You know that small, select group of people you always hear about – the ones making money in even the worst economy? Smart people see opportunity everywhere. In terrible economies, or when the real estate market tanks, when the stock market tanks – these people are always one step ahead of the pack, finding ways to profit no matter what the situation. Although it may seem counter-intuitive, the current economy is rife with “found money,” precisely because things are so bad. Smart real estate investors are becoming “found money pros,” left and right. You can become one of them.
Lots of real estate investors have watched their finances turn upside-down in the last few years. It’s sad. Unable to find renters or buyers for their properties, more and more investors, as well as homeowners, have seen their properties get sold at tax sale by the government – sometimes for paltry amounts of back taxes. We’re talking nice properties, worth $100,000 or more even in the current economy, sold off to the highest bidder – all because the owners owed the government a few thousand in taxes.
Seems pretty bleak.
What did smart entrepreneurs in the real estate industry do?
Well, a select group of tax sale investors caught on to a little loophole almost no one knows about. In about half of the states in the U.S., if more is bid for a property at tax sale than was owed on taxes (in the above example, if the property was sold for $100,000, and only $5,000 was owed in taxes, then there’s an extra $95,000), the government will hold on to that excess cash and the former owner can come in and claim it. Only the former owner rarely knows that it’s there, for a variety of reasons. They’re no longer at the same address, and can’t be contacted by the government, or assume that it’s all lost (in many states, it is)…
So these investors set up an agreement with those former owners to collect this “found money,” the source of which isn’t revealed until after agreements have been signed, for a percentage of the total amount recovered. Since these funds aren’t subject to finder’s fee laws, that agreement can be for up to 50%.
Smart investors come up with innovative ideas like this all the time. You can imagine, with tax foreclosure skyrocketing, how many of these funds are created monthly. The possibilities are endless. And since this money escheats to the government if it’s not collected in time, this service is actually quite valuable to the former owner. If you’re going to exploit this particular “found money” business, there’s no time like the present.