The important questions to ask yourself when buying property at auction:
When considering investing in property tax liens, you have to ask yourself why you are investing and what you hope to get out of the investment, whether in the short, medium or long term. Property investment is currently extremely fashionable and ‘everybody’ seems to be doing it, but that doesn’t mean everybody is automatically on their way to vast wealth.
All forms of property investment are highly complex, especially tax lien certificates, and every aspect of the transaction needs to be completely understood before you proceed. This is what is known in the trade as ‘due diligence’ and you would be extremely unwise to proceed without it, as there are very many sharks out there, waiting to take your money off you.
Never forget that there are very many ways of making money out of you, the investor. There are mortgage lenders, who make vast sums from borrowers, there are surveyors, project managers, builders, insurers, developers, property seminar providers, furnishers, decorators, paint manufacturers, financial advisers, letting and estate agents, pension providers, managing agents, freeholders, solicitors, investment advisers – just to name a few.
And let us also not forget that the government too makes huge sums out of you, the investor, as well, through income tax, stamp duty, capital gains tax, VAT, inheritance tax, council tax. Every time a property changes hands, the government takes its whack, one way or another. VAT is just as much a tax as income tax, stamp duty and capital gains tax.
Because there are so many ways, both legitimate and fraudulent, that money can be taken off you, you have to make sure that you come out on top, even when taking all these people and their fees and commissions into account. It is true to say that the more possibilities there are of making money from property, the more ways there are of taking at least some of that money off you. The only reason buying and selling your main home is such a good idea is that the government have not yet found a way of taxing the profits. But one day, they will, and there is already talk of taxing homeowners who make more than a certain percentage of profit from their house sales.