Tax Lien Investing Secrets of the Wealthy

Most people have not heard of tax lien investing. Yet there are
millions of people across the country earning safe, secure, and
most importantly, high percentage interest returns by investing
in tax lien certificates. To put it simply, investing in tax
liens is an easy, high profit way to invest in real estate,
without needing large sums of money to do it.

So what are tax lien certificates?

Each year property taxes are due on all properties. The local
government uses the money from property taxes to pay for various
things in the community. If an owner doesn't pay their property
taxes, the government still needs that money to be able to run
their county effectively! So what's a government to do? They
levy a tax lien against that property and auction it off at a
tax lien sale. An investor, YOU, will purchase that tax lien
with the understanding that you will earn a certain percentage
interest rate. When the owner of the property finally pays off
their taxes(plus penalty fees), the county then cuts a check to
the investor for the principle amount invested, plus any
interest or penalty fees accrued. The county makes out because
they get the money they need to run things, the home owner or
business makes out because they are given more time to pay off
their taxes, and the investor makes out because they just earned
a lot of money without really doing much at all!

Why should I invest in tax lien certificates?

Safety

Tax liens are sanctioned and run by the government. Your
investment is protected by state law and secured by actual real
estate! What other kind of investment option provides that kind
of backing? Take a look at it from the other end. People do NOT
want to lose their homes. So odds are they'll pay off their
taxes, thus paying you off. And if they don't...you just may end
up with a free property.

Minimal Competition

The great thing about tax lien investing is that, for the most
part, it's a completly unknown investing option. Most people
think that stocks, bonds, mutual funds, CDs, money markets, and
traditional real estate investing are the only ways to invest
their money. So what you have is a very small number of people
in the know making tons of money in an extremely low risk form
of investing.

High Return on Investment

Your return on investment will vary largely depending on what
state and county you are in. But to give you a rough idea,
interest rates will vary from about 5% to 25%. Now, given how
safe and easy this is, these kind of interest rates alone would
be worth the investment. But there's more. In most cases you
won't have to wait a whole year to earn your 15% interest. If
the property owner pays off their taxes in one month, you'll
still earn that same 15% interest, but you'll get it one months
time. Freeing up your money to invest again. Lets say you take
that money, and each month invest in a tax lien certificate and
get paid off right away. That's 15% interest, 12 times, giving
you a final return of 180% over the period of the whole year.
Because interest rates are always calculated over the period of
one year, this is what's called your effective return on
investment. This is why investors love tax lien investing. In a
state like Texas your effective return on investment can be up
to 300%!

Examining the alternatives

Here are some alternative investing options that the majority of
americans invest in. Included with them is an average interest
rate and the degree of safety of the investment.

Savings account - 1% - safe

Money market - 1-2% - safe

CDs - 1-4% - safe(interest rate depends on length of CD

Stock market - average growth 11% - unsafe, percentages vary
wildly from year to year

Tax lien certificates - 5%-300% - Safe. Government run. Enforced
by state law. Fixed interest rates.

The ultimate win/win situation

So what happens if the owner doesn't pay off their taxes? Well
in many states you would initiate a foreclosure on the property.
The property gets auctioned off at a tax deed sale, and as the tax lien certificate holder,
you get paid off first. But in other states the property is
signed over to you free and clear! That's right, your small
investment geared to earn 15% just earned you a free house with
which you can do as you please. Live in it, rent it out, sell
it, whatever you want.

Conclusion

So why should you invest in tax lien certificates? Because it
simply doesn't make sense not to. If you'd like to learn more
about the ins and outs of tax lien certificates or specifically
about tax lien auctions, more detailed information is
available.