Today I’m answering your question, “What is a Property Tax Lien?”
The topics I’m going to cover are:
- Counties Seize Real Estate for Unpaid Property Taxes
- A Tax Lien Is a Legal Claim Against an Asset
- How Investors Profit From Tax Lien Certificates
- How Many Tax Lien Certificates Are Available?
- What Is Tax Lien Certificate Redemption?
- Can It Be Risky to Buy Tax Lien Certificates?
- An Amazing Profit Made on a Tax Lien Property
- You Could Profit From Tax Liens Too
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Counties Seize Real Estate for Unpaid Property Taxes
Nationwide, there are over 3,000 counties, which are separate taxing districts that are authorized to seize tax-defaulted properties.
The local county needs the revenue that’s produced by property taxes in order to pay the county bills because this revenue pays for the police, firefighters, schools, roads, and dozens of other services and infrastructure.
If property taxes are uncollectible, the county treasurer will issue a property tax lien.
A Tax Lien Is a Legal Claim Against an Asset
What is a property tax lien? The tax lien is a claim that the local government makes on a property when the property owner has failed to pay property taxes. Property tax liens are filed at the local county records.
The tax lien is a legal claim against the asset. If the obligation to pay property taxes is not satisfied, then the creditor, meaning the county, may proceed to seize said asset.
A tax lien can be the collateral for the debt. Just like the property serves as collateral for a mortgage, the same property can serve as collateral for a tax lien certificate.
How Investors Profit From Tax Lien Certificates
What is a property tax lien certificate? A tax lien certificate is a simple and easy alternative investment that’s utilized by local counties and municipal governments to make up for the loss of revenue which tax defaulted property owners have not paid.
All of the counties and municipalities are authorized by the state legislature to issue tax lien certificates when property owners are delinquent on property taxes.
Local county and municipality governments will auction tax lien certificates, and the bidding process is directed and determined by the county.
What makes these certificates an excellent investment is that they’re secured by real estate and pay interest rates of 16%, 18%, 24%, or even as much as 36%, depending on the state where they are purchased.
Tax lien certificates are sold by local governments, and you receive the payment from the local government. If you aren’t paid, then you get the property.
How Many Tax Lien Certificates Are Available?
There is no shortage of tax lien properties. The state of Florida alone will traditionally issue as many as 1 million tax lien certificates. I’ve seen as many as 65,000 certificates available in Miami-Dade.
I’ve seen counties in Mississippi with as many as 15,000 tax lien certificates. In Cook County, Chicago, I’ve seen over 100,000.
Counties with large populations, whether they’re in Mississippi, Illinois, or Florida, will have many tax lien certificates available.
I have a free gift for you that will show you how to profit with tax lien certificates and reveal the secrets of tax deed investing. Be sure to get your FREE gift today.
What Is Tax Lien Certificate Redemption?
My opinion is that the counties that issue tax lien certificates are benevolent because they allow the property owner to remain on the property while in default.
The property owner is not evicted from the property until days after the tax lien certificate’s redemption period has passed.
What is a property tax lien’s redemption period? That could be 2 years in Florida or 3 years in other states where the defaulted homeowner can remain on the property without paying property taxes.
Even though most tax lien certificates will be redeemed, meaning the owner pays the tax. All property owners do not redeem.
Can It Be Risky to Buy Tax Lien Certificates?
What is a property tax lien? Can it be a risky investment? The risk is that the property owner may fail to redeem.
If the tax lien certificate remains unpaid once the redemption period has expired, then ultimately, the owner of the tax lien certificate will take possession of the property, which is the collateral for the tax lien certificate.
The county treasurer must transfer the property to the new owner. The good news is that it’s often a property obtained for pennies on the dollar. However, the property is transferred to the new owner as-is.
What if you purchased a tax lien certificate without doing your due diligence? What if you failed to check the neighborhood or the condition of the property and you won the bid?
I’ll answer that by saying, then you’re a risk taker. Investors who purchase tax lien certificates or tax defaulted property sight unseen while merely hoping for a good result have learned that the result may be very poor.
The condition of a tax defaulted property can range from good to being an absolute junk heap. You must vet the property before you bid on it.
An Amazing Profit Made on a Tax Lien Property
It’s not all bad news, not in the least. For those who will follow the rules and do their due diligence, here’s a perfect example.
One of my students, Janice Knetzer, purchased a tax lien certificate. She expected to earn an outrageously high interest rate, however, the property owner did not come forward and redeem the tax lien certificate.
Janice ended up with the property. Her investment was only $460, yet she ultimately ended up owning the real estate which she sold a short time later for $64,000.
That’s an incredible ROI on a $460 investment!
You Could Profit From Tax Liens Too
What is a property tax lien? It’s a lucrative alternative investment, and almost anyone with a little ambition and the right guidance can claim their share of the wealth generated in this alternative market.
Success does not depend on the number of deals or whether you’re working hard. You can do this as a side hustle while working a full-time job. Your profits depend on how well you analyze the market.
Financial success is realistic if you will follow the system that I have outlined in my course material.
I can guide you, and I have customer facilitators to help you and answer your questions. Additionally, I have a team of coaches who will work with you one-on-one so you can gain experience. I top that off with live and virtual auction tours that you can take with others who have walked this path before you.
We hope you enjoyed Ted’s lesson, “What is a Property Tax Lien?”
A property tax lien is a legal claim. It’s an encumbrance placed on real estate for unpaid property taxes. It’s also an opportunity for a savvy investor to earn a high rate of return. Tax lien certificates pay interest rates of up to 36%, and the real estate is the collateral. If you don’t get paid, you get the property without a mortgage just for paying the back taxes.
If you’d like to learn how to reap huge rewards from investing in homes at tax delinquent property auctions, Ted Thomas provides full support and complete training with home study courses, Q&A webinars, live tutorials, workshops, web classes, and personal coaching with certified coaches.
Get started today by taking advantage of this Free Gift from Ted. Act now, it costs you nothing and will give you a big head start!
Ted Thomas is America’s Leading Authority on Tax Lien Certificates and Tax Deed Auctions, as well as a publisher and author of more than 30 books. His guidebooks on Real Estate have sold in four corners of the world. He has been teaching people just like you for over 30 years how to buy houses in good neighborhoods for pennies on the dollar. He teaches how to create wealth with minimum risk and easy-to-learn methods.
Ted is not an attorney or a real estate broker and is not giving legal advice. Engage an attorney and other professionals for financial and legal opinions.