The United States is being faced with one of the worst economic periods of it’s history. Many economists agree that the state of the US economy is the worst that that it has ever been next to the Great Depression of the 1930′s. Many factors led up the current recession but none more potently ignited the current crisis as did the Sub-prime Mortgage crisis that began in 2007.

Sub-prime Mortgages are loans given by banks and other financial institutions to borrowers with riskier credit scores and credit histories than the norm. Because these loans are riskier for the banks the yields or returns on loans to the banks are greater. John Lonski the chief economist for Moody’s investment services said that 21% of all US mortgages where sub-prime in 2006, that number up from 9% eight years earlier in 1994.

Since the banks were giving loans more and more heavily in the sub-prime market leading up to 2006, their risk increased. And soon, when many borrowers became unable to pay their mortgages the bubble began to burst and the domino effect that crashed the housing market, destroyed some of the greatest financial institutions of all time, and sparked the global recession of which we are still feeling the effects today.

Economic Crisis

Once the snowball started rolling, catastrophic occurrences became evident. The default rates and foreclosure filings started piling up in late 2006 into 2007. Sub-Prime Mortgagees could not make their monthly mortgage payments which in turn meant that banks stopped making money. Hundreds of banks worldwide closed their doors in the months and years to follow. When Bear Sterns and Lehman Brothers, two of the largest US financial institutions on record, closed their doors panic was felt throughout the world. The New York Stock Exchange (NYSE) crashed in September 2008. Investors throughout the world started pulling their money out of US banks and selling their US stocks and assets. The dollar shrank in value and many though the end of the world was near.

Foreclosure Domino Effect

Another factor which is credited in aiding the housing market crash and most recent economic downturn is the housing market bubble itself.  Since the early part of the millennium banks started lending more liberally in both the prime and sub-prime markets. With this large influx of cash home buyers and investors took to the market and began

buying real estate properties in mass.  The flood of money and buyers imploded the prices in the housing market to levels that were unaffordable. As soon as the borrowers were unable to pay their mortgage banks began the foreclosure process to regain possession of the asset. Since banks are obviously not in the property management or real estate business so to speak, the more foreclosures that they took back, the worse it became for everybody. Banks were stuck with homes and need to sell them so that they can cut their losses and not be out totally hundreds of thousands of dollars or whatever the previous selling price was. Therefore they needed to drop the prices drastically so that they can move the built up inventory of foreclosed properties of the shelves. Since the foreclosure  inventory piled up, and the list prices were sometimes up to 80% off of the previous sale prices the overall average estimated house values tumbled nation wide. For the average American their home is their biggest investment so when values dropped so did consumer confidence and consumer spending. The retail markets where hit hard and the ripples made their way into the job markets, and unemployment rates skyrocketed nation wide.  No jobs and no money became the second wave of foreclosures that plagued main street America and the cycle had made its way full course.

Buying tax foreclosures is one of the fastest growing ways to make money in real estate investing today. There is not a lot of free information out there about this extremely profitable method of buying foreclosed properties for good reason, since those that are making money in it would probably not want to give out this information for free. There are many different on-line classes, books, CD’s & DVD’s, lists, and so on that you can buy for relatively cheap, that will teach you all of the tricks of the trade of buying tax foreclosed properties. If you follow the advice and guidance of seasoned tax deed foreclosure professionals, than you to can be on your way to making money through buying tax foreclosures.

There are many laws and regulations around buying tax foreclosures, therefore it is important that you check the laws in the state that you live in or are interested in investing. Some of these online services will give you basic legal information that you need to get started before buying tax foreclosures. Like in most real estate transactions, and especially if you intend on making this your career, it is always recommended to consult a real estate attorney before finalizing any transaction.

Similar to any real estate buy it is important to do your due diligence behind each piece of property that you are interested in purchasing before going to the tax deed sale or tax foreclosure auction. When going to the tax deed sale, in most states you will need to have cash on hand to purchase the deed. If you are the highest bidder than the title of the property gets transferred to you.

Many people have purchased their homes through buying tax deed foreclosed properties for pennies on the dollar. Many real estate investors are making up to a 200% return on investment by going to tax deed sales and buying property for cheap, than flipping the properties for a lot higher value. Normal everyday people that have come across this method of buying foreclosed tax properties have quit their day jobs and started their own companies doing the same as entrepreneurs.

In this economy there is more inventory of foreclosed homes than there are buyers. There is no better time to get started in making money with tax foreclosed properties than today!

Home owners and property owners are required to pay some form of property tax to their local municipality or county government office. It is through these property taxes that local and small governments are able to meet their annual budgets. If the property owners become delinquent on their property taxes, the government entity can push for a foreclosure. Instead of owning the property right out, the tax collectors will have a tax foreclosure auction where the starting bid is the delinquent tax plus any fees and interest. This is known as tax deed sale. Not to be confused with a tax lien.

The winning bidder received possession of the property and the deed. They pay off the taxes and won the property. This way of purchasing real estate is not as well known to most common investors. The return on investment or ROI in buying tax deed foreclosure properties can be enormous if you know what you are doing.