There are two kinds of real estate investors. The majority who bury their heads in the sand and avoid any mention of taxes of any type. Then those who take taxes head on, and use them to create more value and profits that others overlook.

Here are five ways to turn property tax related challenges into incredible opportunities for real estate investors…

Negotiating Past Due Property Tax Bills

When a homeowner wants to sell their home, the local taxing authorities are going to demand any past due property taxes are paid off by closing. This can mean sellers are asking way too much, thinking they have to pay off this giant bill. Or their Realtors try to put the entire bill on the new buyer. Often times these liens, as well as second mortgages, mechanics liens and code violations can all be negotiated out for a fraction of the initial ask. It’s any easy way to add tens of thousands of dollars to the equity.

Property Tax Auctions Create Urgency

Not all homeowners will appreciate the gravity of the situation. Yet, local authorities can foreclose on and auction of homes for less than $10 in back property taxes or related fees. When owners are facing the pending loss of everything it creates a lot of urgency. Buying tax liens is one potential avenue to taking over these assets, but simply stepping in to wholesale these properties can often work even better.

You Can Appeal Annual Property Tax Bills

Property owners have the right to appeal and challenge their property tax assessments and annual tax bills. In some areas like NY, as many as 50% of all bills are believed to be flawed and over inflated each year. This is free money for them if they aren’t challenged. Appeal, and you could save thousands per year. That can make these properties far more appealing, affordable and profitable for your end buyers. They can get more cash flow, even if you ask for a higher sales price.

There Are Lots Of Exemptions Available

Exemptions can provide huge savings each year. Some provide $25,000 in protection from taxes each year. Others can result in paying just 25% of the previous bill. These exemptions include homestead, veterans, seniors, disability, agricultural and other exemptions. If you don’t take them you are throwing away money.

IRS Tax Liens

IRS tax liens sound scary but don’t have to be. Often they come from faulty reporting to the IRS, including the sale of previous property. If the IRS thinks someone is behind on taxes they can lien other property they own, even above the value of the property. This can be a big shock to owners, and creates a lot of stress and panic. Yet, even these liens can be released for a variety of reasons or negotiated. It can be your secret hack for getting deals done that others pass up on.

 

What types of property deals are ripe for real estate wholesaling right now?

The market is always changing. What worked 5 years ago may not work as well today. Here are 5 niches to explore, test out and find bigger profits in now…

Small Multifamily & Mixed Use Properties

Overall yields on single family home rentals have been getting squeezed over the last year. To get the same spreads, many income property investors are having to look at multifamily apartments. Mixed use is still a hot item too. Funds and mom and pop investors alike need deal flow. Help them get it by considering flipping these types of properties.

Vacation Rentals

It’s true that the Airbnb Effect has dramatically driven up asset prices in many areas over the past few years. Yet, if you look, you can still find sweet spots where property prices are low and the potential yields from short term rentals can be massive. That makes it easy to flip these types of properties to rehabbers and buy and hold investors.

Empty Nesters

We’re in an interesting moment, coming off of a down period, but with a strong new economy. That means there could be fewer good inherited property deals or foreclosures. Yet, there are all types of reasons for sellers to be motivated. Age can be a big one. With age homes can end up being too big to manage, or just don’t fit health and mobility needs of seniors. Help these property owners who are more focused on convenience than price, and create more win-wins.

Construction REOs

Construction REOs have been a secret pocket of the distressed property industry. The average homeowner or new investor may not want to take on a home or apartment building that wasn’t 100% completed. That means these deals can have less competition and more bargaining room. Today, we need more new construction than ever. Take a look. You may find houses that just need a little love on interior design and applying for the Certificate of Occupancy. You don’t even have to finish the work. Wholesale them to rehabbers or small builders who can complete it.

Foreclosures

There are still foreclosures and foreclosure auctions. Check the data and you can find fresh spikes in this activity in different parts of the country. Be flexible and willing to go where the deals are at and you can still find great profits.