One Michigan homeowner just lost his property due to mistakenly underpaying his property taxes by just $8.41.
This case both unveils unscrupulous tactics in play by local government officials who abuse laws, as well as fantastic opportunities for real estate and debt investors.
It’s A Common Issue
Over 100,000 other local residents in Michigan recently lost their home in similar circumstances. It’s a practice not uncommon in other areas like NY too. Many property owners have lost their properties for $6-$10. More for less than $100. Often not even because they didn’t underpay property taxes, but missed additional fees and fee notices supposedly sent in the mail.
This very questionable method has become quite a popular strategy with cities and counties. In this case they seized the property for $8.41 in unpaid property taxes, and resold it for $24,000. Others have lost much more expensive properties for less debt.
It has created a huge windfall for local governments and those in control who have turned it into a huge profit and revenue center. Many may question whether they are purposefully rigging the system and setting owners up for failure on purpose for a profit.
Legal opponents to this practice are pushing for it to end. Yet, some attorneys argue that ruling in favor of any homeowners would create a $2B deficit and debt to pay back those harmed. They argue this in turn could bankrupt counties and local governments.
Like the cases of rife fraud at big banks deemed ‘too big to fail’ it seems to be a case of continuing to finance bad practices because they’ve come to rely on criminal or unfair practices.
Expect the events of 2020 to fuel more issues like this, just as in 2008 when robo signing, foreclosure fraud, and forced placed insurance fraud were all over the place. We’ve already been given a glimpse of this with Wells Fargo’s forbearance program fraud.
Tax Lien Investing
For investors this case highlights the profits to be had in tax lien investing. Tax liens can deliver high yields and even be a back door to acquiring property worth many times more than the investment made.
However, instead of preying on the elderly and others, investors can use this opportunity to help out owners, and create win-win-win solutions for the owners, local communities and can still make great money in the process.
Other Distress Situations Creating Buying Opportunities
Mortgage note investing is similar to tax lien investing. Especially in that you can acquire valuable physical and paper assets for pennies on the dollar, via defaulting debts.
Other signals of opportunities and distress which can be turned into success may include:
- HOA liens
- Mechanics’ liens
- Stalled construction projects
- Builder closeouts
Find out more about investing in secured debt and real estate, go to NNG Capital Fund