INVESTING Lien Tax Properties
What are government tax lien certificates or tax deeds? What’s in it for me? How about high returns on your money of 18-20%, sometimes 25%...which are guaranteed by the government! Tax certificates result from properties that the owner has not paid the taxes on. Therefore, the government puts a lien on the property and lets you pay their taxes for them. You receive your money when the owner pays back the taxes. If the owner doesn’t pay the back taxes, you could receive a nice 3 bedroom, 2 bath home for $5,000!
How do I find Available Tax Certificates?
First you need to find your county’s property tax website or contact information. To do this, go to Google.com and type in your county and state + “property tax collector”, “property treasurer” or “property taxes”. Once you locate your county’s property tax office, look on their website, email or phone them and find out where you can find a list of their “delinquent tax properties.” (Sometimes it will be on their website, or in a local newspaper). Also ask when their tax sale is held and for a copy of the rules of their tax sale. (Keep in mind that different counties and states call the tax sale by different names such as: tax deed sales, government tax lien certificate sales, lien tax properties, and tax levy sale...but they’re all the same thing.)
Which Tax Certificates Should I Buy?
Once you have found a list of the properties available, you should find out which real estate properties are valuable for you to bid on at the tax deed sale and which ones you should cross off the list. To do this, visit your county’s property appraiser website and search the public records for each property listed in areas that you desire. Most counties have this info online. If your county doesn’t, then you must go to your county property appraiser’s office to look at hard copies of the delinquent property records. Overall, the best properties you should focus on are the ones with the lowest risk and easiest potential to sell in case you end up owning the property. You should avoid vacant land as a beginner because this is the riskiest. Single family homes in decent to good neighborhoods are a safe bet and should be your focus. Begin to narrow down your list to properties you are interested in according to area, recent sales history, and estimated home value.
To find the estimated home value of a property look on your county’s property appraiser records website or do a search here: Find Estimated Home Value
Evaluate the Lien Tax Property.
Take your list of the best properties and go visit them in person. Get a feel for the neighborhood, the outside of the home, take pictures and notes. I can’t stress this enough. It is critical that you visit the property. I have done research on properties that looked like gold mines on paper, but when I actually saw the home in its current condition, I found that a car had wrecked into it and took out the brick wall side of the home! Believe me, you will thank yourself for spending the extra time to visit the property. Once you get a few tax lien certificates or tax deed sales under your belt, you will be able to quickly analyze and pick the best properties.
Decide Before You Bid.
Before you go to the government tax lien certificate sale or tax deed sales, you should already know what properties you want to bid on, and what your maximum bid will be. (As a general rule of thumb, you should always keep your max bid to at least 60% or less than estimated market value of the home to leave room for profit and unexpected repair costs, etc.) If you win the bid for a tax certificate or tax deed and the delinquent owner pays his taxes, you can expect a nice return on your money sometimes 20% or more! If the owner doesn’t pay his taxes, you could find yourself becoming the owner of a new piece of real estate that you got at a bargain price...thanks to your effort and research. Either way, if you do it right, it could be a win-win outcome for you and an exciting project. Investing in tax certificates can be much safer than investing in stocks, and provide a much greater return on your investment than a bank savings account.
Investing in real estate tax lien certificates and tax deeds can be very profitable and fun. It does involve research of properties to minimize risk. I have given you a brief overview of the process but once you decide to invest in tax certificates, you will need to learn about the details and rules of buying tax certificates in your state and county. If you really want a detailed step-by-step guide on investing in tax lien certificates, I can personally recommend a down-to-earth guide written by an experienced tax certificate investor named Larry Loftis. His book is titled:
Profit by Investing in Real Estate Tax Liens: Earn Safe, Secured, and Fixed Returns Every Time
This book has everything you need to know about how to get started, without all of the fluff and empty promises that some other books and websites say about tax certificates. Mr. Loftis made the seemingly complex process of buying tax certificates simple by breaking down the process into small steps. You don’t need to buy some elaborate course or collection of books. This is the only material you will need to get started.
Here is an estimate of the interest you can earn by investing in tax lien certificates according to these states:
Arkansas - 16%
California - 18%
Connecticut - 18%
Florida - 18%
Georgia - 20%
Iowa - 24%
Louisiana - 12%
New Hampshire - 18%
Rhode Island - 18%
Texas - 25%
If you've enjoyed this article,
I believe you will also enjoy my ebook. It is filled with information just like this on how to make money and save money.
Do you have any stories or questions you'd like to share about lien tax properties or tax deed auctions? Please post them below.