Last week, we talked about using cash flow notes to earn a solid return on
your investment dollar. This week, I'd like to introduce you to another method
of earning anywhere between 16% to 24%, or higher on your investment. Tax lien
certificates can easily earn you a good, solid investment return.
Here's how tax lien certificates work. When a property owner fails to pay
his/her property taxes, the unpaid taxes will eventually become delinquent. In
the states which issue tax lien certificates, the unpaid taxes are included in
the tax lien certificate, in addition to the penalties accrued and the interest
accumulated. These states usually offer these tax lien certificates to the
public at a sale or auction. When you successfully bid on a tax lien
certificate, you now own a certificate which bears interest and is secured by
the real estate on which the taxes are due. When the home owner pays his
back-taxes to the government, the government will pay you the amount paid for
the certificate plus the accrued interest.
This process usually occurs on a local (often county) basis and the rules and
regulations (and the interest rates earned) vary from one location to another.
So, before you invest in these tax lien certificates, you need to do some
homework and learn the rules of the principality you are purchasing the
certificates in. However, there is nothing to stop you from buying certificates
from many different locations.
You may be wondering why the local governments holding these certificates do
not prefer to hold the certificates themselves. The answer is that these tax
lien certificates represent monies which these governments need to fund
construction and repair projects and pay employee salaries. By selling the
certificates, the governments get the money to continue paying their bills, and
you get a great opportunity for an investment.
Of course, when you purchase a tax lien certificate, there is no guarantee as
to when the property owner will pay the back-taxes owed and redeem the
certificate. So, you may need to wait an unspecified amount of time for your
money to come back to you. Some of these certificates pay off very quickly, some
take longer.
What happens if the property owner never pays the taxes and redeems the
certificate? Your tax lien certificate is secured by the property as a first
lien. That means, if necessary, you can foreclose on the property and either
resell it, rent it out, or live in it yourself. At this point, you own the
property.
If you are interested in learning more about tax lien certificates, stay
tuned to the Cash Flow Clarion. I will be reviewing "Ted Thomas' Secrets To
Earning 16%-18%-24% Up To 50% On Secured Government Certificates" very soon.
This is a comprehensive resource containing a 117-page introductory ebook which
explains the basics of tax lien certificates, an ebook consisting of a very
large county directory, plus two CD's. I am in the process of looking through
this information as we speak and will let you know in the near future whether
this resource is worth your time and money (in my opinion). Look for the review
soon.
