Tax Lien Properties: It’s just a source of income not owning property
By investing in tax lien properties, an investor will receive a good return with minimal risk. This is done by an investor purchasing a tax lien certificate.
A tax lien certificate is proof that the holder has a legal claim to the taxes that are owed by a property owner. The lien is first placed on the property by the government for non-payment of taxes. This lien is then auctioned off at a public auction.
The auctions are held once a year and are sold for the face value of the lien or above face value. Each county and state has their own regulations and stipulations when associated with a tax lien and the legality of the transaction. To know the specifics in your area, you should consult with the appropriate government authorities in the area of concern.
The specific bidding process varies in different places of the country. In some auctions, the interest rate that can be charged is what is being bid on. The winning bid is the person that bids the lowest interest amount. In other places, the bidding is on the lien amount. Some states permit interest on the premium while others do not.
This is considered a safe investment. You are either paid the lien or you can foreclose on the property. Foreclosures are rare but do happen. If the investor pays too much for the lien they could lose money since the property owner is only obligated to pay the lien amount and the interest accrued on the past due taxes, not what the investor paid for the lien certificate.
Tax lien properties is a long term investment so do not expect a quick return on your money.
Other articles you might like;
