Although we've talked about tax liens quite often, let's take another chance to review the foundation of buying tax lien certificates. At the start of this fabulous country, the young gover
nment decided they wanted to establish a schooling system like that in England. They considered their options for funding the schooling system and finally decided to initiate a property tax. From that time until now the government has been collecting taxes on real estate and property to fund all county and city projects and expenses. Your property taxes cover things such as roads, schools, fire stations, police stations, etc. Obviously these are things we would not want to go without. These are essential for comfortable and safe living; not to mention constant progression for our young people.
Every once-in-a-while someone fails to pay their property taxes. In order to collect that money the county issues a tax lien against the property. The tax lien against the property gives the county the right to collect the amount of unpaid taxes through other means; mainly through investors. After a certain period of time the county offers a certificate to sale to investors for the amount due to them for a given property. The investor is not paying the actual taxes, but simply buying a certificate for the same amount as the delinquent taxes. Because the value of the paper upon which the certificate is printed is of little value, the county also attaches an interest rate to the amount paid for the certificate that the investor will also receive. These interest rates range anywhere from 8% to 25% annually. Not bad... not bad at all. Investing in tax lien properties is a sweet deal! The other great thing about those interest rates is that they are state mandated; that means that that rate is the standard rate that will be applied unless bid down by the investor (which we will discuss in a different post). Also, the tax lien certificate is backed by the real estate for which the certificate was placed.
So this is how it works, when the property owner pays the county the delinquent tax amount plus interest and penalties the county writes you a check for that same amount. The property owner has a certain amount of time to pay those delinquent taxes once the certificate is sold to an investor. If the property owner doesn't pay the amount within the set time frame, which changes from state to state, then you have the opportunity to take ownership of the property. Tax liens are an incredible investment. It's safe and lucrative and easy to do once you know what you're doing.
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.
