What is the truth about tax lien investing?
What is tax lien investing anyway and why is it such a good investment?
What is the difference between tax liens and tax deeds and what are some of the misconceptions about them?
Read on the find the answers to these questions and the truth about tax lien investing…
Local governments in the U.S. – counties and municipalities, depend on money from property taxes to meet their budgets. When property owners don’t pay their taxes, the some counties or municipalities will sell the taxes to an investor at an auction. The investor does not buy the property at the auction. But bids for the right to pay the taxes on the property and put a lien on the property.
Why would an investor want to do pay someone’s property taxes?
There are 3 main reasons why this is an attractive investment:
- Very high rates of interest are possible with tax lien certificates – anywhere from 8% – 36% per year.
- A tax lien comes before most other liens, so the investor is first in line to get paid on their investment
- The investment is backed by real estate, and if the lien is not paid in a certain amount of time – known as the redemption period, the lien buyer can foreclose on the underlying property.
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