In the last few years, there have been many informercials about investing in tax lien certificates. Many of these informercials claim you can make 20 - 50% or more on your investment and obtain properties for pennies on the dollar. Investing in tax lien certificates can indeed be lucrative, but the hype surrounding this investment is often overblown. Here are the facts.
Tax lien certificates are considered a low-risk investment since they are controlled by the government. Each state has different laws on how tax lien certificates are handled, however, most states sell them through an auction. The rate that is set for the liens is generally anywhere from 16 to 36%. However, because of the bidding process, be aware that the actual rate you end up getting could be somewhat lower.
In most cases, you do not become the owner of property (I've read as high as 95% of the time), so don't expect to own property when you buy a tax lien certificate. What you should expect, however, is to receive a sound investment that is secured by your lien, for which you make a nice return that often beats what you can get from most other investments.
While investing in tax lien certificates is considered relatively safe, there are certain things you must understand before jumping into this investment. For example, you should know how to protect yourself from lousy properties, how to bid, where to get information on auctions, what the laws are in the state you live in, etc. Listed below are some excellent resources and books I have found on investing in tax lien certificates:
|Tax Lien Investing Basics|
Tax Lien Investing Basics offers audio recordings, slides, and an ebook manual, providing a well-organized and course that is easy to follow and understand. No fluff - just the information you need, delivered in a straightforward way.
|Creating Wealth Without Risk|
This is a good resource for the price. You get several ebooks for the price of one. Topics include tax lien certificates, how to invest in tax liens by mail, a comprehensive directory of tax lien states/counties, and more. Also includes a video showing an actual tax lien auction.