What type of investing are you doing? Is it safe? Does it offer a staggeringly high rate of return – guaranteed? No? Well, perhaps you should consider Tax Lien Investing and start making your money work for you.

Tax Lien Investing 101

For those not familiar with tax liens, don’t worry. It’s not as scary as it may sound. You know what property taxes are, so you’re halfway there already.

The government expects homeowners to pay their property taxes every year, in full and on time, like all other creditors do. For a variety of reasons, sometimes people don’t. When that happens, an investment opportunity arises. As far as the government is concerned, a person’s home is their collateral if they fail to pay their tax bill. The smart investor (you) pays that outstanding bill, which means that investor (you) has purchased a first position lien on the property in question.

After that, there’s a bit of a wait. The governing body involved will notify the homeowner that they have a specified period of time in which to pay up their arrears. It could be months or it may be a couple of years. It’s like a ‘one last chance’ before they lose their property. Obviously, there’s two ways this can go – they pay up or they don’t.

What Each Option Means In Tax Lien Investing

  1. If the person in default pays their tax bill within the specified period of time, the government cuts you a cheque. The amount they give you will be the original principal (your investment) plus interest and penalties (your profit) that they’ve collected from the consumer on your behalf. You don’t even have to do anything except cash the cheque.

  1. When the person in question does not pay the bill within the allotted time period, you can then foreclose on that property. As you will have the first position lien, you have first dibbs. Not even the bank holding the mortgage can get in there ahead of you.

As you can see, Tax Lien Investing is a pretty sure of making some good money. You win regardless of how the situation plays out.

A Caution

Not all states allow Tax Lien Investing. Some only allow for Tax Deed Investing, and still others offer Hybrid Tax Investing. You need to know which one is legal in the state you are looking to invest this way in.

Your best chance of success in any type of investing is to be as fully informed as possible. Learn as much as you can about each type of investment, including which states allow what.

If you can find a mentor, great. If not, or you prefer a faster and easier way, try the highly recommended book by Andrew Kestler entitled, Tax Lien Riches. It explains everything in layman’s terms and gets straight to the point. It’s available through www.taxlieninvestingguide.com.

Best of luck with your new investments, and don’t forget to pay your property taxes or someone will be doing some Tax Lien Investing on your property!