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Seven Reasons To Get Into Tax Lien Investing

By Edited Feb 5, 2016 0 0

Tax lien investing is well off the radar for most of the public. But, that's only because it is not promoted by brokers or real estate agents. And why should it? No one can earn a commission because you buy straight from the county or municipality! The returns are great-up to 24% a year in some states. Here are seven reasons why you should get into tax lien investing:

  1. Great returns. While the 24% is only found in one state (Iowa), the rate of interest you earn is typically in the teens for almost all states selling delinquent property tax liens and certificates. Plus, with quick redemptions (meaning, when the taxpayer pays you back), your annual returns could be much much higher if you reinvest your funds throughout the year.
  2. Safe Investment. Tax lien investing is more secure than the mortgages held by the banks. Why? Because you take priority over them! As a delinquent tax lien investor, you take the place of the tax collector. There is no one ahead of you. You are on equal basis with the IRS, municipal fines, other property taxes. And, in some states, you can buy those fines and taxes and roll them into your own investment.
  3. You could end up with the property and a gain. What happens if the taxpayer doesn't pay? You can get the property! That's right, in as soon as a year, you can receive deed to the house, land, office, whatever real estate you held the lien on. You can then sell, rent or hold that property for an additional gain.
  4. The county or municipality forecloses for you. In most states, you don't even need an attorney to foreclose on the property. The county does it for you! All you need to do is notify them that you want to begin foreclosure (after the statutory redemption period expires) and they do all of the hard work of running title, notifying parties of interest, and auctioning the property.
  5. Your attorney is paid for you. In those few states that require you to hire your own attorney to do the foreclosure, the taxpayer is billed-not you! So, if you start the foreclosure and the taxpayer or lender pays their taxes, you can charge for your attorney bills. You may even be able to get paid yourself for part of the work!
  6. You can double or triple down on your investment. If you purchased an initial delinquent tax lien, you have priority in most states, to purchase subsequent taxes that become due. And, those taxes may have a much higher rate of interest than your first investment.
  7. It's enjoyable. If you like real estate but don't want the hassle of tenants, brokers, repairs, title companies, etc., then this may be right for you. You spend your time performing due diligence-researching the market, the property, and your competition. Then, you make your investment and wait for your return!


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