WHAT HAPPENS WHEN YOU BUY A TAX LIEN?
What Happens When You Buy a Tax Lien? You earn an outrageously high interest rate, or you get a property for pennies on the dollar.
Ted Thomas, America’s Leading Authority on Tax Lien Certificates and Tax Deeds, will teach you about one of the safest and most lucrative investments in the USA that’s a win-win for everyone involved.
Watch the video above or read the summary below:
Today I’ll answer your question: What happens when you buy a tax lien?
I’m Ted Thomas, and I’ve been involved in tax lien certificates and tax deeds for over 30 years. For the last 25 years, I’ve been teaching people how to do it, guiding them. Sometimes I coach. Sometimes I mentor.
This is an easy business to learn, and you can learn it quickly. Also, it’s a very profitable business. It’s quite lucrative, and most people don’t know about it.
You’re looking to learn how to develop some skills and be able to do this yourself, so I’ll answer your question what happens when you buy a tax lien certificate?
In a short time, you can learn the process. You can do it online, or you can do it offline. I’m also going to tell you about at least two big mistakes that people make at auctions, and I’ll tell you how to avoid all that.
I have a free gift for you. Be sure to get the FREE Safe Haven Investor System course.
WHAT HAPPENS WHEN YOU BUY A TAX LIEN? IS IT RISKY?
So what is a tax lien certificate, and what happens when you buy a tax lien? Millions of certificates are sold across the United States each year. This is a safe, secure, and predictable investment.
You don’t buy anything from me. You invest directly with the government, and you’re going to get checks back from the government.
For example, a tax lien on a property valued at $100,000 is only going to be a few percent. What if you could purchase a tax lien certificate for just a few percent?
What are the risks of buying tax liens? Well, your risk would be very, very low. $100,000 value, and you paid $2,000. I would say that’s a pretty low loan to value ratio, if it was one.
So new investors, don’t worry about losing your money. You’re going to invest with the government, and you’re going to get a check back from the government. Your money will go directly to the local government, not to Ted Thomas.
In exchange for your money, the government’s very happy. They want that money to pay their bills. I’ll talk about that in a minute.
WHAT HAPPENS WHEN YOU BUY A TAX LIEN? HOW MUCH DO THEY PAY?
In exchange for your money at a tax lien certificate auction, you’re going to receive a tax lien certificate. That certificate allows you to earn outrageously high interest rates.
In Arizona that could be 16%. If you’re buying tax liens in Florida, it could be 18%. Iowa, 24%. You’re getting the idea.
Wherever you buy, you’ll know what the maximum rate is before you invest, and you’re buying the safest and most lucrative investment in America.
How can we say that? Well, it’s easy because we invest with the local government, and ultimately, you get a check back from the local government.
How do we know that? Well, county treasurers tell us that only a few percent of tax lien certificates go unpaid. 95% to 97% of the certificates will pay you all your money back in 24 four months or less.
WHAT HAPPENS WHEN YOU BUY A TAX LIEN, AND HOW MUCH DOES ONE COST?
Is buying tax liens a good investment? This is a perfect investment for the little guy.
You could start out with $500, $5,000 or $50,000. At any number you want, there will be tax defaulted properties, and you could pay the taxes and end up with a tax lien certificate.
If you worry about money, stop worrying because you’re going to give your money to the county. You’re investing with the county and getting a check back from the county.
There are thousands of counties that sell tax defaulted properties and tax liens. About 1,500 of the approximately 3,000 counties will sell tax lien certificates, and you buy directly from the county.
There’s going to be something for everyone. Any size certificate you want, you’ll have it.
WHAT HAPPENS WHEN YOU BUY A TAX LIEN? A WIN-WIN SITUATION!
This is a win-win situation for everyone.
First of all, the county needs money. When you buy a tax certificate, the county is grateful they have the money to pay the county employees.
You’re grateful because they’re going to give you a certificate, and that certificate allows you to own the property, if the people don’t pay the tax.
Tax liens are very benevolent. Why do I say that? Because they don’t throw the property owner off the property.
In other words, when you buy a tax lien certificate, the property owner will still be in the property. They’re not kicked out. They’re not evicted.
You don’t have possession. You have a tax lien certificate. Immediate possession is a kind of a falsehood.
You won’t get immediate possession. What you’ll get is a certificate, and when the time runs out if the people don’t pay you, you’ll get the property. But on 95% to 97% of all these certificates, you’re going to get all your money back.
WHAT HAPPENS WHEN YOU BUY A TAX LIEN IF THEY DON’T PAY?
If you do get a certificate, and they don’t pay, they don’t redeem, well, then that means they’re going to default. When they default, they default with the county. Then the county awards you the property.
You’ll go through a legal process, but they will award you the property without a mortgage.
Anytime a tax lien sale takes place, you will own the property without a mortgage. How good is that? Especially when you only paid 2% or 3%.
WHAT HAPPENS WHEN YOU BUY A TAX LIEN? EVERYBODY IS HAPPY.
Let’s discuss money. Everybody’s happy here.
You’re happy because you bought an investment that could earn 16%, 18% or 24% percent. So you like that.
The county likes that because now they have money, not only to pay the county employees, but they can pay the fire department. They can pay the police department. They can pay for building schools and to hire school teachers.
So everybody at the county is going to get paid because they collected all the revenue. You’re happy because you bought an investment that’s very low risk. If you don’t get paid, you’ll get a property without a mortgage.
WHAT HAPPENS WHEN YOU BUY A TAX LIEN? WHAT ABOUT THE HOMEOWNER?
What about the property owner? Well, the property owner is pretty darn happy too. Why? Because they can stay in the property. They’re not going to be evicted until the time is up on that certificate.
That gives them time to recover from sickness, get a new job if they lost a job, or to take care of the kids that might be sick in the hospital, or whatever their crisis is.
I don’t know what life crisis they might have, but the point is everybody’s happy with a tax lien certificate.
WHAT HAPPENS WHEN YOU BUY A TAX LIEN VS. A TAX DEED?
The penalties in a state where they sell tax deeds or tax defaulted property are severe, and they’re final because the county will confiscate the property and sell it at auction.
When they sell at auction, they’ll wipe out the mortgage and evict anybody that’s in the property.
WHAT HAPPENS WHEN YOU BUY A TAX LIEN? EARN UP TO 36% INTEREST
Tax lien certificates are very popular, because they pay high rates of return. These rates are absolutely phenomenal. 16% all the way up to 36%, depending upon the state where you buy it.
Some states will be penalty states, but they’re not selling tax liens. They’re selling redeemable deeds. This happens in states like Georgia.
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WHAT HAPPENS WHEN YOU BUY A TAX LIEN? RECESSION-PROOF INVESTING
When I discovered this about 30 years ago, I found out that it was a very lucrative business and very low risk. The counties have been selling these tax lien certificates for over 200 years.
I had been a real estate investor, and I changed.
Why did I change to tax liens and deeds? Because this business doesn’t go roaring up with a big boom and come crashing down with the recession. It’s about the same all the time.
There are always going to be tax lien certificates and tax defaulted properties.
There are about a hundred million properties in the United States. About two and a half percent or two and a half million properties will have some kind of tax situation on them this year.
Two and a half million means plenty of business for you and me.
This allows you to be involved in a huge market that the rest of the world doesn’t know about it. You won’t hear brokers talk about it. You won’t hear bankers talk about it, and you won’t hear the attorneys talk about it.
This is a business that you can do, and you can do it at a very low risk.
AN EXAMPLE OF WHAT HAPPENS WHEN YOU BUY A TAX LIEN
Let’s use an example so that you understand it more fully.
Mr. and Mrs. Property Owner go into default because unfortunately they had an accident and their car insurance didn’t pay off on the accident. So now they didn’t pay their property tax.
What’s going to happen? Well, if they’re in a tax lien state and the tax is unpaid, the county is going to issue a tax lien.
What happens when they issue the tax lien? They not only issue it, but they tell you with many notices.
These notices are called notices of default. These are notices that explain all the consequences of what’s going to happen if they don’t pay the tax.
WHAT HAPPENS WHEN YOU BUY A TAX LIEN AT AN AUCTION?
Let’s assume they didn’t pay the tax, but the property comes up for auction. You’ll know about it because they’ll put it in the newspaper. They’ll also put it on the website. So you’ll know there’s a tax certificate auction.
Anybody can buy at that auction. If you buy at that auction, you now get a certificate. You don’t get the property. The homeowners stay in the property.
Can you buy a house by paying the back taxes?
You have to wait until the certificate expires. That means it doesn’t get paid. That could be a year. It could be two years. If you don’t get paid, you will get the property without a mortgage.
The county’s going to award you the property after it goes through a legal process, but you will get the property if you don’t get paid.
The counties tell us that 95% to 97% of all the tax lien certificates they issue will pay off in 24 months.
WHAT HAPPENS WHEN YOU BUY A TAX LIEN? IT’S A PASSIVE INVESTMENT.
So, what took place here? You had a very easy investment because you invested the county. You’re going to get your money back from the county in about 97% of the cases.
This is a passive investment. There’s very little work to do.
What happened to the property owner? Well, not a lot. The property owner could stay in the property, and if they get their money together, they can come and pay you off anytime they want.
They can pay you whatever the certificate was plus whatever the interest was.
What about the county? Well, the county did fine too because they got the money from you, and now they have money to pay all the county bills. That’s exactly what they wanted.
WHAT HAPPENS WHEN YOU BUY A TAX LIEN? ANYONE CAN DO THIS.
Anybody can do this. You can do it with $50, $500, $5,000.
If you don’t understand tax lien certificates, I have a free gift that will tell you about the profits on tax liens and the big money to be made on tax deeds. So start there.
From there, research at the county records. If you want to know where to buy tax lien certificates, all of this will be published in the newspaper or at the county records. None of this is hidden.
WHAT HAPPENS WHEN YOU BUY A TAX LIEN? WHAT ARE YOU BUYING?
How you will know what you’re buying? That’s really a good question to answer because you shouldn’t purchase anything without knowing what you’re buying.
The tax lien properties list will be online. It will be on the county website, and it also will be in the newspaper.
With the property numbers given there, you can look up the property at the county and visit the property and look at it.
That’s the easiest way to know what you’re buying.
WHAT HAPPENS WHEN YOU BUY A TAX LIEN? WHEN DO YOU GET PAID?
You get paid when the county gets paid. The people come in and pay their tax on the 11th hour. The county will take the money, and they will tell the people just stay in the property. They haven’t left anyway.
The county will then notify you to send the tax lien certificate in. If you did it offline or online, they’ve already got it, and then the county will pay you. You’ll get paid, when the people pay their taxes.
WHAT HAPPENS WHEN YOU BUY A TAX LIEN? MISTAKES PEOPLE MAKE.
One final word, and that is, I promised to tell you about two problems I see at tax auctions.
The number one problem is, people don’t look at the property. You wouldn’t marry a woman unless you’d seen her. So it’s same thing with this real estate business.
Don’t buy a property unless you’ve looked at it. What could’ve happened? It could be a hurricane, a flood, a fire. Or what if that property is next to a chicken farm? Are you going to be able to sell that? I don’t think so.
So don’t buy anything that you haven’t seen.
The second big mistake is people buy tax defaulted property, and they have no exit strategy in their mind. How can you bid if you don’t know what you can sell it for? If you don’t know your exit strategy, don’t buy property.
So what have I covered today? The question was: What happens when you buy a tax lien certificate?
What happens when you buy a tax lien is you have a passive investment that could earn you 16%, 18%, 24%, up to 36% interest. You have a no-work investment. That’s pretty darn good.
What happens at the county? They smile a lot because they’ve got money to pay all the county employees.
What happens to the homeowner? Well, you’ve done them a favor.
You allow them to stay in the property and give them time to straighten out their life, whether they were sick or whether they had an accident or whether they abandoned it.
I don’t know what happened, but it gives them time to rectify, or as the law would say, to cure the problem.
Tax lien owners do not get immediate possession of the property, but the clock is ticking. The property owner has a limited time to pay. About 97% of them will pay. If they don’t pay, you get the property.
They’ve been notified. They’ve had numerous notices of default issued. The consequences have been explained. That’s called due process of law. There’s no question.
The county has been doing this for 200 years. It’s a passive investment, and you should get involved.
If you’d like to know more about tax lien certificates and tax defaulted property investing, I’ve been teaching this for over 25 years, showing students how to earn 6-figure incomes within a year of completing the training.
I have a top-notch team of guidance facilitators and certified coaches, and we offer home study courses, live workshops, web classes, Q&A webinar sessions, and personal one-on-one coaching. No one offers you more support.
Be sure to get the Safe Haven course. It’s a free gift from me to you. Costs you nothing.
Safe Haven is 2 hours of streaming videos and a 100-page illustrated manual that reveals the secrets of tax lien certificates and how to make profits in tax deed properties. It’s valued at $197, but no charge for you.
You can watch everything online, and you’ll even see some case studies there, so act now and get your FREE Safe Haven Investor System course today.