Tax Lien Certificates

A tax lien certificate is a low risk, good return investment. 98 percent of tax liens will indeed be redeemed by the property owners. Your money remains safe and secure, and you get fixed returns, and if lucky, the property itself. A tax lien certificate offers good value to those with the time and discipline to invest along with some money to invest.

BUY A TAX LIEN CERTIFICATE

Tax lien certificates are a cheap, lazy way for towns to collect delinquent taxes. They don't want to get involved with their community problems, don't want to hold the delinquents hand or hear their problems. The tax lien certificate is a low risk, high return form of investment and have proven to be an effective method for a county to collect delinquent taxes. Mortgage and all other liens are off the property, and the likelihood of someone acquiring the property makes for a good deal to 3rd party outsiders. The strategy to buy lien for properties that are close to foreclosure, or more likely to be redeemed.

TAX LIEN CERTIFICATE POPULAR STATES

There are 566 municipalities that sell municipal liens in NJ alone. Florida is a "bid down the interest" state with a maximum rate of 18% and a guaranteed minimum return of 5% regardless of the rate bid. Arizona's Maricopa County is the largest U.S. County that sells tax lien certificates.

TAX LIEN CERTIFICATE ONLINE SOURCES

You can get information from county web sites on tax lien certificates as a form of investment along with detailing the terms and conditions. Google for the several online auction sites offer tax distressed property sales.

TAX LIEN CERTIFICATE STATISTICS

Number of states issuing tax lien certificates: 31
There are 566 municipalities that sell municipal liens in NJ alone.
$7.6 billion dollars in delinquent property taxes are created each year.
Total size of the market: $20 billion dollar.
Annual growth rate: 8 to 12% per year.

TYPES OF TAX LIEN PROPERTIES

Tax lien property types over which liens arise are: industrial, residential, commercial, and specially zoned property and land.

HOW TO INVEST IN A TAX LIEN CERTIFICATE

The lien is sold in the open market auction to anyone who agrees to pay the taxes and fines on behalf of the owner. The highest bidder wins and in return you get get a tax lien certificate.

The incentive is an interest rate fixed beforehand, from 5% upwards, that the certificate holder gets on the total amount. The certificate is for a period upto 2 years during which the owner of the property can pay the taxed, fines, and interests to the certificate holder and redeem his property.

TAX LIEN COMPETITION

For an average return of 10-20% and a chance for at cheap but, you'll face competition. You face competition from local estate investors, other investors, and banks and institutional investors.

FORECLOSURE

Each state has its own Foreclosure laws.

If no action is taken by the owner, the certificate holder can go for foreclosure and bid for the ownership of the property. This is called deed sale. Even if the property is on mortgage, the lien holder has the first right over the property.

The amount received for the tax lien can only be for the same amount of the delinquent taxes plus interest, advertising and costs.

The County Treasurer issues a "Tax Certificate" which evidences the payment. Tax Deeds are issued by the Clerk of the Court.

If the owner of the property files for bankruptcy, you will lose the interest and recover only the principal invested, as the owner would not be able to pay anything, and other creditors take priority over the lien holder.

http://www.property-taxes.us