Throughout our website we have talked about tax lien investing being one of the safest investment strategies. This is so due to a few different characteristics.
1. Tax lien certificate interest rates state mandated - Every state that sells tax lien certificates sets a specific standard interest rate that is applied to each tax lien certificate sold. Each state has a different rate. On the low end it starts at 8% and on the high end it could be as much as 50%.
Although investing in the stock or money markets can result in good rates of return you never KNOW what you'll get. You may get 4% one month then 10% the next. Even those who trade professionally don't always know. When investing in tax lien certificates you KNOW what interest rate you will get. The only time you don't get the maximum rate is if you bid it down at the auction.
2. Tax Lien Certificates are backed by real estate - Each tax lien certificate is backed by the real estate for which the certificate was placed. If the property owner doesn't pay the delinquent tax amount plus interest and penalties during the redemption period then the tax lien certificate holder can have the opportunity to foreclose on the property.
3. You control where your money is invested - When you contribute to a 401k or CD you generally don't know where your money is invested. If you do know where it's going you generally can't control where it goes. That's scary... When buying real estate and tax lien certificates you know exactly what you're buying when you research properly. You know if it's a piece of dirt in the middle of Arizona or if it's a single family residential home. Some properties are safer than others, which is mostly determined by property value, and if a building is present.
When buying tax lien certificates and your intention is to collect interest only then your safest bet is to buy tax lien certificates on residential homes where the property owner lives. It seems that every time the property owner will find a way to pay their taxes and penalties effectively paying you.
No Risk Investor is the ultimate resource and tool for investing in tax liens, tax deeds, and real estate strategies for investors all over the world. No Risk Investor takes incredible pride in its ability to help students take action, get into properties, and begin the journey to financial freedom. No Risk Investor provides county lists, property lists, online auction lists, comprehensive training and education, an auction calendar, and online auction center, an investor community and much more for its members.
