Tax Lien Investing: Double-Digit Returns – But is This Investment Right for You

Each one of us has an idea about property taxes. Whether you’re a homeowner or an investor, we know for sure that the government collects taxes from property owners to fund the needs and services for the common good of the greater number of people. This is in addition to income and sales tax.

We also know that the government will not accept IOU’s nor will it issue some sort of a pass to exempt a property owner from paying the realty tax. The best arrangement a taxpayer can get is on occasions of tax amnesty where delinquent taxes can be renegotiated.  The bottom line, sooner or later, you still have to pay. If you don’t a tax lien shall be attached against your property for auction.

Having said all these, TAX LIEN SEMINARS will, once more, provide some of the most vital information about Tax Lien Investing.  But this time, we will focus on tax liens alone and discuss tax deed investment some other time.

How Does it Work:

• There are no extra fees or fixers to pay, so you have to pay a one-time registration fee for the auction.
• A county or municipality basically published a list, weeks before a tax lien sale. As there may be hundreds of properties up for grabs, be sure to narrow down your choices based on your preference and budget.
• . If you have only a few thousand or even only a few hundred dollars to invest, you can immediately eliminate the properties with higher minimum bids.
• If your purpose is earning interest income only, and not acquiring a property, look for single-family homes with a mortgage. They offer the best chance of being redeemed. In other countries, their redemption costs reach 85% or more.
• The time frame for tax lien investing is between six months and three years. There is no secondary market in which to sell your certificates. So you need to make sure you only invest some amount of money you won’t need in the short term.

 How to Bid

• Due diligence is a must. Do your homework and get in touch with the county where you are interested to register and bid.
• Register a few weeks ahead of the actual sale and pay a registration fee, which is usually about $100.00. They email you a bid identification number. When the auction opens, you bid on the certificates that interest you with an online form.
• From the list, mark out the properties you wish to bid on.
• Set your budget and stick to your bid price to avoid over-bidding.
• Your minimum bid to buy a tax lien certificate includes gross tax, penalties, and interest. The penalties include any applicable costs about the tax lien certificate sale. The minimum bid is listed beside the delinquent property address and ID number.
• Because of strong possibilities of high rates of return on some properties, they attract a lot of attention. And if you don’t have enough money, some moneyed competitors and companies   can jump in and bid higher shooing away all small investors, including you.
• The price can easily escalate more than the taxes due that in many cases, properties can sell at a tax auction for more than the real value of the property. Never get tempted to do that.

The Rewards And Huge Benefits Of Tax Lien Investing: 

• You don’t have to be a real estate license broker and you don’t need a lot of money to invest in certificates or deeds.
• When you buy a tax lien, you only pay the unpaid taxes for the homeowner in exchange for a certificate. The certificate is good for the amount you paid plus interest.
• One thing nice is your investment has the property as collateral and protected by state laws. As an investor stepping in to pay the back taxes you are guaranteed to be paid back with handsome interest rates and penalties on your investment.
• Your Tax Lien Certificate, has top priority over other liens as it has first-position lien on  that  particular property. This means it is the first debt obligation that’s paid out if the property goes through foreclosure.
• If the tax lien certificate is not redeemed, you can acquire the property through foreclosure, sometimes for pennies on the dollar. So depending on your investment plan, either way  can be highly rewarding.
• Tax liens provide a fixed interest rate, depending on the In Baltimore, it is 18% annually. In other counties across the  country, it can be either lower or much higher. A few counties in Illinois pay an interest rate of 18% every six months, which is more than 36% when computed annually.

As earlier mentioned, TERRA INTERNATIONAL REALTY, would like to reiterate  that the  honest intention of this article is to provide  would-be buyers/investors  some of the  necessary information  in tax lien investing.  We believe, this  would  help or guide you,  no matter how small it may seem,  to  study every possibility of  the  present  market condition.

At the end of the day, it would be your insights and business acumen that will drive you to do what’s  best  or maybe, to  turn small things to great things.   In parting, remember an old cliché, “Opportunities do not happen, you create them.”