How to Make Money on Tax Liens and What Are the Risks of Buying Tax Liens?


Learn How to Make Money on Tax Liens to get high interest rates or receive a mortgage-free property. How much do they cost? How many are available? Who can buy them? How much money can you make? Is it risky? I’ll answer those questions and more.

Today we’re going to talk about how to make money on tax liens. We’ll talk about tax liens and tax lien certificates, and you’re going to learn how to make money on tax liens.

It’s going to be a step-by-step process. It’s not going to be hard. So let’s make sure we understand what they are first of all.


A tax lien certificate is issued by a local treasurer for someone that did not pay their property tax.

That takes place in about half of the States. Now, we have a whole United States, about 3,000 counties.

Half of those counties will sell tax defaulted property, but that’s not what we’re talking about today. Right now we’re going to learn about tax lien certificates.

Here’s what basically happens. The property owner does not pay the tax, so in a tax lien county, what they’ll do is they will issue a notice, and they’ll tell them, look, you’ve got to pay your tax.

If they don’t pay the taxes required by law, what will simply happen is they’ll issue a tax lien certificate. It’s nothing more than a piece of paper.

You might call it a tax lien, but they’re going to issue a piece of paper called a tax lien certificate.


Look, if you’re doing business with brokers and bankers and financial advisors, what are they going to do?

They’re going to teach you a lot of things, but they won’t teach you about tax liens and deeds, and I’ll tell you why, because there are no commissions paid.

You need to learn how to do this, so you can buy directly from the government and get checks back directly from the government.

I’m going to teach you how to do it in other articles, how to sit on your rusty dusty, sit at the computer and buy.

Back in the days when I had black hair and I was skinny, we had to go to all the auctions. Now you can do it online, and you can go to the auctions. You can do both.


The point is, tax lien certificates are available in half of the counties in the United States. Those counties are all what I call very benevolent counties and states.

Why are they benevolent? Because when they issue a tax lien certificate, they do not evict the property owner.

That means when you buy the certificate, it’s to make money, not to get the property, because you are not going to get possession of this property.

What kind of money can you earn on these? Well, you can earn a ton of money, and the stock brokers don’t tell you about it. The financial advisors don’t tell you about it.

None of those people are going to tell you about it, because they can’t earn commissions on it.

My name is Ted Thomas. I’ve been doing this for 30 years, and I’ve been teaching it for 25 years.

I’m going to teach you a lot about tax liens certificates today, how to make money on tax liens, and I’m going to talk to you about two mistakes that people make.


A tax lien is placed on a property simply because the property owner did not pay the tax. They sell those certificates because the government needs money.

Now, what does that mean? Well, that simply means that all the local government is funded by property owners.

All the property owners in that community, put their money together, so the county employees can get paid.

That’s how they pay the police. That’s how they pay the fire department, and that’s how they’re going to maintain the roads, you’re getting the idea. All those things are taken care of by the county.

Well, where does the county get the money? They get it from property tax.

The law in all States is this, you can have a property; you can subdivide it; you can rent it; you can own it; you can live in it. You can do anything you want with that property, but you must pay property tax. It’s the law.

So the treasurer is the one that enforces the law. The treasurer sends out a levy, then they go to collect the taxes.

If they can’t collect it, only one of two things will happen. They will either confiscate the property, or they’re going to issue a tax lien certificate.


They issue thousands of these, actually millions of them across the United States. That tax lien is placed on the property, and anybody can buy the tax certificate.

So if someone was sitting in London, or they’re sitting in Canada, or they’re sitting in Australia, if they wanted to buy one, they could buy it online. They could pay the taxes for somebody right here in the States, they could do that online.

illinois tax lien certificate
Illinois Tax Lien Certificate

Why would you want to pay someone else’s taxes? Well folks, you’d want to pay it, because the interest rates that are paid on that certificate are outrageous. I’ll say it again, they’re absolutely outrageous.

For example, on a tax certificate, the lowest I’ve ever seen is in the state of New York. Out on Long Island, Suffolk County and Nassau County, they pay about 12%.

Here in Florida, they pay 18%. In Arizona, they pay 16%. You’re getting the idea. So there are some really generous rates of return here.

In Baltimore, Maryland, they pay 24%. In Illinois, in DuPage County and Cook County in Chicago, they pay 36%! So you can earn these generous rates of return, and you could do all of that online.


What is the county doing with that money? Well, they’re not just stacking up money over there.

They’re paying the county employees. They’re fixing the roads; they’re taking care of the police department, so you see they have a lot of bills to pay.

So the county will issue a tax certificate on any property if the person’s in default. They don’t push that person out of the property, so that I say is a benevolent place. They’re pretty benevolent. They don’t push them out.

They let the people stay in possession. So when they get a new job, or the wife gets healthy, or they put a new roof on after the hurricane, whatever. When they get all that done, then they pay the tax.


Generally speaking, you can check with the counties. You’ll find out 95% to 97% of all the property owners will pay the tax.

When they come in to pay, they have to give you back all your money. Let me say that again.

When you buy a certificate and they come in to pay, they have to give you back all your money and the high rate of return. That’s how to make money on tax liens.

Let’s say you bought a certificate in Florida, and it was outstanding for the whole year, where you would get back all your money plus 18%.

Where are you going to find an investment that’s got a high yield, and the government is mandated to not only administer it but take care of it?

Here’s how safe it is. You’re going to invest with the government, and you’re going to get a check back from the government. Is that good? So this is going to make it safe.

It’s going to be secure, and it’s going to be very predictable. Predictable, certain and secure. How about that. Wouldn’t that be good?


If you’re wondering to yourself saying Ted, why on earth would I pay someone else’s taxes? Here’s why.

You see the tax money is needed by the government, but when you pay a bill late, you’re going to have to pay some fees, some penalties.

When those people come in to pay their taxes, they’re going to have to pay a penalty, they’re going to have to pay 16% or 18% or 24%. You’re going to get that money.

The government collects the money, then they just simply send it to you. I have clients that love to buy these certificates online. They buy them online, and then when the people come in to pay, the county actually pays them online.

So the county has their bank account number, and they call me up and say, “Ted, I just got a text.” We all get a text.

Well, they got a text that said, just made a deposit into your account. How would you like to be getting deposits in your account with checks from the government? Not bad, right? Well, that’s what they love to talk about.

So that’s how to make money on tax liens, something that you really need to learn about, a high yield investment.


Here’s what I haven’t told you. I know it’s in the back of your head. You’re probably saying it, “Ted, if they won’t pay the government, why are they going to pay me?”

Well, I’ll tell you why they’ll pay you. Because when you get that certificate in your hand, the property can’t be sold. It can’t be remortgaged. Nothing can happen to that property until you’re paid.

If you don’t get paid, you are now going to get the property. You’re not only just going to get the property for the minuscule amount you spent. You see, you probably paid $2,000 or $5,000 for that tax certificate.

Well, guess what? If you don’t get paid, you’re going to get the property with no mortgage.

There’s no mortgage on the property. It’s gone. Now, they don’t rip the mortgage up and throw it away. The county just said, we’re wiping the mortgage off. We take the mortgage off the property records and there’s no mortgage.

So you would get a property with no mortgage, and you just bought it for the price of a tax lien certificate.

Now, do I have clients that I can show you doing that? Absolutely, I don’t have time in this article, but I will in my next one about tax liens. You want to watch for that.

I’ll show you people that invested as small as $5,000 or $10,000 and ended up making six figure incomes.


What happens to the tax certificate when you buy it? If you buy it online, they’ll send you a tax certificate online.

If you buy it at an auction, they’ll actually issue you a certificate. It’s just a piece of paper. That’s all it is. You would just hold it. There’s nothing for you to do with it. You can take it home, put it on your desk.

You don’t have to worry about it being stolen. You don’t have to worry about anything, because it’s got your name on it, and the county has it in their records.

How much do tax lien certificates cost? Well, let’s say it’s a mansion, and the mansion is worth $3 million. Taxes are generally at 1%.

So if it’s in default for two years, you’re probably going to have to pay your first one, and pay 2% of the property value. If it’s a $3 million one, you can pretty well figure that out yourself.

If you bought a regular house, that’s like, let’s say a $300,000 house, well, the tax certificate might be $3,000 or $5,000.


Let’s talk about a couple of mistakes that people make, and I want you to avoid those mistakes, Here’s what they are.

Number one, for some reason people do this. They start bidding on a property they haven’t seen.

Now, for goodness sake, I know, ladies you wouldn’t marry the guy if you hadn’t seen him. It’s the same thing with property.

What if it was next to a chicken farm or something like that? I you’re buying a property next to a chicken farm, how are you going to sell it?

You won’t be able to sell it. It would be impossible to sell it. Why? Because it’s going to smell, so that you don’t want to buy that property.

Don’t buy any property that you haven’t seen. What if there was a hurricane? What if there was a fire or some other disaster? Well, you don’t want to spend money on that. You won’t get your money back. You’d lose your money.

Mistake number two has to do an exit strategy. You don’t want to just get in there and start bidding. You want to know what you could sell the property for.

I know people get to the auction, they’re excited and want to make a lot of money, I understand all that.

Well, if you’re going to buy property, you’d better have an exit strategy for that property. You have to worry about an exit. They either pay you, or they don’t pay you.

If they pay you, you make a generous rate of return, an outrageous rate of return. If they don’t pay you, you’re going to get a property without a mortgage. It doesn’t get any better than that.


Learning how to make money on tax liens is a valuable skill. Tax lien certificates pay interest rates as high as 36%, and they’re secured by real estate.

Over 95% of the time, the tax is paid, making it a low-risk investment that yields high interest. However, if the tax isn’t paid, then you acquire a mortgage-free property for pennies on the dollar.

You don’t have to collect. The government does that for you. The checks you receive come directly from the government, making tax liens an excellent passive investment.

You must know how to make money on tax liens before jumping in, know the rules and do your homework to avoid making mistakes. Ted can show you how.

Safe Haven 720x1024 1 1If you’d like to know more about how to make money on tax liens, Ted has a FREE gift for you, the Safe Haven master course (a $197 value).

Safe Haven is 2 streaming videos and a 100-page illustrated manual, that teaches you how to make money on tax liens & tax deeds.  To learn more about tax defaulted property investing, act now and get your FREE Safe Haven course today.

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Ted Thomas

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.

The Ted Thomas Difference:

  • Ted is recognized as America’s Tax Lien Certificate & Tax Deed Authority and has been helping people with investing in tax defaulted properties for over 30 years.
  • Ted has built a team of certified coaches that have 70 combined years of auction experience and are available to his students by phone to guide and mentor you to avoid getting overwhelmed or worse, losing money
  • Ted has ironclad PROOF that what he is teaching you does work. With hundreds of successful students providing testimonials and a 4.9 Google rating which is unheard of in this industry.
  • Ted and his staff don’t hide behind a website; they can be reached during office hours at 321-449-9940.

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