State Tax Lien & Deed Sales List
Investing in Tax Liens
Written by: Denzel Spencer
Investing in Tax Liens
If you're contemplating a venture into the realm of investing, tax liens are a little-known but highly lucrative opportunity to make some very good money at a relatively low risk. The process of investing in tax liens in unfamiliar and intimidating to many people, but once you understand how it works you'll find that as an investor your role in the whole proceeding is pretty straightforward and with a little research your potential gains could be very high.
The first order of business is a bit of clarification on just what it means to purchase a tax lien. When a property owner becomes delinquent in their tax payments, the local government levies a tax lien against that real estate. An investor can purchase the lien with the understanding that they will earn a certain percentage-typically 12-18%--in addition to the principal and any additional penalty fees accrued once the homeowner pays off the tax. In some cases, should the homeowner ultimately fail to pay off the lien, you could walk away with the entire property for the mere cost of taxes owed. Purchasing tax liens isn't so much of a gamble as some other forms of investing since the government issues the liens and monitors the sales.
First Stop-County Treasurer's Website
The next question that likely arises is where to find these properties and how to purchase the liens. The world of tax lien auctions is not so esoteric as many people imagine and you needn't be a professional entrepreneur to have access to this potential source of wealth.
It is possible to conduct your tax lien purchases entirely by mail, but this is not so recommendable, especially for someone just starting out. Counties usually sell tax lien certificates at auctions. Your first destination is the county treasurers' websites for the areas you're interested in checking out, where you'll find listings of upcoming auctions. You can also read all the specific rules and regulations of your particular state and track previous sales for research purposes. There are a few states that don't offer tax lien sales. Even if your home state does not, you can still participate in out-of-area sales.
Your First Tax Lien Auction
When you're ready to attend an auction-and you can always sit in on one as an observer before you decide whether or not to commit to any purchases-you'll need to pre-register with your county clerk, who will have you fill out the necessary paperwork. Your next job is to give a look to any properties you're considering. This is where the brunt of the work for the whole endeavor takes place. It's unlikely that any information will be offered at the time of the sale, so all inspections need to be undertaken beforehand. All properties sold at auctions are sold "as is". Remember that you will not be given the right to enter the property to inspect the interior. Your review will have to focus on what you can garner from checking out the perimeter. For example, a property may be listed as a 10 acre woodland lot-but it may be landlocked with no way to enter into it without crossing someone else's yard. Do a little research and be sure that the property is indeed worth more than the taxes owed. It isn't impossible to find very high quality real estate with liens levied against them. Often large parcels of land become available because someone inherited them but didn't really want them and didn't feel it was worthwhile to keep up with the taxes on them.
Timing matters when it comes to tax lien auctions. Try to attend the entire auction. Investors with a lot of funding behind their enterprise often spend a lot of money on a lot of tax liens in the opening hour of the auction and then leave. Waiting it out can be to your advantage.
For more information please visit Investing in Tax Liens or Tax Lien Investing.
