Investing in Tax Lien Certificates

What exactly are you trying to win when you bid in a tax lien auction? The highest bidder on a property is granted a tax lien certificate legal paperwork warranting you first position authority ahead of the bank-on the property, and entitling you to rights of foreclosure should the owner fail to recompense the government for the accrued back taxes. By investing in tax lien certificates, you become the secured creditor for the real estate.

Usually, the owner will redeem the property-only about 1 in 250 homeowners fail to pay the taxes within the redemption period. This is not a bad thing though-you reap the monetary gain of the interest and penalties accumulated within that period, while dodging the responsibilities and potential hassles of foreclosure.

Why stop at just one?

The number of tax lien certificates you can add to your investment portfolio basically comes down the funds you have available to you. Today's market abounds with quality properties and high interest rates. Redemption periods vary between states and even between counties-so multiple tax liens can ensure a steadier source of income. Besides, waiting out a single lien is just no fun. Stay actively engaged in tax lien certificate investing at all times to keep your skills sharp and your interest engaged.

Places to avoid

Location is always important when it comes to real estate and tax lien properties are no exception. Some states offer excellent opportunities for the investor and other states are not so generous. States that have minimum bids are best avoided. Bids in this state will begin around the 49%-50% mark of the property's market value. This immense initial investment just isn't worthwhile, especially for the new investor.

Guaranteed earnings

Not to worry-many states start off with bidding rate whatsoever. You can get a certificate at a low investment and then proceed to make easy money. And if the property does end up going into foreclosure, you can become the owner of some very valuable real estate for a ludicrously low price.

Tax lien certificate investing is an exciting alternative to the more well known investments such as stocks, bonds, and mutual funds. It is low-risk and no matter what happens, you make a profit. So what are you waiting for-the sooner you start the sooner you can start raking in the cash.

Government Tax Sales
Information on investing in government tax sales.