Creative Options for Turning a Profit with Tax Lien Properties

Once you have invested in a tax lien and used it to take control of a property, you will have a variety of options when it comes to making that property generate an income. Your choice will depend partly on personal preference and partly on the state of the market. While many tax lien investors prefer to simply promote and sell their properties as quickly as possible using competitive pricing to attract buyers, there are other ways that you can generate wealth using your tax lien properties.

1. Sell via lease-option
   A lease option is an agreement between you and a buyer that you will rent the house to the buyer for a set period of time. At the end of that time period, if the buyer has fulfilled the rental terms and is willing and able to meet predetermined financing and down payment conditions, then you will sell the home to the buyer. This is a good way to work with buyers who may not have the money for a sufficient down payment immediately but who want to buy the house. It also tends to encourage responsible tenancy since the renters look at the home as their own.
2. Sell using owner-financing
   Once you have foreclosed on the home using the power of your tax lien, you will own the home free and clear in most cases. This means that you can owner-finance it should you choose to do so, and then sell the note on the home to convert your deal to cash if you do not want to deal with owning a mortgage for the next 15 to 30 years.
3. Rent the property
   Tax liens are a great way to get rental property that you can maintain for a relatively low cost. Once you get a tenant installed, much of the monthly rent payment can be used for other things since you will not have a mortgage on the property. Some investors even rent the property back to the original owner, but you need to work with a real estate attorney to establish firm, clear guidelines for this relationship since a homeowner who is no longer a homeowner may be a volatile tenant.

What is your favorite way to convert tax lien properties to profits?

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