Low-Risk High-Yield Investing With Tax Liens
Are tax-defaulted properties risk-free investments? You might consider a tax lien or a tax deed when investing in property.
The financial gain from buying a tax lien certificate is getting your money back plus interest when the property owner pays you back the taxes they owe. But what happens when a property owner does not pay their taxes back?
You may watch the video above, or if you prefer, read the transcript below.
What Makes Tax Lien Certificates Secure Investments?
When you purchase a tax lien certificate, the money you put down will be returned to you once the property owner pays the taxes. Depending on how long that takes, you will earn a certain percentage per month, which is how you will make your profit in most cases.
But when a property owner does not pay back their property taxes, you own the property with no mortgage payment. So you now own a property without a mortgage. This is a law across the entire United States.
If the end goal is to own the property via the purchased tax lien certificate, then learn about the property and do your homework on the city and county you want to buy the property from.
In contrast to tax deeds, you will be going to an online or in-person bid-down auction and bidding on the interest rate. These properties will be sold and auctioned off during their foreclosure period.
Learn More About Tax Liens And Tax Deeds
In conclusion, there is really no such thing as risk-free investments. Even the safest investments come with a certain degree of risk. However, tax lien certificates are one of the closest things to being risk-free investments. You either get paid the interest rate or you get the property, and this is enforced by the local government.
For over 25 years, Ted Thomas has been teaching people how to make intelligent investments on properties with tax liens and tax deeds. Click here to get your Free Auction List and Guide and start making investment moves!
Please browse our website for more information about this fantastic investment opportunity and take advantage of our library of educational videos to start investing today!
Read the Video Transcript – Are Tax-Defaulted Properties Risk-Free Investments?
Randy: So maybe you’re looking into buying a tax lien which is sort of an investment strategy in real estate, and we’re here talking to Ted Thomas again who is an authority on this kind of stuff. And Ted, you’ve said these are sort of risk-free investments. In other words, this guy can’t pay the tax on his house so the local government gives me the opportunity to pay the tax and so now when he does pay the tax, I’m going to get that plus whatever percentage. Sounds good, what if he doesn’t pay? What if the guys just doesn’t pay his taxes?
Ted: Nobody’s going to believe me, but I’m going to give you the real answer, okay? All right. So folks, the property is taxed, the local government issues nothing more than a tax lien certificate, which is a piece of paper, and you buy that piece of paper, you take it home, it’s a passive investment, you put it on your desk then you sit on your rusty dusty.
Ted (cont’d): All right, so the question is, what if the guy doesn’t pay you? Well, I’m going to tell you something, if you own the tax lien certificate, the local government is going to issue a deed to the property. Okay. The tax lien certificate, only two things can happen, one, they come in and pay, two, if they don’t pay, you get the property and you get the property with no mortgage on it, the mortgage is wiped out.
Ted (cont’d): Now, how did that happen? That happened because it’s the law in the United States that if you don’t pay your property tax lien certificate, if someone doesn’t pay it, they lose the property to the person that owns the certificate, remembering that the tax certificate is the number one priority lien on that property and you own it so you get the property without a mortgage. That means, you probably bought that property for 1% or 2% of value.
Randy: Yeah, wow.
Ted: I can actually show you, I can’t on this video, but other videos, that people have spent $10,000 for a tax lien certificate and they ended up with $180,000 house because the people didn’t pay the tax. I can show you examples of that more than once, it happens on a regular basis.
Randy: Are there strategies then for when you’re going to buy a tax lien to know which ones are either, it’s going to take them–
Ted: Absolutely, yes. You want to learn the different strategies, I can’t teach you that now. You want to learn the different strategy and you want to learn the different states. Now, here’s what we’re involved in, we’re involved with a massive country that has 50 states, 3000 plus counties, and every county is a different individual county so each one of them has a different rule.
Ted (cont’d): So if I take out the book to read about that county, the rules will be a little bit different. For example in Georgia, if I raise my hand like that and I bought a certificate, and the people come in 10 days and pay me, well, if it was in Mississippi, I’m not going to make 1% of my money, but if it was in Georgia right next door, if it’s in Georgia and I get paid, guess what? I’m going to get paid at the rate of 20%.
Ted: So every single county’s different. I’m not trying to confuse you, I’m just trying to explain to you that it’s different in every state. This is a systematic business that’s been around for over 200 years and each state in each county made its own rules.
Randy: It really is amazing, it’s been around for 200 years, we talked about that because this is all new to me, might be new to some of the folks who are watching. Ted, if they want to learn more, why don’t you let them know where they can head next.
Ted: Right. If you like to learn by video, we’re specialists at that, so we have tons of video on my website at tedthomas.com. If you want to learn to go to auctions and have someone hold your hand, we can do that, if you want to learn online, we can do that.
Ted (cont’d): There are so many ways to learn, we’ve figured it out. You can just learn with audio, if you want to listen to audio in your car, you can do that. If you want to have someone to talk to you like I’m talking now, we can do that. Whatever it is, we know how to teach people and we’ve been doing it for over 25 years.
Randy: And again, you’ll find it all at tedthomas.com.
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