If you’re older than dirt you might remember the ABC soap opera about the Collins family in the late 60’s and early 70’s.  Not your ordinary soap opera the lead was Barnabas, a vampire.

Odd as it sounds it was a hit for several years.  Not unlike investing in tax lien certificates or tax deeds; it’s different and they both developed a loyal following.

Today, the dark shadows we’re writing about is the recently revealed “Shadow Real Estate” market.  You may have heard about it, the topic broke through the normal financial news programs into the national news.  Of course it did not survive past the twenty-four news cycle.

The “Shadow Real Estate” market refers to the hundred of thousands of bank reprocessed properties carried on their books as Real Estate Owned or REO.  It’s a liability and an expense to the bank and they try to get a foreclosed property off the books quickly.

Here’s the rub, banks already have thousands REOs up for sale and listed on the market already suffering from oversupply.  The Shadow RE are all the REO properties still to come to the market.  Compounding the issue is the current historic pace of continuing foreclosures adding to bank’s REO inventory.

Right now prices and values are flat due partly to the current market inventory.  The Shadow RE market exists because the current market cannot absorb more inventory for sale.  That keeps values down making it difficult for state and local governments to raise real estate tax rates.

Also banks used to be one of the biggest classes of tax foreclosure investments.  This double whammy, bloated REO inventory and paying the property’s expenses, is a continuing boom for the investors in tax lien certificates and tax deeds.

There’s more room for the individual investor to get into these guaranteed fixed-income investments.  Since the tax rates will not rise, getting every dollar from the existing tax base is critical to state and local governments.

The long and short of it is:  Tax foreclosure investing is good and will be for a long time to come.  That is for the few who discover the opportunity.
Stop back again is you believe that ‘revenue anticipation” bonds AKA Tax Free Munis and state bonds are a great investment.