June 20, 2016

In the tax lien industry, due diligence is a key differentiator between investment firms that succeed and those that have a short-lived career in this alternative finance industry. Each property has its own issues that will arise based on a number of factors. Sometimes that factor can be a buried body in the backyard to an environmental hazard such as chemical spills or sewage. These represent just a few of the key factors that PIP Group looks at before bidding on any tax lien available at auction.

Focusing on both the quality of the property, it’s improvements, and the property proximity to vital resources is how we value a property and the probability the tax lien will be redeemed. For instance, if a property has a land value of $65,000 and improvements of $85,000, there is a very high probability that the owner will not want to lose this to a $2,500 tax lien. By utilizing a rigorous process, we are able to sift out the properties that are duds and select only those that will pay back the highest percentage of return on investment and maintain a high probability that an owner will redeem.

Another valuable tactic in the due diligence process is to perform a physical inspection of the property from the road and other public spaces near the property. You can tell many things by viewing a property from a distance that Google Maps or other publicly available sources will not clue you in on. For example, if a roof is in poor condition, but there is a new coat of paint, someone was making an effort to improve the property. However, if the house has a roof in poor condition and the paint is peeling with weeds growing over the fence, it’s apparent that no one cares about this property. Avoiding a property where weeds are growing over the fence means you will reduce the likelihood of having to foreclose on the property. In every situation, it comes down to one simple statement: “Does someone care about this property in one form or another to redeem on the tax lien?”

Over the years, we have honed our ability using our proven method to filter through tens of thousands of properties that are available in the US tax lien market to select those that can provide our clients with the best possible investment in this industry.

About the author 

Charles Sells

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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