Tax Lien Investment

Tax Lien InvestmentIf you are a property owner and have failed to pay your property taxes, Government can rightfully attach liens to your property. Legally, liens are security interests that block the property, in the process ensuring payment of debt, fee, or any other charge. This payment also includes penalties for defaulting the original debt. Lien’s main purpose is to make sure the Government does not suffer losses and gets all the money owed to it, but it can also be valuable for third party investors.

Tax lien investment is made when your bid is the highest on a property at any auction. You can put your bid both in person and online. If your bid wins, you get a certificate that will set forth your property interest. Your bid will have all unpaid taxes covered in it, and then you will have the exclusive right to get all the penalty fee that the original owner will have to pay if he or she is not able to pay the property taxes on time. However, you will not possess ownership interests on the property. If the original owner repays the money that he owes, then the country will pay you the principal amount along with any interest, if accrued. Rates or return on these Lien investments are much higher than other kinds of investments. This happens because the Government sets interest rates on unpaid taxes way higher than any other type of fees. In most states, interest rate is above 15% for selling liens.

Tax lien investments can get you profits in a major way. Even is the original property holder pays off his defaulting debts, the government will pay you penalty fees incident to the unpaid taxes from the money they get from the defaulter. The value of the property taxes that were unpaid determine the penalty fees that you as a lien holder will get. And that in most cases is lucrative because of the high rate of interests. Hence, lien investing can turn out to be very profitable if done with a little bit of planning.