Investing in tax lien certificates - Tilted Forum Project Discussion Community

Force 10 · 04-15-2004, 05:23 AM

How would I go about learning who to contact, finding lists, etc.?

This looks like a great return. I'm interested in learning more on this. Anyone know anything?

Full Article/Advertisement Link: http://www.rogueinvestor.com/governm...ales_book.html

Partial Article:
Do you ever wonder what would happen if you don't pay your property taxes?
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 go broke.

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

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

The annual returns you can make buying tax lien certificates are unbelievable,

Arizona tax lien certificates pay an annual return of 16 percent per year

Florida tax lien certificates pay an annual return of 18 percent per year

Iowa tax lien certificates pay an annual return of 24 percent per year

Illinois tax lien certificates pay an annual return of 36 percent per year

Georgia offers a redemption fee to investors of 20%, if redeemed within one year. If the property owner redeems in one month, the effective annual interest rate is 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, the effective annual interest rate is 300%.

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.

Now do you understand why tax lien certificates are an incredible investment with a great built in safety factor?

If the delinquent property tax 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, tax lien investing does not depend on the economy, so there is zero investment volatility when you invest in tax liens.

Instead of going up and down like the stock market, tax lien certificates just rise in value.

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

purdz23 · 09-27-2004, 07:12 AM

wow, wonderful link. Loads of information... Thank you!

tokaok · 10-02-2004, 12:40 AM

whats the down side? how come ive never heard of this before. not saying its a scam, just following the "if its sounds too good to be true .." any one have any actual experience with this form of investment?

zenmaster10665 · 10-02-2004, 04:16 AM

Sounds really interesting, but i am with tokaok....there must be a downside..

Anyone have any experience?

zenmaster10665 · 10-02-2004, 04:34 AM

some good info here:

http://www.thecreativeinvestor.com/m...Lien+Questions

gar1976 · 10-02-2004, 12:08 PM

If it seems to good to be true...it probably is.

I fail to see how a lien (usually at prime + rates, so around 7-9%) can generate 20% returns for someone who buys the paper. Hmmm.

scout · 10-07-2004, 03:00 AM

One downside is the fact that you've just become the person to hate rather than the government. Instead of the person hating the government for taking their property, they now hate you. It kinda puts you in the position of the repo man, it puts a face on the "evil" entity that is taking their hard earned property.

DDDDave · 10-07-2004, 08:22 PM

As you posted, the rules vary (sometimes widely) from state to state re:tax liens. Any research you do needs to be completely state specific. I can tell you how it works in Florida, and I'm sure some of the same principles apply.

First, who doesn't pay their real estate taxes? Answer, not very many people.

What eventually gets sold at auction are abandoned properties, gaps and gores(surveyor mistakes), and low value properties whose taxes exceed the 'percieved' value of the property. Yes, there are properties whose taxes are not paid because of a mistake by the owners. This does happen.

One of the real important issues is that, at least in FL, the taxes have to be three years in arrears in order to foreclose. This is where the 'real money' is to be made and that all the 'gurus' tout. 'You can own properties for pennies on the dollar'. Yes but it will take a while. And the owner can show up on the day of your foreclosure sale, pay the taxes and walk away.

Also, while the lein for taxes to the community is superior to mortgage leins, no matter the date, they are not superior to federal tax liens. Federal tax liens do not automatically attach, but they may and it can be hard to find this out without a lot of research.

The tax certificates are auctioned off at the sale. The starting bid is 18% and investors bid down from there. You say 'I am willing to accept 17% interest on the back taxes'. Then a guy representing an investor group steps up and says 'I am willing to accept 8% interest'. It is worth it to him because his group is investing hundreds of thousands and he has set up cool programs to track and research all the properties.

It ties up your capital and you really have no idea when you will get it back. Could be three weeks or it could be five years.

All in all, there are easier ways to make money in RE. Like writing books on 'How to make millions buying tax deeds'

tokaok · 10-07-2004, 11:08 PM

thx for your input dave, you input pretty much settled this for me.

gar1976 · 10-07-2004, 11:30 PM

Sounds like you've learned the hard way Dddd!

zenmaster10665 · 10-08-2004, 04:42 AM

yup, thanks Dave!

TaxLienInvestor · 04-20-2011, 05:47 PM

Tax LIEN investing should definitely not be used in anticipation of owning a property. Nearly all liens are eventually redeemed by the property owner, or mortgage company (most houses these days have a mortgage). However, you can still earn a very handsome return on liens with some states offering up to 36%/yr (Illinois).

If you're looking to attain a property, then tax DEED sales are where to go as they're actually selling a type of ownership in the property. But, tax deeds are generally sold for a lot more than a tax lien. Also, even after the tax DEED sale, you have to clear the title (additional costs). In short, you need quite a bit of capital available.

Anyhow, you can learn more about the process and sales available in each state at Tax Sale Resources.

Good luck with all your investment ventures!

04-15-2004, 05:23 AM	#1 (permalink)
Force 10 Had to leave this awesome space	Investing in tax lien certificates How would I go about learning who to contact, finding lists, etc.? This looks like a great return. I'm interested in learning more on this. Anyone know anything? Full Article/Advertisement Link: http://www.rogueinvestor.com/governm...ales_book.html Partial Article: Do you ever wonder what would happen if you don't pay your property taxes? 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 go broke. To make sure this does not happen, the county places a lien on any property owner with delinquent property taxes and sells the tax debt to investors. This creates a win-win situation for everyone, the county gets their money, the delinquent property tax owners get a little extra time to pay their overdue property taxes and the investor gets a low risk, high return investment. How high is the rate of return on tax lien certificates? The annual returns you can make buying tax lien certificates are unbelievable, Arizona tax lien certificates pay an annual return of 16 percent per year Florida tax lien certificates pay an annual return of 18 percent per year Iowa tax lien certificates pay an annual return of 24 percent per year Illinois tax lien certificates pay an annual return of 36 percent per year Georgia offers a redemption fee to investors of 20%, if redeemed within one year. If the property owner redeems in one month, the effective annual interest rate is 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, the effective annual interest rate is 300%. 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. Now do you understand why tax lien certificates are an incredible investment with a great built in safety factor? If the delinquent property tax 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, tax lien investing does not depend on the economy, so there is zero investment volatility when you invest in tax liens. Instead of going up and down like the stock market, tax lien certificates just rise in value. Overall, you cannot find a higher return/lower risk investment than tax lien certificates.

10-02-2004, 04:16 AM	#4 (permalink)
zenmaster10665 Bokonist Location: Location, Location, Location...	Sounds really interesting, but i am with tokaok....there must be a downside.. Anyone have any experience? __________________ "Beware of the man who works hard to learn something, learns it, and finds himself no wiser than before. He is full of murderous resentment of people who are ignorant without having come by their ignorance the hard way." -Kurt Vonnegut

10-02-2004, 04:34 AM	#5 (permalink)
zenmaster10665 Bokonist Location: Location, Location, Location...	some good info here: http://www.thecreativeinvestor.com/m...Lien+Questions __________________ "Beware of the man who works hard to learn something, learns it, and finds himself no wiser than before. He is full of murderous resentment of people who are ignorant without having come by their ignorance the hard way." -Kurt Vonnegut

10-02-2004, 12:08 PM	#6 (permalink)
gar1976 Custom User Title Location: Lurking. Under the desk.	If it seems to good to be true...it probably is. I fail to see how a lien (usually at prime + rates, so around 7-9%) can generate 20% returns for someone who buys the paper. Hmmm. __________________ Blistex, in regards to crappy games - They made pong look like a story driven RPG with a dynamic campaign.

10-07-2004, 08:22 PM	#8 (permalink)
DDDDave Addict Location: Sarasota	As you posted, the rules vary (sometimes widely) from state to state re:tax liens. Any research you do needs to be completely state specific. I can tell you how it works in Florida, and I'm sure some of the same principles apply. First, who doesn't pay their real estate taxes? Answer, not very many people. What eventually gets sold at auction are abandoned properties, gaps and gores(surveyor mistakes), and low value properties whose taxes exceed the 'percieved' value of the property. Yes, there are properties whose taxes are not paid because of a mistake by the owners. This does happen. One of the real important issues is that, at least in FL, the taxes have to be three years in arrears in order to foreclose. This is where the 'real money' is to be made and that all the 'gurus' tout. 'You can own properties for pennies on the dollar'. Yes but it will take a while. And the owner can show up on the day of your foreclosure sale, pay the taxes and walk away. Also, while the lein for taxes to the community is superior to mortgage leins, no matter the date, they are not superior to federal tax liens. Federal tax liens do not automatically attach, but they may and it can be hard to find this out without a lot of research. The tax certificates are auctioned off at the sale. The starting bid is 18% and investors bid down from there. You say 'I am willing to accept 17% interest on the back taxes'. Then a guy representing an investor group steps up and says 'I am willing to accept 8% interest'. It is worth it to him because his group is investing hundreds of thousands and he has set up cool programs to track and research all the properties. It ties up your capital and you really have no idea when you will get it back. Could be three weeks or it could be five years. All in all, there are easier ways to make money in RE. Like writing books on 'How to make millions buying tax deeds' __________________ I am just a simple man trying to make my way in the universe... "Go confidently in the direction of your dreams. Live the life you have imagined." - Thoreau "Nothing great was ever accomplished without enthusiasm" - Emerson Last edited by DDDDave; 10-07-2004 at 08:25 PM..

09-27-2004, 07:12 AM	#2 (permalink)
purdz23 Upright	wow, wonderful link. Loads of information... Thank you!

10-02-2004, 12:40 AM	#3 (permalink)
tokaok Crazy Location: Canada	whats the down side? how come ive never heard of this before. not saying its a scam, just following the "if its sounds too good to be true .." any one have any actual experience with this form of investment?

10-07-2004, 03:00 AM	#7 (permalink)
scout Psycho	One downside is the fact that you've just become the person to hate rather than the government. Instead of the person hating the government for taking their property, they now hate you. It kinda puts you in the position of the repo man, it puts a face on the "evil" entity that is taking their hard earned property.

10-07-2004, 11:08 PM	#9 (permalink)
tokaok Crazy Location: Canada	thx for your input dave, you input pretty much settled this for me.

10-07-2004, 11:30 PM	#10 (permalink)
gar1976 Custom User Title Location: Lurking. Under the desk.	Sounds like you've learned the hard way Dddd! __________________ Blistex, in regards to crappy games - They made pong look like a story driven RPG with a dynamic campaign.

10-08-2004, 04:42 AM	#11 (permalink)
zenmaster10665 Bokonist Location: Location, Location, Location...	yup, thanks Dave! __________________ "Beware of the man who works hard to learn something, learns it, and finds himself no wiser than before. He is full of murderous resentment of people who are ignorant without having come by their ignorance the hard way." -Kurt Vonnegut

04-20-2011, 05:47 PM	#12 (permalink)
TaxLienInvestor Upright	Tax LIEN investing should definitely not be used in anticipation of owning a property. Nearly all liens are eventually redeemed by the property owner, or mortgage company (most houses these days have a mortgage). However, you can still earn a very handsome return on liens with some states offering up to 36%/yr (Illinois). If you're looking to attain a property, then tax DEED sales are where to go as they're actually selling a type of ownership in the property. But, tax deeds are generally sold for a lot more than a tax lien. Also, even after the tax DEED sale, you have to clear the title (additional costs). In short, you need quite a bit of capital available. Anyhow, you can learn more about the process and sales available in each state at Tax Sale Resources. Good luck with all your investment ventures!