[jlpicard]

How they work – Property taxes are levied by the county governments of U.S. states. When these taxes are not paid on time, it hurts the finances of local governments. To ensure this valuable revenue stream is uninterrupted, many county governments offer private investors an opportunity to pay these delinquent taxes and receive a reasonable return on their investment. When an investor pays these taxes, they have essentially purchased what is known as a “tax lien” or a “tax deed”. Each state uses a different term for these because how they work varies from state to state, but don’t worry about these details at this point.

The rate of return on a tax lien or tax deed is generated by late fees charged to the delinquent tax payer. The investor does not normally have any contact with the delinquent tax payer. The job of collecting these taxes normally falls upon local governments. These governments collect the back taxes and then pay the investor. Though the rate of return to investors is specified, the actual amount of this return can vary quite a bit depending upon how long it takes for the taxes on the property to get paid. Normally, the longer the taxes remain unpaid, the more the investor collects in penalties.

A strong feature of this type of investing is that they are secured by the underlying property on which taxes are due. In other words, if taxes are not paid by a certain deadline, the tax lien or tax deed holder (the investor) can take possession of the property. Though this does not happen very frequently (usually less than 3% of the time), when it does, it is often an additional bonus to the investor because it allows him/her to take possession of a property for only the cost of the taxes.

Factors that influence returns and risk – size of the tax lien purchased, when (if ever) the taxes are paid, location of property (returns vary from state to state and not all states sell tax liens/deeds), state and county law, when the delinquent tax bill is paid, value of the property on which the delinquent taxes are due, other parties with a financial interest in the property (banks, mortgage companies, government agencies like the DEA, etc.), potential hidden liabilities in the underlying property

Suggestions for further research – Call your local county office for details. I found a website which explains my county tax lien sale process very well by doing a google search. There are many courses on this subject available, but I have not taken any because I was able to learn everything I needed to learn on my own. Others may find such courses valuable if this process looks intimidating. Courses on this subject are easy to find by searching the internet.

If you are serious about this kind of investment, be sure to learn your countries rules and do some due diligence on the underlying property which the taxes are due on. If there is some huge little know liability (like a toxic waist site) on the property, an investor could get burned. Though this is rare, it is something to be aware of.

[MotherLode]

Jean Luc, you are so sexy! I love it when you quote the Bard.

This is for everyone who goes to seminars about Tax Lein Certs...be aware of these two things:

1) they talk about doing it by mail. The properties that don't sell at the courthouse are usually awful and you wouldn't want them, either.

2) check the guarantee on the package carefully...is it 6 months? In 6 months, will it be tax lien season? Or have the tax bills just come out/are waiting to be paid, and the not on the block, effectively making your "guarantee" null and void?

Consider all the angles...don't be fooled by the impressive speaker. He's paid to be that way.

ML
(a seminar junkie and a public speaker)

[jlpicard]

Hi MotherLode - For the record, I'm not selling any seminars. I just like to educate folks on investments that are 'off the beaten path' that I myself have made alot of money on. I first heard about Tax Liens from a guy trying to sell a $1000 seminar. Since it sounded straightforward to me, I decided to do my own research and save myself a grand. I encourage everyone reading this thread to do the same.

Tax lien investing is very real and can be very lucrative if done right. Banks have been quietly investing in this vehicle for along time and would just assume the public stay ignorant. I currently own a little of $5000 in tax liens that I bought at our county auction last year. They are paying 12%. Not a fortune, but since they are backed by real estate, they're very safe. In my county, auctions are held in November and are paying 14% this year. It's a very simple process where I live.

The rates and the process vary from state to state and county to county. Some states don't offer them, some offer tax deeds (that work differently), while others are true tax liens states. You must do your homework if you are interested in this kind of investing. It's a relatively safe way to generate a decent return, but each county that offers them has their own particular rules you need to be aware of and it is not risk-free (nothing really ever is).

There is a great book that goes into all the states procedures: Rogue Real Estate Investor Collection by Bryan Rundell. You can get it at Amazon by clicking the link or you can get it somewhere else.

[MotherLode]

Oooh Jean Luc!

I never meant to imply that YOU were selling seminars...I just learned what I did from attending several sales pitches!

ML

[mommy9806]

Can anyone help me in getting more info for Tax Liens in SC? Our Auction is on the 4th. I have my property listings and already have the properties outlined that I want to do my research on. But where do I go from here? How does the Auction actually work? How how does the bidding typically go? Ive never done anything like this before and I am totally lost. My local courthouse was not very helpful and they dont have any solid information on their website except the listings themselves

[HipHopStar]

Hey I'm new and I guess this is as good a place as any to see if anyone knows of a good loss mitigation training course?

I keep hearing about people making tons of money becoming foreclosure consultants.
So, If you have any info or you have purchased a good course, please share. I'm retired and looking for a home based business that I can earn a decent income with.

Thanks,

[SFindley]

Yep, they're good!

But I think it's SPAMMY LINK REMOVED BY FOLDER MODERATOR