What are the Benefits of Investing in Tax Lien Certificate?
Investment return: Although it varies from state to state, a 16 to 24 percent return is common. If the property owner never pays the delinquent taxes, the investor may realize profits well in excess of 100 percent by receiving the property for only the amount of the property taxes owed to the county. With interest rates near 50-year lows, tax lien certificates are an incredible bargain.
Investment risk: The investment risk is very low because (1) state and county governments control the tax lien process, (2) property owners risk losing their property if they do not pay their taxes, (3) in most states the investor receives the property if the delinquent owner does not pay the back taxes, and (4) tax liens are not volatile investments. The value of a tax lien does not fluctuate and is not affected by general economic factors like most other investments. In fact, in most cases, the worse the economy performs, the greater the number of tax lien certificates will be issued (more people default on their property taxes and mortgage when the economy does poorly).
Investment secrecy: Few
people have ever heard about tax lien certificates. Even fewer people understand how to invest in them. Very little information is available on how to invest in tax lien certificates. Successful investing is almost always about supply and demand. In the United States there are thousands of counties that have tax-lien-certificate auctions every year. At each auction, hundreds to thousands of tax lien certificates are usually available. Many states have so many tax lien certificates that you can buy the ones that didn’t sell at auction by mail (also called over-the-counter sales or negotiated sales). No one person can cover more than a few counties in a few states per year. This virtually ensures that for the foreseeable future, the supply of certificates will be much greater than the demand.
Bryan Rundell is co-author of the book and online course, Rogue Real Estate Investor Collection . a book that profiles the wide range of investing options available to real estate investors in one comprehensive 500-page manual that covers all 50 states and Canada. For two years, Rogue Real Estate Investor Collection has been one of the top real estate books on the Internet, selling over 5,000 copies.