Are you wondering, are tax liens a good investment? You’ve probably heard about how much you can earn from these. Learn more about how it works and what the risks are!
Tax liens are a creative and interesting investment, and the majority of the population has no idea what these government-controlled certificates could mean to them and the county revenue system.
For over 25 years, Ted Thomas has been turning average people into real estate tycoons successful beyond their wildest dreams. Want to learn more about this little-known, 200-year-old way to create wealth investing in real estate?
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A 200 Year-old Investment Strategy
Tax liens and tax deeds have been available for investment for over 200 years, and they are legal in all states and counties in the United States.
Local counties have an enormous need for funds to pay school teachers, police officers, and fire fighters, and that’s just a few of the responsibilities of the local county.
The revenue to pay county services comes from local property owners within the county.
Property owners pay taxes which are usually a small percentage of the property value that is estimated by the tax assessor. It’s in the area of 1% or 2% in most counties.
I’ll share with you many positive money-making examples that the individual state legislature and the local county have created to collect past due property taxes and to make you, the investor, a beneficiary. You are in the right place.
I’m Ted Thomas, and I’ve been involved as an investor purchasing and reselling tax defaulted property and tax lien certificates for the past 30 years. I’m also an author, a coach and a guide.
Why Tax Liens Are a Good Investment
Is buying tax liens a good investment? There are ample positive things to say about tax lien certificates.
They are safe. You will invest directly with the local government. You actually purchase the tax lien certificate, of which county governments will have millions nationwide.
They pay high returns. The earnings on the tax certificate are generous, and in some cases, outrageous. The interest rates paid on tax lien certificates are 16%, 18%, 24%, up to 36%. The check comes from the government.
They are secured by real estate. If the homeowner does not pay, or repurchase and redeem the tax lien certificate, the certificate holder will be awarded the property.
They are benevolent. The delinquent property owner does not lose the property immediately – they are not evicted. The tax lien certificate holder does not get possession of the property.
There are certificates for every budget. Small investors can start with only a few hundred dollars, or investments can be as large as $100,000, such as when paying delinquent taxes on a shopping center or an office building.
The Risks of Tax Lien Investing
Here are some negatives.
They are not available in every state. You may not have tax liens in your location or county. Not every tax lien district will have tax lien certificates. Only half of the states will sell them; the remaining half will sell tax deeds.
The rate may be bid down. Tax lien certificates may be bid down to low interest rates, however the certificate still remains safe and secure.
The auctions are competitive. Tax lien certificate auctions are competitive, and the best certificates will sell quickly and at lower interest rates than you prefer.
Auctions are stressful. Others may outbid you or underbid you and take lower returns on their investment. Real world interest rates may be lower than you anticipated.
You may end up managing a property. Purchasing a tax lien certificate could leave you with ownership of real estate which requires you manage the property.
You may end up selling a property. If you own the tax lien certificate property, you will have the problem of selling the property.
You must know the rules and do your homework. Tax liens require you to do your homework and research. You must understand property value, the process of selling in a competitive market, and the development of an exit strategy so you will be paid.
You must have computer skills. Most tax lien certificate auctions are now online which means you must develop computer skills.
If you’d like to get started today, you can begin now at no cost by taking advantage of Ted’s FREE Master Class. It’s only about 1 hour of streaming video and will open your eyes to the incredible opportunities available in tax delinquent real estate investment.
Understanding Tax Lien Certificates
Today I’m answering your question, is investing in tax liens a good idea?
For newcomers to the tax lien certificate business that have not invested, here are some fundamental pieces of information about tax liens certificates and tax defaulted property.
First, you must understand, what is a tax lien certificate?
The United States is divided into 50 states. Each state legislature chooses:
If they want to sell tax lien certificates on real estate that is delinquent on taxes, or
If they want to give notice to the property owner who is in tax default and then confiscate the property
Understanding Tax Deeds
In tax deed states, the consequence will be that the county will resell the seized property at a public auction, and the revenue will pay the delinquent taxes.
Approximately half of the states use this system of tax deed auctions.
This means the legislature authorizes the county treasurer to levy taxes, collect taxes and if uncollectible, the treasurer will confiscate and then sell the property at a public auction. The revenue will be used to pay the taxes.
Are Tax Lien Certificates an Ethical Investment?
The remaining states will sell tax lien certificates.
In my opinion, these states are more understanding and benevolent. They do not evict the property owner or confiscate the property immediately. They do not seize the property.
The tax lien states also give notice of default to the delinquent property owner just as in tax deed states. However, the tax lien county treasurer will issue a certificate on the property that is delinquent on taxes.
This certificate in the amount of the past due taxes is auctioned at a public auction. Anyone with funds may purchase the certificate and pay the delinquent taxes.
How Property Tax Auctions Work
The state legislature mandates to the local counties when and where the auction should take place.
The county executes and manages the public auctions and determines how big a reward they will pay the purchaser of the tax lien certificate holder. This is a county decision.
You will find, for example, in Maryland, certain counties pay 12 %, yet other counties within the same state pay 24%.
The lifestyle you always wanted could be yours, so don’t miss out. Act now and take Ted’s FREE Tax Lien Investing Course to learn how to profit safely, securely, and predictably from tax liens and tax defaulted property.
What is a Redeemable Deed?
Some states are penalty states. The county auctions the deed to the property, however, it’s a redeemable deed, which means the county is auctioning the delinquent property owner’s deed.
The property owner has a limited time to redeem. In this case, redeem means come forward and pay the delinquent taxes plus a penalty and redeem the property.
Here’s a tax lien investing example. In Texas, the penalty is 25%, and the delinquent tax payer has only 180 days to redeem. I’d say in Texas, they are pretty firm about collecting property tax.
For clarity, in Texas, and in all states, if the property owner fails to come forward, pay the taxes, and redeem the certificate or the deed, the property owner forfeits the property to the purchaser of the redeemable deed or tax lien certificate.
How Lucrative are Tax Lien Certificates?
Though there are tax lien investing pros and cons, the pros far outweigh the resolvable cons.
This is a big money business.
Recently, one of my students purchased a redeemable tax deed in Texas. The property was a residential lot in a well-kept subdivision. The purchase price was $42,000, and the property owner did not redeem.
The student sold the property for $75,000 and did so within nine months of purchasing. Nice deal! That’s a 70% profit over nine months.
How does that compare with your current investments?
Are Tax Liens a Good Investment: Conclusion
In Are Tax Liens a Good Investment? Ted Thomas draws on his decades of experience to provide a realistic perspective of this lucrative real estate niche that’s been the best-kept secret of the wealthiest investors for far too long.
On the tax lien investing pros and cons downside, tax lien certificates are not sold in every state, so it’s possible that your state may not sell them. However, many auctions are done online these days, which still makes them available to you wherever you may be.
Note that tax lien auctions are competitive, and the rates can be bid down. However, once you’ve purchased your certificate, the rate is locked in.
You also need to be prepared to end up owning the property.
95% to 97% of the time, you end up with a passive investment that pays you an excellent interest rate, but it’s also possible that you could end up with the property and dealing with all that property ownership entails.
So you should have an exit strategy in place before you purchase the tax lien in case you do end up owning the property.
Those are the cons of tax lien investing pros and cons, but here are the upsides, and they are powerful.
Tax lien certificates are secured by real estate. You won’t find a safer investment that pays such outrageously high rates of return, even as much as 36%.
Tax lien investing is also benevolent. You can sleep well at night knowing you’re helping local communities and distressed homeowners.
Even if you don’t have a huge bank account, there are tax lien certificates for every budget. You don’t need to be rich to begin investing. Whether you have $50 or $50,000, there’s a tax lien certificate out there for you.
Ultimately, when weighing tax lien investing pros and cons, Ted has determined that the pros far outweigh any cons. The lion’s share of what could be called cons are actually easily resolved through proper education.
For over 25 years, Ted Thomas been teaching students how to successfully invest in tax lien certificates and tax defaulted property, and many of Ted’s students have gone on to earn 6-figure incomes within a year of completing the training.
Ted Thomas offers full support and a complete training with home study courses, Q&A sessions, live tutorials, workshops & web classes, and personal one-on-one coaching.
Once you’re a member of the Ted Thomas community, you’ll have access to attorney contact information, county contact information, state statutes and due diligence processes. Everything you need at your fingertips.
If you want to learn more about how to make lucrative profits from tax lien and tax deed investing, you can get started today with Ted’s FREE Master Class. It costs you nothing, so why wait when you can change your life today?
