Kansas

What are Tax Liens?

The collection of property taxes is a huge priority in every county in the United States. Literally, if the county cannot collect property taxes, they cannot pay for vital services.

To make sure this does not happen, the county places a lien on any property with delinquent property taxes and sells the tax debt to investors. This creates a win-win situation for everyone: the county gets their money, delinquent property tax owners get a little extra time to pay their overdue property taxes, and investors get a low risk, high return investment.

How high is the rate of return on tax lien certificates?

• Illinois tax lien certificates pay an annual return of 36 percent per year and if the lien gets redeemed early your annual return can be a staggering 216% per year.

• Indiana tax lien certificates pay an annual return of 15 percent per year and if the lien gets redeemed early your annual return can be a amazing 120% per year.

• Florida tax lien certificates pay up to an annual return of 18 percent per year and if the lien gets redeemed early your annual return can be a impressive 61% per year.

• Iowa tax lien certificates pay an annual return of 24% per year.

A few states like Georgia and Texas offer tax deeds with a right of redemption fee – that is, a flat fee of up to 25% regardless of whether the property owner redeems in one month or 6 months. This process is very similar to a tax lien certificate.

• Georgia offers a redemption fee to investors of 20%, if redeemed within one year. If the property owner redeems in one month, your effective annual interest rate is a stunning 240%.

• Texas offers a redemption fee to investors of 25% for most properties, when redeemed within 6 months. If the property owner redeems in one month, your effective annual interest rate is an incredible 300%.

• Delaware offers a redemption fee to investors of 15%. If the property owner redeems in one month, your effective annual interest rate is a spectacular 180%.

But what about investment safety, are tax lien certificates a safe investment?

Investing in tax lien certificates is ultra-safe!

Why?

1. State governments control the entire tax lien process so it is very safe and fair. The last thing the state wants is unsatisfied tax lien investors. Without the investors, counties would not be able to collect the money they need to keep the county government operating.

2. If delinquent property tax owners fail to pay their back taxes plus interest, they lose their entire property to the investor for the property taxes owed.

3. Tax liens take priority over almost any other lien, including the mortgage, so you are paid FIRST.

I am sure you can see why tax lien certificates are an incredible investment with a great built-in safety factor!

If the delinquent property owners pay their tax bill, you, the investor, make an extremely high rate of return on your money.

If the property owners do not pay their tax bill, you, the investor, get to keep the entire property for the taxes and penalties owed, often pennies on the dollar.

And the best part is that tax lien investing does not depend on the economy, so there is zero investment volatility when you invest in tax liens. In fact, there is more opportunity to make money in tax liens in this recession, than there is in a good economy!

Overall, you cannot find a higher return/lower risk investment than tax lien certificates.