, experts expect billions more in property tax liens to come available soon. It’s a big market with high returns.


Why Investors Need To Challenge Property Taxes

Often these investors end up taking ownership of the property. Sometimes they will wholesale them. Or they will fix them up and flip them. Or hold them as income producing rental properties.

No matter what strategy you are considering, it is still wise to challenge and appeal property tax assessments on these assets.

If you are reselling, then end buyers are looking at the tax bills to see how much this property will cost them. Given the choice between similar competing homes for sale, they are likely to choose the one with the lowest property tax bill. It could save them thousands of dollars each year, and at closing. They may also be willing to pay more upfront for homes with the lowest annual tax bills.

For investors planning to hold onto properties as rentals, these savings can mean hundreds of extra dollars in cash flow and net returns each month. All while minimizing the risk they themselves will end up defaulting on taxes and losing the property in a crunch.