| Most people have not heard of tax lien investing. Yet | | | | on what state and county you are in. But to give you a |
| there are millions of people across the country earning | | | | rough idea, interest rates will vary from about 5% to |
| safe, secure, and most importantly, high percentage | | | | 25%. Now, given how safe and easy this is, these kind |
| interest returns by investing in tax lien certificates. To | | | | of interest rates alone would be worth the investment. |
| put it simply, investing in tax liens is an easy, high profit | | | | But there's more. In most cases you won't have to |
| way to invest in real estate, without needing large | | | | wait a whole year to earn your 15% interest. If the |
| sums of money to do it. | | | | property owner pays off their taxes in one month, |
| So what are tax lien certificates? | | | | you'll still earn that same 15% interest, but you'll get it |
| Each year property taxes are due on all properties. | | | | one months time. Freeing up your money to invest |
| The local government uses the money from property | | | | again. Lets say you take that money, and each month |
| taxes to pay for various things in the community. If an | | | | invest in a tax lien certificate and get paid off right |
| owner doesn't pay their property taxes, the | | | | away. That's 15% interest, 12 times, giving you a final |
| government still needs that money to be able to run | | | | return of 180% over the period of the whole year. |
| their county effectively! So what's a government to | | | | Because interest rates are always calculated over the |
| do? They levy a tax lien against that property and | | | | period of one year, this is what's called your effective |
| auction it off at a tax lien sale. An investor, YOU, will | | | | return on investment. This is why investors love tax lien |
| purchase that tax lien with the understanding that you | | | | investing. In a state like Texas your effective return on |
| will earn a certain percentage interest rate. When the | | | | investment can be up to 300%! |
| owner of the property finally pays off their taxes(plus | | | | Examining the alternatives |
| penalty fees), the county then cuts a check to the | | | | Here are some alternative investing options that the |
| investor for the principle amount invested, plus any | | | | majority of americans invest in. Included with them is |
| interest or penalty fees accrued. The county makes | | | | an average interest rate and the degree of safety of |
| out because they get the money they need to run | | | | the investment. |
| things, the home owner or business makes out | | | | Savings account - 1% - safe |
| because they are given more time to pay off their | | | | Money market - 1-2% - safe |
| taxes, and the investor makes out because they just | | | | CDs - 1-4% - safe(interest rate depends on length of |
| earned a lot of money without really doing much at all! | | | | CD |
| Why should I invest in tax lien certificates? | | | | Stock market - average growth 11% - unsafe, |
| Safety | | | | percentages vary wildly from year to year |
| Tax liens are sanctioned and run by the government. | | | | Tax lien certificates - 5%-300% - Safe. Government |
| Your investment is protected by state law and | | | | run. Enforced by state law. Fixed interest rates. |
| secured by actual real estate! What other kind of | | | | The ultimate win/win situation |
| investment option provides that kind of backing? Take | | | | So what happens if the owner doesn't pay off their |
| a look at it from the other end. People do NOT want | | | | taxes? Well in many states you would initiate a |
| to lose their homes. So odds are they'll pay off their | | | | foreclosure on the property. The property gets |
| taxes, thus paying you off. And if they don't...you just | | | | auctioned off at a tax deed sale, and as the tax lien |
| may end up with a free property. | | | | certificate holder, you get paid off first. But in other |
| Minimal Competition | | | | states the property is signed over to you free and |
| The great thing about tax lien investing is that, for the | | | | clear! That's right, your small investment geared to earn |
| most part, it's a completly unknown investing option. | | | | 15% just earned you a free house with which you can |
| Most people think that stocks, bonds, mutual funds, | | | | do as you please. Live in it, rent it out, sell it, whatever |
| CDs, money markets, and traditional real estate | | | | you want. |
| investing are the only ways to invest their money. So | | | | Conclusion |
| what you have is a very small number of people "in | | | | So why should you invest in tax lien certificates? |
| the know" making tons of money in an extremely low | | | | Because it simply doesn't make sense not to. If you'd |
| risk form of investing. | | | | like to learn more about the ins and outs of tax lien |
| High Return on Investment | | | | certificates or specifically about tax lien auctions, more |
| Your return on investment will vary largely depending | | | | detailed information is available. |