IS BUYING TAX LIENS PROFITABLE?
Is buying tax liens profitable? The answer will amaze and delight you. Tax lien certificates are safe, secured by real estate, and pay outrageous interest rates. Find out how much.
Today I’ll answer your question, “Is buying tax liens profitable?”
You’ll be surprised and delighted when you learn how tax liens are a safe, secure investment, and almost anyone with any minimum amount of training and a small amount of startup money can produce surprising returns.
Even if you’re just starting and buried in debt, there is hope for you with this program.
Want to learn how you can make big profits from deep discount real estate? Would you like to buy mortgage-free, tax delinquent homes for sale for pennies on the dollar? Or earn double-digit interest rates? Then you won’t want to miss this FREE mini class.
IS BUYING TAX LIENS PROFITABLE? – TAX LIENS
I’m Ted Thomas, and for the past 30 years, I’ve been involved with tax liens and tax deeds.
In the real world, tax liens are transformed into tax lien certificates by the county government, and then the tax lien certificates are sold at public auctions to raise money to pay county obligations, for example, the police department, firefighters, school teachers and so much more.
At this point, I’ll provide you with a brief but important background and history of tax liens.
The state, actually all states, have a legislative government that manages the state business and makes laws. The legislators have created what they call statutes. These are the laws that are followed at the local county level.
IS BUYING TAX LIENS PROFITABLE? – PROPERTY TAXES
Among these laws is that all privately owned real estate within the state will owe property taxes.
It’s a privilege for all residents to own property. However, to maintain the privilege, property owners are required to pay property taxes, which are their fair share of the county government bills.
Generally speaking, nationwide, property taxes are 1% or 2% of the property value as determined by a local tax assessor and county treasurer. My point is property taxes are generally low, however, properties with high values will have significant dollars to pay.
IS BUYING TAX LIENS PROFITABLE? – DELINQUENT PROPERTY TAXES
If the property owner fails to pay property taxes, the local county is authorized to take action.
The legislature of the state has authorized the county commissioners or board of supervisors to mandate that the treasurer levy property taxes and then collect property taxes.
If the property taxes are uncollectible, the tax collector will issue a notice of default which explains the consequences of nonpayment of taxes and then, ultimately, seize the tax delinquent property.
After seizure, the property is owned by the county/state.
IS BUYING TAX LIENS PROFITABLE? – TAX LIEN CERTIFICATES
Throughout the United States, two systems are in place, tax liens and tax deeds.
In one system, they issue tax lien certificates. Tax lien states are benevolent and have an understanding government.
The county allows the former property owner to stay on the property while the property taxes are in default. However, that doesn’t mean forever. Each state has a limit on the tax lien, usually about 2 years.
Once again, the state allows the property owner to stay on the property to recover from sickness or other health issues or get a new job in order to pay the taxes.
According to county records, 95% or more of these property owners will recover and pay their taxes.
IS BUYING TAX LIENS PROFITABLE? – TAX LIEN CERTIFICATE INTEREST RATES
The bottom line is that past due delinquent property taxes in about half of the states are sold as tax lien certificates, and outsiders have the ability to pay a delinquent property owner’s tax.
This occurs at public auctions, and anyone can attend.
The interest rates on the certificates are outrageous. For example, Arizona pays 16%, Florida up to 18%, Iowa up to 24%, and Illinois up to a whopping 36%!
Go here to see tax lien certificates’ interest rates by state.
The purchaser of a tax lien certificate is the beneficiary of the outrageously high interest.
The county is the beneficiary of the purchase price because the taxes are now paid, and the property owner is also a beneficiary because they are not removed from the property, at least initially.
IS BUYING TAX LIENS PROFITABLE? – A SECURE INVESTMENT
Conservative investors and newcomers are excited about this investment. Tax lien certificates are secured by the delinquent property.
This is a secure investment. What makes it secure and safe is the fact that if the property owner fails to redeem the certificate from the investor, the property owner is forfeiting the property.
In common language, you’ll get paid the high interest rate or you’ll get the property.
Property owners who have defaulted and are delinquent, in most instances will ultimately pay the delinquent taxes and the high interest rate to retain their property.
The person who invested in a tax lien certificate will own the property if the property owner fails to pay. In simple terms, the property owner has forfeited the property.
IS BUYING TAX LIENS PROFITABLE? – MORTGAGE-FREE REAL ESTATE
Folks, it gets better. The county government has power authorized by the legislature. That power allows the treasurer to wipe out, extinguish, delete the mortgage or trust deed loan from the official county records if the property owner fails to pay.
In other words, if you purchase a tax lien certificate and you don’t get paid, you will receive a deed to the property after a short foreclosure process, and the property will be free of mortgage encumbrances and many other liens.
This is the law in all 50 states.
If this is interesting to you, I have a free mini course, a free gift from me to you that will teach you the secrets of tax lien certificates and how to profit from tax deeds.
IS BUYING TAX LIENS PROFITABLE? – TAX LIEN CERTIFICATES VS CDS
So is buying tax liens profitable? For clarity, here’s an example that’s easy to understand.
My friend, David, who makes his home in Phoenix, Arizona started a small savings account with $2,000. With that $2,000, he purchased a bank CD (certificate of deposit).
I asked him about the interest rate on his CD. and David explained that he had a special arrangement with his bank that paid him 3.75% annual interest. This was surprising because most bank investors are collecting less than 1% at local banks.
IS BUYING TAX LIENS PROFITABLE? – BANK CD INTEREST
My next question was, “What’s your intention with this $2,000?”
David stated that he planned to leave the $2,000 in the bank for the next 20 years and, at the anniversary of the CD each year, to roll it over principle and interest. In other words, he would keep reinvesting each year.
Then I asked, “What will your $2,000 be worth in 20 years?”
I wasn’t surprised when he told me he had no idea what his earnings and dollars would be.
My point is you are not alone when it comes to financial matters. Others feel the same way. They don’t know about the future.
In the next few minutes, I’ll share information and examples with you of how you could make money. Those who have this information and knowledge can succeed and have freedom and security for the future.
IS BUYING TAX LIENS PROFITABLE? – COMPOUNDING BANK CD INTEREST
Next, I said to David, “Okay, let’s figure this out,” and using the calculator on my smartphone, I did the simple calculation,
$2,000 at 3.75% and as soon as I understood that multiplication, I compounded it for 20 years.
Bottom line, David’s $2,000 investment earning 3.75% for 20 years would result in $4,230 in 20 years for David .
Wow! Only $4,230!
IS BUYING TAX LIENS PROFITABLE? – ARIZONA TAX LIEN INTEREST RATE
David said, “What should I do?”
I told David I’m not a CPA, attorney, or financial planner; I’m just a prepared tax lien certificate and tax deed buyer. I guide and teach others, and I write a few books.
Next David said, “Can I buy tax liens in Arizona?” and I told him, “Yes”.
When he asked about the interest rate, I explained it was 16% at its highest rate.
He asked me how I knew this, and I said, “David, I’ve been doing this for 30 years. You can do it too. You can attend auctions, and you can even do it from your home computer.”
IS BUYING TAX LIENS PROFITABLE? – COMPOUNDING ARIZONA TAX LIEN INTEREST RATE
David jumped at that conversation and asked, “Can you show me how?”
I said, “Well, of course, it’s very simple.”
Sure enough, David invested, but before he did so, he asked, “Ted, let’s use your calculator on your smartphone. If I get the maximum rate of 16% and reinvest the $2,000 plus 16% for 20 years, how much will I have?”
Folks, the answer is $38,922. That’s a lot better than $4,230.
IS BUYING TAX LIENS PROFITABLE? – IOWA TAX LIEN INTEREST RATE
Since today I’m answering the question, “Is buying tax liens profitable?” in closing, I’ll give another example.
In Iowa, the interest rate on a tax lien certificate is up to 24%.
A $2,000 investment in Iowa tax lien certificates, earning the highest rate of 24% interest reinvested annually, principal and interest, will result in a total of $147,729 at the end of 20 years.
IS BUYING TAX LIENS PROFITABLE? – ILLINOIS TAX LIEN INTEREST RATE
Which state has the highest interest rates on tax lien certificates? Illinois at up to 36! So, while we’re at it, let’s do the math on Illinois.
$2,000 invested in Illinois tax lien certificates, earning the highest rate of 36% and reinvested annually, principal and interest, results in a total of $937,148 after 20 years!
The point is, tax lien certificates with patience and understanding could make a major difference in an investor’s portfolio and the amount of financial freedom.
CONCLUSION
We hope you enjoyed Ted’s lesson, “Is Buying Tax Liens Profitable?”
About half the states in the USA sell tax lien certificates. These certificates pay outrageous interest rates, and your investment is secured by real estate. You either get paid the high rate of interest, or you get the property mortgage-free.
Depending on the state, tax lien certificates pay interest rates of 16%, 18%, 24%, or even as much as 36%.
What is a tax lien certificate? When a property owner defaults on paying property taxes, instead of promptly seizing the property, the county gives the owner more time to get their affairs in order to be able to pay the delinquent taxes.
However, the county still needs the money, so a tax lien certificate is issued, which allows any investor to pay the property owner’s unpaid taxes. Meanwhile, the property owner gets to remain on the property.
The reward for the investor paying someone else’s taxes is to receive all their money back plus a high rate of interest from the county once the taxes are paid, and 95% to 97% of the time the taxes are paid. If not, then the investor gets the property.
Tax lien certificates are among the safest investments and a rare safe investment that pays high yields.
How do you find tax lien certificates to buy? You can find out where to buy tax lien certificates by visiting county websites and tax delinquent properties for sale lists are also published in local newspapers.
Is buying tax liens profitable? Absolutely, especially if you take compounding interest into account. Continually reinvesting in tax liens for many years can turn even a small investment into a large sum!
If you’d like to know more about how to buy property with delinquent taxes, there’s no one more qualified to teach you than Ted Thomas, America’s leading authority on tax lien certificates and tax defaulted property investing.
Ted Thomas is the only one who provides full support and complete training on how to profit by investing in tax liens and deeds via home study courses, Q&A webinars, live tutorials, workshops & web classes, and personal one-on-one coaching.
Get started today at no cost with 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 lien certificates and tax deed investing.
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