If you’re determined to get involved with foreclosure investing, you’re on the right track. Foreclosures are at an all-time high due to the recent slump in the global economy, and the opportunity for huge gains has never before been quite what it is in this current financial climate. The question is, what road will you take – buying houses for back taxes, or by investing your money in mortgage foreclosures?

The clear answer is buying houses for back taxes, and here’s why.

While investing in mortgage foreclosure used to be a lucrative business, current times are showing more and more homeowners upside-down in their mortgages. The equity these people had in their homes dropped along with their home values. Finding a mortgage foreclosure with any equity still left in the purse is virtually impossible at this time.

Buying houses for back taxes, on the other hand, means usually never have a mortgage and still have a ton of equity left in them. Why? Because at tax foreclosure sales, mortgages are eliminated – mortgage companies ensure the payment of delinquent taxes on a property before it ever makes it to tax sale, leaving properties that have no mortgage on them by the time the sale comes around. Also, often times the back taxes owed are the only debt on these houses; properties without a mortgage are most likely without any other liens.

So what do we do now? How do we get this property?

Most will likely have very little success at the tax deed/lien sale itself. A host of large tax property investment firms will have long done their due diligence and researched the top properties to invest in. They would be willing to make a smaller return on their investment than you are – in other words, would likely be outbid. This shouldn’t stop you from wanting to invest in tax property– you simply have to be a little more creative.

Why not try something along these lines. Purchase the home directly from the owner – but wait until after the tax sale. This way, you bypass the need for competitive auction bidding. And by the time their property has already been “sold” at tax sale, these property owners are more than willing to rid themselves of their tax obligation and would rather see you with the property instead of losing it to the government.

You will often notice that the majority of these owners have already accepted the loss of their homes and simply want to put the bad memories behind them. They are motivated to sell, and to sell for cheap. Not only do you help someone in need, but you also make a wise investment move.

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