The Next Big Real Estate Boom: Cashing in on Delinquent Taxes

The Next Big Real Estate Boom: Cashing in on Delinquent Taxes

BALTIMORE, Nov. 6 /PRNewswire/ -- As U.S. home prices free-fall, a new big boom for real estate investors has started taking place in delinquent property taxes.

The real estate triple play of shrinking home prices, negative equity and increasing foreclosures are all contributing to an epidemic in delinquent property taxes. This current downturn in residential real estate puts homeowners at the greatest risk since perhaps the 1970s in failing to pay their taxes.

For governments, delinquent property taxes create a budget shortfall for essential services such as police, education and sanitation. To keep the coffers full, states offer "secret certificate" programs that let individual investors make money from delinquent property taxes.

These "secret certificate" programs can deliver returns of 24% and more.

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As Home Prices Decline, Real Estate Investors Hit the Jackpot

As Home Prices Decline, Real Estate Investors Hit the Jackpot

With home prices still descending and foreclosures continuing to rise, homeowners haven't been this vulnerable to the risk of not paying their property taxes in more than 30 years. And real estate investors are banking on the delinquent property taxes.Until states can collect all the late property tax payments, their budgets are slimming. One common solution is a "secret certificate" program, which investors are jumping on to make returns of 24 to 50 percent from the late tax payments.Newly built homes are getting hit the hardest, with a 9.7 percent decrease in September--the largest drop since 1970. Even the hottest markets aren't immune to the falling prices.The prices of exisitng homes fell by 2.2 percent in September compared to the same month last year, the biggest one-year decline since November 1990, reported the National Association of Realtors.According to RealtyTrac, rising mortgage rates, combined with declining prices, caused 115,292 new foreclosures in August alone.