The Huge and Hidden Potential in Pre-Deed Investments

Real estate investing holds the potential for huge investment returns, but some aspects of the process can be a real headache.

That is what makes tax lien investing so appealing to investors who do not actually like owning property but love the security that comes with owning liens that have property as collateral.

Many of PIP Group’s investors buy tax liens specifically to collect the returns when the lien is paid off, not because they want to ultimately foreclose on and then own the property itself. However, there will always be occasions on which the investor must consider foreclosure because the lien has gone unpaid. When this happens to investors working alone, they usually opt to go through the foreclosure process and then try to sell the property quickly since their strategy does not involve holding a large portfolio of properties. It can be extremely stressful since the investor usually does not have a deep familiarity with the foreclosure process. It can also be costly since the investor may sell at a deep discount just to avoid owning the property for an extended period of time.

At PIP Group, as I mentioned, we work with a lot of these investors. We call them “redemption investors” because they prefer to own tax liens that are likely to be redeemed before the time comes to foreclose on the property. However, because we are active in so many states and so many tax sales around the country, we also work in acquisitions with a large population of investors who are perfectly okay with owning properties and who customize their purchasing strategies in order to optimize their chances of building up their real estate portfolios. We call these investors “property investors” because their investing strategies include property ownership as well as lien redemption.

Working with both of these investor populations puts us in a very unique position when it comes to helping both parties out when a lien that an investor expected to redeem instead moves into foreclosure. Selling a property with a redemption period set to expire to an investor who plans to continue the foreclosure process and claim title to the property can be extremely profitable, if managed correctly. These properties, called pre-deed properties or pre-deed investments, are extremely attractive to investors hoping to build their portfolio of properties because the waiting period is already done.

Of course, there are many steps involved in taking over a property or tax deed in order to correctly continue with the foreclosure process and claim title on the property. You will need to assess the collateral, negotiate with the current lien holder, and follow the appropriate steps to let the homeowner or occupant know what is going on. PIP Group handles all of these things for our clients, making the process much smoother and less confusing. You can learn more about pre-deed investments and even watch a webinar on the topic at PIPGroup.com.

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About the Author

Charles Sells is the founder and CEO of The PIP Group, a turnkey service provider that focuses on investments in distressed real estate assets including tax liens, tax deeds, traditional foreclosures, fix-and-flips and long-term cash flow acquisitions. He has been involved in tax lien investing for over 20 years, during which time The PIP Group has grown to become one of the largest agencies of its kind with nearly 1,000 individual and institutional investors worldwide.

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