How to make money with tax liens

Ever since there has been real estate ownership in our country, the government has levied taxes against it. These taxes help to fund a lot of county services, such as public schools, law enforcement, road construction & maintenance, parks, and other hospital funding. When real estate taxes are not paid, the local government can not support the county infrastructure. So to help the local government make back the capitol they need, the offer tax liens on real estate to investors. Here is how to make money with tax liens.

First of all, this is not a get rich quick scheme. This takes some time and research. I have seen a lot of sites out there offering info on tax liens and courses - but honestly, all you have to do is go to your local county government office and ask about tax lien info. Tax liens are not to be confused with tax deeds -these are two different ways to pick up property, and not all states offer tax liens! SO DO YOUR HOMEWORK! We will talk about tax deed sales in another article.

Tax Sales are offered up by local government agencies at auction to the public. During Tax Lien Sales you DO NOT purchase land, but you do purchase a debt to be collected on. You are paying the home owners tax debt, and hoping that they pay you back with interest. It is a gamble, and you are essentially loaning them money to pay their taxes. Investors receive the governments lien for property taxes or first lien position on title, ahead of mortgages, deeds of trust, and judgments, subordinate only to State tax liens. So if these homeowners default, you could pick up a property that you could later auction off, but you really only want the interest on the loan, not the property. That is the point! If you want the property, then you want to go to a TAX DEED sale.

Local governments allow investors to pay off these taxes so that they can raise money to pay for basic city functions like police protection, public schooling and medical services. Depending on state laws and competition, investors can realize returns as high as; 16% per year If everything works out as planned, the city and county will get their money, the home owner will be able to stay in their home, and the investor gets a real estate secured, high yielding investment that performs better than the stock market - hopefully.

Generally, a tax lien sale is held once each year by the county, as a public auction. If you are interested in participating in a Tax Lien or Tax Certificate Sale, contact the county your local county office for specific information and details about these sales.

It is extremely important to know and understand which type of sale you are attending. YOU WANT TO GO TO A TAX LIEN or TAX CERTIFICATE SALE, not a TAX DEED sale. Each has specific rules and guidelines which must be followed promptly, and which can differ greatly county to county. It is strongly recommended that anyone interested in attending a tax sale be aware of the method and timeliness required for payment and delivery of a property. For further information, familiarize yourself with property tax law, consult a legal attorney, and contact the government agency conducting the sale.