Real Estate Tax Lien Investing
Real estate tax lien investing is safe, lucrative, and an excellent hedge against inflation.
I started as an investor, and after about 5 years of investing and answering questions, I evolved into a guide, coach and mentor for thousands of student investors.
Today, I’ll share information with you that will make real estate tax lien investing easy for you, low risk and highly rewarding.
So let’s talk about how to buy property with delinquent taxes in tax lien states.
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It Starts With Unpaid Property Tax
To get started, the state government coordinates with the county government to collect taxes, and they do that in a very effective way. The legislature of the state makes the laws, the rules.
In the United states, everything that involves real estate is taxable, except for schools and churches.
The legislature mandates that the county, usually the treasurer, levy taxes then collect taxes. If the property tax is not paid, then the treasurer will issue a notice of default.
What Are Tax Liens?
Tax liens are the result of a property owner not paying local property tax. When this happens, the local government places a lien on the property, around the amount of the unpaid taxes.
Tax liens become tax lien certificates, which the local government will then auction off to the public. The opening bid is generally the amount of back taxes owing.
Bidding on and purchasing a tax lien certificate does not mean that the owner of the certificate owns the property.
Rather, the investor, by purchasing the certificate, has paid the delinquent taxes for the property owner. When the property owner pays their delinquent taxes to the government, the government then pays the certificate holder.
This is called “redeeming the certificate”.
How Does the Tax Lien Certificate Owner Make Money?
The county will establish an outrageous interest rate to be paid as a penalty. The interest rate is not determined by the investor.
Tax lien certificates interest rates vary by state. For example, in Arizona, that rate is 16%. In Florida, it is 18%. Iowa is 24%, and in Illinois it is 36%.
So when the property owner pays their delinquent taxes (redeem the certificate), they also pay the interest and penalties to the government and the government pays all of it to the lien holder (investor).
How Many Tax Lien Certificates Are Available?
Hundreds of thousands of tax liens are available.
The United States has over 3000 counties, and approximately half of those county governments will be selling tax lien certificates. These are called tax lien states.
Auctions happen year-round in the United States, and all you need is to know where and when they are taking place.
Where To Find A Tax Delinquent Properties List
To sell tax lien certificates, the county government will advertise. They will announce a public auction to encourage investors to purchase at the auction.
To purchase tax lien certificates, you start at the county level when doing a property tax lien search.
The county will create a list of delinquent property owners, and that list will be available in the newspaper and on the county website.
What to Do With The Tax Delinquent Properties Lis
Starting with the list, the new investor will find the property number, that’s a tax number. Once the investor knows the tax number, he or she can go online or to the county records and find the address of the property.
The wise and savvy investor, or what I call the educated investor, will check out the property and make sure it really is there and not burned down or not a drainage ditch and that the property has a value.
Attending a Tax Lien Certificate Auction
The treasurer and the county will conduct a tax lien certificate public auction.
Funds received at auction will go directly to the county treasury to pay the delinquent back taxes. The process will depend on the auction rules and the treasurer.
Auctions move quickly, and live auctions will follow an exact sequence. Knowing the rules of the auction is mandatory.
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Is Real Estate Tax Lien Investing a Safe Investment?
Tax lien certificates are considered by most investors to be a safe, secure investment because investors are investing directly with the local government.
The investor does not get possession of the property immediately.
Instead, the investor receives the Tax Lien Certificate, that gives the investor rights to ownership if the property owner fails to redeem the certificate by paying the property tax plus interest.
The property owner will remain in the property. However, the taxes are now delinquent, and the tax lien certificate holder controls the property. It cannot be sold or remortgaged until the owner pays the tax lien certificate purchaser.
What Are the Risks of Tax Lien Investing?
Not all properties are a good investment. A savvy investor checks out the property. The location is important. The condition is important.
Why? You must keep in mind, when you pay the government money for a tax lien certificate, you get back all your money plus the outrageous interest rate only when the property owner redeems.
If the property owner fails to redeem, then the defaulted property owner is now forfeiting the property to the tax lien certificate purchaser.
The point here is look before you leap. Know what the property may be since you may end up owning it.
Real Estate Tax Lien Investing – Conclusion
We hope you enjoyed Ted’s lesson on real estate tax lien investing.
Tax lien certificates pay outrageous interest rates, even as high as 36%, making them a wonderful hedge against inflation.
These certificates are secured by real estate. Therefore, if you don’t get paid, you get the property, making this a very safe investment. Additionally, you get the property without a mortgage.
Just be sure to do your due diligence on the property before you purchase a tax lien certificate since you could end up owning it. However, 95% to 97% of tax lien certificates are redeemed.
If you’d like to know more, Ted can show you the secrets, strategies, and safest ways to profit from tax deed and tax lien investing.
There’s no one more qualified than Ted Thomas, America’s leading authority on tax lien certificates and tax defaulted property investing, to teach you how to do this safely and profitably.
Ted Thomas is the only one who offers full support and a complete training program on how to buy property with delinquent taxes with home study courses, Q&A webinars, live tutorials, workshops, web classes, and personal coaching.
If you’d like to learn how to create massive cash flow and streams of residual income from deep discount real estate, you can get started today at no cost by taking advantage of Ted’s FREE Master Class on America’s best kept secret, tax lien and tax deed investing.