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Are Tax Liens An Excellent Investment?

By: Pauline

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Tax liens are gaining popularity in America. Those that have money have been buying tax lien certificates and tax deeds for years. Tax liens are one of the most profitable investments you can make without the risk of the unstable stock market.
It is also the easiest and most lucrative enterprise that anyone that can buy property can be a part of. A matter of fact, a whole industry has boomed from folks that search local auctions for real estate sales caused by delinquent taxes.
What is a Tax Lien?
A tax lien is nothing more than a lien on property for not paying the yearly taxes on it. Essentially, each and every year owners of real estate have an obligation to pay their property taxes. If a real estate owner doesn't pay that tax in a timely manner the county government places their real estate up for tax lien sale. This allows you or me to pay the property tax on behalf of the owner.
The owner of the Tax Lien Certificate can then expect one of two options:
1) A state- mandated yield from the lien, which the delinquent taxpayer has to pay in order to free the lien, OR
2) Title to the property (after a certain amount of time, set by the jurisdiction) if the delinquent taxpayer does not to pay up.
Local county governments use property taxes to fund every day services of police, fire department, welfare programs, teachers and other local projects and services. What do you imagine would happen if the revenue for these projects and services halted? This is why local governments will create and sell tax lien certificates to people like you and me. The lien is guaranteed by the property it is joined to.
To put it to you in plain terms, you will be paying another person's real estate tax and making a guaranteed interest on your money.
This is a win-win service for everybody concerned. The property owner has time to fulfill his/her duty to pay their tax, you will receive a guaranteed yield for your money spent and the local government will get the money it needs to keep running.
If the holder of the property doesn't pay his taxes, then the property becomes yours free and clear only after so many years of non-payment, depending on the State mandates you are purchasing in. You now have the options of selling, renting or living in the property. It is truly a win - win situation.
There is more to think about when arriving at that level. Before you purchase a lien, be sure it is real estate that you want should you suddenly be in the place to take over.
You should check out the property first. I use a satellite map to view the properties I am interested in and then I use my local County Assessor's website to look up the value of the property before I decide.
If it is so easy and simple, why isn't everybody doing it?
Because most people believed that you had to be wealthy to buy liens. Liens could be as low as 6.00 and as high as in the hundred thousand dollar or more range. Of course, the higher your lien certificate is, the higher the yield will be. I wouldn't purchase a 6.00 lien because most counties charge a processing fee and Certificate of Purchase fee per lien certificate and that could be about 20.00. So, in essence you would be paying 26.00 for a .96 return. Not a good investment.
Look for the lien amount that you can buy and start there. People with money have been buying and selling liens for years at high returns; that doesn't mean that a person with limited means can't start and create his business up to that high yield mark. Anyone can and many do.
How can I learn to buy liens?
There are many ways to get started. You can attend a seminar in your area. There are a lot seminars all over the country on learning about buying lien certificates. Many are free and they want to sell you their expensive product with more detailed information that was not covered in the free seminar.
There are also many online programs you can purchase. Many are reputable and have valuable information.
Or you can go straight to your County Assessor's office and just ask! It is not secret and all governments love lien investors because they're/ we're doing a service for them, your local government. So, someone there most likely will take the time to explain the process and procedures for you. Some county governments even have brochures that explain everything.
This is a perfect opportunity with the highest yield on money spent you will ever find, and the government guarantees it. Because the lien is at a fixed interest rate, you win regardless of whether the property owner pays or not.
So, the question, Are Tax Liens An Excellent Investment?, is a resounding, YES.

Article Source: http://depositarticles.com/

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