Buying Tax Lien Certificate
~ Know Your Stuff ~
Buying Tax Lien Certificate? There are so many Tax Lien Programs out there that is is critical that you understand the benefits and pitfalls of the process so you'll get a great return on your investment and avoid common mistakes.
It also helps to have the right education so you know where to look for a Tax Sale List or if you're looking to buy a Tax Deed that you know where to find Tax Deed Sales Online and save time.
Tax Liens VS Tax Deeds
So let's start with the basics. What is the difference between a Tax Lien and a Tax Deed? Well, a Tax Lien is when a homeowner or property owner has not paid their property taxes that were due to their county for that year and the county lets them know that if they don't pay it by a certain date, a lien will be placed on the property.
Further, the county also lets them know that an investor will be allowed to purchase the lien (called a Tax Lien Certificate) for the amount due -- directly from the jurisdiction with interest due - and that if they don't pay that lien off, the investor can initiate foreclosure proceedings and obtain all ownership rights to the home/property.
That means the property owner owes interest on the back taxes and when they finally pay the taxes and interest, the jurisdiction pays the investor (the Tax Lien Certificate is thereby redeemed) and releases the lien from the property. In some states, the interest rate is as high as 20 to 25% annually.
This process gives the local government a quick, easy way to get the revenue owed to them without having to try to foreclose on and take away property. The interest charges are a great motivator for the home/property owners to try to pay up more quickly because the longer they take to pay, the more they owe as the interest quickly adds up.
If the home/property owner does pay up by the due date, the Tax Lien Investor makes a handsome profit and everyone is happy; the
county received their money, the investor received their money and the home/property owner got to keep their property.
Now, if the home/property owner doesn't pay the tax lien by the time it is due, the investor can initiate foreclosure proceedings and end up owning the property. So, you see in a Tax Lien situation, it is a WIN-WIN for the investor buying tax lien certificate as the investor either gets their investment back with significant interest - or they get ownership of the property.
A Tax Deed is an instrument that becomes available for sale by a county after a homeowner or property owner stops paying the county the property taxes that were due for several years.
The property is then sold at auction to the highest bidder in the form of a Tax Deed and the starting bid will be roughly the amount owed.
If you are the highest bidder on a given Tax Deed, you end up owning that property FREE AND CLEAR - WITH NO MORTGAGE. Typically, a quiet title action is required in order to receive a marketable title so you can turn around and sell it when you want to. Another great aspect of all of this is the Government does all the work for you; you just go to the auction and bid.
You Definitely Need To Know What You're Doing
Now Buying a Tax Deed can offer a fantastic opportunity for a great financial return on your investment -- but if you don't know what you're doing, it can be extremely frustrating, deeply disappointing and even cost you a pretty penny.
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BUYING TAX LIEN CERTIFICATE
These days there are states that hold Tax Deeds Sales Online so in those cases, you don't even need to leave the comfort of your home.
In other cases, you may need to go down to your county office or travel to other places where the sales and auctions are being held.
In this terrible economy, which appears to be getting even worse, the Tax Lien Certificate and Tax Deed sales businesses are likely only going to heat up more and more, creating significant opportunities for investors.
About half the states in the U.S. are Tax Lien states and the other half are Tax Deed states so before you delve in, you need to find out which states offer which programs so if you want to learn even more about this lucrative Tax Lien Certificate and Tax Deed Sales business, you can do that here. After researching numerous programs, Tax Sale Secrets is one of the very best programs we have found to learn all of the right stuff for Buying Tax Lien Certificate or venturing in to the Tax Deed Sales business.