Can you make money buying tax liens? Yes, you can. With tax lien investing you can earn double-digit interest rates without the risk that’s normally associated with high-yielding investments.
You’ve probably heard of people earning fortunes with tax defaulted properties, but what about tax lien certificates? What can you do with these? Today I’ll explain how it works.
Today in “Can You Make Money Buying Tax Liens?” I’ll cover the following topics.
Table of Contents:
- Make Money Buying Tax Liens
- Buy Tax Liens Online
- Tax Lien Investing Risks
- Tax Lien States and Tax Deed States
- Tax Sales
- What Are Tax Lien Certificates?
- County Tax Sales Are a 200-year-old Business
- An Example of How to Make Money on Tax Liens
- How to Make Even More Money Investing in Tax Liens
- Conclusion
Make Money Buying Tax Liens
Americans love to make money, and when they hear about government tax liens, they wonder, is this really true? Yes, it is, and I’ll explain how.
I’m Ted Thomas, and about 30 years ago, I discovered this little-known, very profitable investment which is perfectly legal and ethical. It helps people in your community, helps the home owner, and it helps you, and it’s been available for over 200 years.
Once I discovered that I could buy tax lien certificates for pennies on the dollar and earn outrageous interest rates, I was all in and changed my investment strategies.
Today I’m answering your question, “Can you make money buying tax liens?” You’ll find the answer very profitable if you learn these steps to success.
Buy Tax Liens Online
Can you make money buying tax liens online? Yes, as the years have passed, this investment has become easier and easier because local counties, which tend to be old fashioned and a little behind the times, began changing.
They still have a ways to go, but at least in today’s market, they have changed enough that you can learn how to research, buy and do everything with tax liens online. That means you can sit at your kitchen table and make money.
Tax Lien Investing Risks
Can you make money buying tax liens without incurring a lot of risk? My answer is absolutely!
Tax liens are a safe and secure investment. I’ll show you what’s in it for you and give you some foundational material.
You can get started right away, and you can make money relatively quickly. Your profits will be steady, predictable, and certain.
When you invest in tax liens, your profits come from the local government.
Tax Lien States and Tax Deed States
Why can you make money buying tax liens? Here’s how it works.
The United States is divided into approximately 3,000 counties. In about half of those counties, the local governments will sell tax lien certificates. When tax lien states sell tax lien certificates, they’re doing so because the property owner did not pay property taxes.
The other half of the states and counties are not so benevolent and have a severe penalty for not paying property taxes. They don’t sell tax lien certificates.
These are tax deed states where the counties seize the tax delinquent property, and the county treasurer sells the property at a public auction for a little more than the back taxes.
Tax Sales
The county announces tax deed auctions in the local newspaper and on the county website. The starting bid at these auctions is very close to the back property taxes that are delinquent.
Tax deed states use the money from tax sales to pay the delinquent taxes, and whatever is leftover remains at the county as an overage.
Properties are sold at tax deed auctions for 60%, 70%, 80%, and sometimes even 90% below the tax assessed value.
What Are Tax Lien Certificates?
How can you make money buying tax liens? Let’s talk about tax lien certificates.
Once again, there are 3,000+ counties across the United States. Approximately, half of those counties will sell tax lien certificates.
This simply means the county will issue a tax lien in the form of a certificate on each property that is delinquent and has unpaid property taxes. The property owner remains in the property until the certificate expires.
The county treasurer will issue many notices of default to the delinquent property owner. These notices will explain the consequences of nonpayment of property taxes.
After many due process notices from the county, the tax lien certificate will be sold at a public auction which could be online or on the courthouse steps. The public may purchase as many certificates as they want.
The purchaser of the certificate is paying someone’s property taxes. This act of paying another’s property tax is rewarded generously. The purchase of the certificate will earn the buyer an outrageously high interest rate.
For example:
These interest rates are annualized interest, payable on the investment made on the tax lien certificate.
Thousands of tax liens are available, and they are all for sale.
County Tax Sales Are a 200-year-old Business
The business of tax liens and tax deeds has been mandated and administered by local counties for over 200 years.
Over 5,000 tax delinquent property auctions will be scheduled across the United States this year. Why? Because county governments need the money from the property owners to pay school teachers, county employees, sheriff and police department, firefighters and hundreds of other bills, like building schools, fixing roads and running the legal system.
When real estate owners don’t pay property taxes, the county will auction the tax delinquent property to recoup the unpaid tax revenue.
An Example of How to Make Money on Tax Liens
Now that we understand how tax lien auctions benefit the county, what’s in it for you? How can you make money buying tax liens?
I’ve put together some easy math. Let’s review the numbers so you see the profits.
For example, if you purchased a certificate at a tax lien auction in Arizona, invested $2,000, and on that certificate, you got the highest interest rate of 16%, here’s what that would look like financially.
For the first year of investing $2,000 at 16%, at the end of one year, assuming the property owner paid the tax, you will receive your $2,000 principal back plus interest of $320.
You have choices. Spend the money, or reinvest the principle and the interest. If you decide to reinvest all the principle and interest each year for 20 years, your $2,000 would magically almost become $40,000.
I’m not a CPA, financial planner, or an attorney at law. I’m just a prepared investor who helps and guides others who want to learn this almost secret and hidden market, and the numbers speak for themselves.
How to Make Even More Money Investing in Tax Liens
To make this really look good, let’s check out the following example. Tax liens in Iowa pay 24% interest. Just as we did above, let’s invest $2,000 which will now be earning 24%.
In a perfect world at the end of the year, the taxpayer will pay you the $2,000 principal payment, all your capital returned, and now the interest would be $480.
Again, you have a choice. Go spend the money or reinvest your tax lien funds.
To give you some idea of how valuable this investment really is, let’s take the $2,000 principle plus the $480 interest and reinvest again and again for 20 years.
At the end of 20 years, your account would show close to $150,000, and the only investment was $2,000.
The choice is always yours; it’s your money. Would you prefer Bank of America at 1%, or would you prefer tax lien certificate investing at 24%? When it comes to tax lien certificates vs CDs, it’s no contest.
Conclusion
We hope you enjoyed Ted’s lesson, “Can You Make Money Buying Tax Liens?“
The answer to that question is, “Yes, absolutely!” Tax lien certificates pay outrageously high rates of interest, and they’re secured by real estate, making them one of the safest high-yielding investments in America. You either get paid the high rate of return, or you get the property.
You purchase tax lien certificates from the government, and you get paid by the government. They’re sold at public auctions, also called tax sales, and today many of these auctions, tax lien properties lists, and county records are conveniently online.
About half of the states sell tax lien certificates, and the rates vary depending on the state, or sometimes even per county. You can earn interest rates of 16%, 18%, 24%, even up to 36%. Now compare that to the 2% or so the banks are paying.
Tax lien certificates are an excellent passive investment, safe, certain, predictable, and very, very profitable. If you’d like to know more about the safest and most profitable real estate investments available, there’s no one more qualified to teach you than Ted Thomas.
Ted is America’s leading authority on tax lien certificates and tax defaulted property investing and can show you how to buy property with delinquent taxes and make huge profits from it. Ted Thomas is the only one who provides full support and complete training with home study courses, Q&A webinars, live tutorials, workshops & web classes, and personal coaching.
If you’d like to get started today, you can begin now by taking advantage of this FREE Gift from Ted. Act now, it costs you nothing and will give you a big head start!
Ted Thomas is America’s Leading Authority on Tax Lien Certificates and Tax Deed Auctions, as well as a publisher and author of more than 30 books. His guidebooks on Real Estate have sold in four corners of the world. He has been teaching people just like you for over 30 years how to buy houses in good neighborhoods for pennies on the dollar. He teaches how to create wealth with minimum risk and easy-to-learn methods.
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