Tax-Lien Certificate InvestingI stumbled upon tax-lien certificate investing after doing a lot of studying about how to financially survive, and possibly even thrive, in today’s challenging economic conditions. Between the C-19 virus, high levels of unemployment, and political turmoil, the stock market has been a rollercoaster that has most investors disgusted. Returns on investment in many stocks and even mutual funds have left investors looking to put their money elsewhere, but only the savviest have turned to tax-lien certificate investing. Before I go on, a bit of background on me.

 

I would never claim to be an investment genius. I’m just a normal person, trying to survive financially, and eventually get out of the rat race. I spent years working my way through university. Basically I’ve always worked for a living. I didn’t learn or know anything that was different from what almost everyone else knew about financial security. I had certainly not been told about tax-lien certificate investing.

Sure, we all were taught to try to buy a house, start planning for retirement as soon as possible and all that common wisdom. What I couldn’t do was stop working, or anticipate the real-estate and financial crash of 2008, or predict the C-19 pandemic and how it devastated the world economy. However, I soon learned that tax-lien certificate investing is an excellent way to make solid returns in both good markets and bad.

 

For the last few years, I’d been studying investing, the markets, and how to adapt financially regardless of the financial climate. All the experts I read repeated how a diverse portfolio was essential, but made no mention of tax-lien certificate investing. It was basically the old adage, don’t keep all your eggs in one basket. So I examined my situation. It was not looking good. At the end of my self-assessment, I knew I had to look outside of the normal mix of stocks and bonds.

I also was not willing or able to stop working and go back to school, or leave my future up to another expert. So I asked my best friend, the smartest guy I know, if he could suggest anything that would get me closer to my goal of financial freedom. He actually gave me something, tax-lien certificate investing, or rather someone who would change my life.

That someone was Ted Thomas. Ted is an educator, publisher, and author who specializes in an area of real estate that I had never heard of. and I had been looking into real estate. Though I quickly ruled out just getting another mortgage on a house, because I had been down that road, and it got me no closer to financial freedom. Then something I had never heard of came up: tax liens.

What is tax-lien certificate investing and are tax liens a good investment?

First of all, tax-lien certificate investing has been around for almost two-hundred years, so it is nothing new. Second of all, they might not be as well known as stocks and bonds, but a quick search will show that tax-lien certificate investing is known by many authorities as a good investment.

Once I went through the first part of Ted’s program, I began to get excited. Of course as I got excited, I began sharing what I learned with family and friends. The same questions kept popping up. What everyone wanted to know was…

Are tax-lien certificates good investments in troubled economic times like what we are going through now? The question pushed me to study more before I was able to answer confidently. My answer went from a simple, “I think so…” to a resounding, “it may be the best time ever to get involved in tax-lien certificate investing.”

To begin with, the upheaval going on now is a perfect example of something that causes people to fail to pay their back taxes. As a result, counties all over the country issue tax-lien certificates, often called “tax liens.” You see, when property owners can’t pay their back taxes, local governments can’t properly function. That’s because they depend on those tax dollars to pay for schools, police, fire departments, and a host of other services needed to keep neighborhoods running safely.

Are tax liens a good investment if they contribute to local governments’ ability to provide essential services? By my definition they are. That’s not something that can be said for many other investments. More and more people want to earn a healthy return on their investment while doing something good at the same time. This is often referred to as socially-responsible investing. In my opinion, tax-lien certificate investing qualifies for that title.

When some of my friends and family ask me, “Are tax liens good investments?” What they are really asking is, “Are tax liens a safe investment?” To this question my answer is “yes,” tax-lien certificate investing is generally a lot safer than most stocks and mutual funds. My reasoning is that tax liens are guaranteed by counties to return the percentage of return that they are purchased at. So while that percentage may vary, it is locked in at a specific percentage once bought.

More importantly, approximately 90-95% of the time, the property owner pays the back taxes owed. This is referred to as redeeming the certificate. In this case, the lien holder gets paid the full percentage the lein is guaranteed to pay out. If that doesn’t happen, then another process begins. Let’s save that for a future blog, because here we want to concentrate on what happens most of the time.

Again, over 90% of tax liens get redeemed, which means it is paid off by the people who owe the back taxes.

If we were to ask an investment professional which stocks or even mutual funds guaranteed a healthy rate of return 90-95% of the time, they would have to say none. Individual stocks or specific mutual funds may occasionally earn well. But they also carry the risk for large losses. 

Tax-lien certificate investing doesn’t have those risks. If you don’t like the percentage of interest offered by the tax lien, you don’t bid or buy it. If you do, and you buy it, your rate is guaranteed. I don’t know about you, but I like knowing what I’m getting a lot better than rolling the dice with my financial future.

 

What some of my friends were wondering when they asked that question was, “Is buying tax liens profitable?” What I found out was that there was no one answer to that question. The answer depends on each buyer and each lien. That’s because the rate of return varies from county to county, and state to state, and even from lien to lien. So while in Florida the rate offered starts at 18%, with each round of bidding, the rate goes down.

Obviously these variables make it extra important that buyers are armed with all the knowledge possible. That’s why I strongly suggest Ted as a source of information for anyone who wants to make sure their investment will indeed be profitable. There are plenty of examples of Ted’s students earning over 20% interest with tax-lien certificate investing, which by my standards is a spectacular return, especially when lots of stocks have been losing value lately.

 

In conclusion, if your criteria for deciding “Are tax lien certificates a good investment?” are based on socially-conscious reasons, then I would have to say absolutely. I cannot think of many things I would rather know my investment was doing than providing for schools, fire departments, police, and keeping neighborhoods running safely.

If when you ask, ” Are tax liens a good investment?” you mean are they safe? Again my answer is yes. If you mean can you earn a healthy return on your investment, my answer is still yes. So all I can suggest at this point is to take a look at tax-lien certificate investing. Learn it from Ted Thomas, who has literally spent decades going to every state and hundreds of counties nationwide to uncover the best way to invest in tax liens.

Go to TedThomas.com where for many years, Ted has helped people learn everything they need to take advantage of this impressive investment opportunity, and you will be glad you did.

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