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Wednesday, November 11, 2009

Tax Lien Institutional Investors

By Steve Jonas

Tax liens are open for individuals through auctions but institutional investors in tax liens also attend the tax sales and are the main competition. Certain auctions are limited to the institutional investors alone because of the amount of money they invest.

These investors do include hedge funds, banks, insurance companies and the like. Trying to compete with such investors, especially if you are an individual tax lien investor, shall be discouraged for these big institutions can always shell out big amount to be invested and can always outbid you.

Generally speaking, these institutional investors in tax liens do not just go for any properties. Mostly they are more interested in buying tax liens on homes and on looking for properties which are easily redeemed. And as much as possible, they wish to go for properties that require minimum capital and lower interest rates.

These institutional investors in tax liens are preferred by the states also as they can have high influence. These big investors can clear the bank formalities and close the foreclosure quickly.

Since institutional investors can quickly secure payments and are regarded to have high reputation, security regulations are usually less.

Institutional investors in tax liens can make good profits because they can do extensive research about the property with their resources. Hence when you have institutional investors in the auction, you can be sure that the property with high market value will probably not be yours.

Moreover, while you are bidding for the highest interest rates, these institutional investors more likely invest on properties with lower interest rates. This is because they do not mind having lower returns than you do.

These institutional investors in tax liens have a large sum of money to the point that they can easily win a bid that prefers bidders with higher premiums. The price of the bid is never a problem to them since their resources has no limit and usually they invest those that are located in big cities.

The number of properties they can acquire is almost endless, as the institution will have large capital ready for investment. Apartments, commercial buildings and houses that are near airport, bus stops and terminals are preferred by institutional investors in tax liens as they have higher value in the future. - 23221

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