Tax lien investors know that the holder of a mortgage on a tax-lien compromised property can be a friend or a foe. If you are hoping to have your lien redeemed, then a mortgage holder is a friend. After all, they would probably rather pay off your tax lien – with interest and penalties of course – to avoid losing their larger investment in the property. On the other hand, if you are hoping to foreclose on the property, a lender holding a large mortgage can be bad news since they will likely prefer to take a loss on the tax lien and foreclose themselves.
If you want to know ahead of time what the debt situation is on a property, you can easily check out the situation at the county courthouse. Liens on properties are matters of public record, meaning that you can simply contact your county recorder or city clerk to find out where a property stands. Generally, the more mortgages on a property, the less likely that all those lenders will opt not to pay off the lien. This may mean that a property is more attractive to you because as the holder of the primary lien – the tax lien – you are in a position to simply pay off that amount, and then foreclose on the property. On the other hand, if you are hoping to have your lien redeemed before foreclosure is necessary, you might want to take a look at properties that have only a tax lien or a tax lien plus a few smaller issues so that you are more likely to get your money from the mortgage company if the property owner does not pay up. Checking out the lien status of a property can be a huge help when you are determining what properties will work best for your personal tax lien investing strategy.
How do you identify prime targets for your tax lien investing?
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