As stories of dramatic earning potential and easy profits begin to circulate, many people are growing to regard tax lien investing as some kind of gimmick. Actually, since tax lien auctions are regulated by the government, tax lien investing is very low risk and if you take a moment to do the math you'll see that this highly rewarding opportunity is anything but a gimmick.
Earn your Money Back-Plus Interest and Penalties
When you place a bid at a tax lien auction, you are bidding on a property for which the owner has become delinquent in their taxes. When you win an auction, you will either eventually gain the actual real estate, or you will earn back your investment plus any penalties and interests that accrued during the redemption period. Consider this credit card metaphor-when you don't pay off a credit card balance in its entirety, finance charges are added to the total. If you're late on a credit card payment, late fees are tacked on. Often these accrued fees are staggering in comparison to the amount you would have initially owed. This is essentially the way tax liens work-except that the amounts of money and respective interests involved with real estate are a good deal higher.
When you become the a tax lien investor, you become a secured creditor. With each passing month that the back taxes go unpaid, your wallet gets fatter. The shorter the redemption period, the greater the penalties and interest rates. Six month redemption periods are often the most valuable to an investor.
Home Foreclosures and the Tax Lien Investor
You always want to research your properties and invest wisely in good quality real estate-because sometimes, the property may become yours to own, rent or sell. Imagine you bid $3,000.00 on a property that has a market value of $150,000.00. if the owner fails to redeem their taxes within the redemption period, you become the owner of that real estate. And congratulations-you've just earned four middle-class yearly salaries in six months.
Some investors choose to rent the property as a source of continually generated revenue. Average rent typically ranges from $700.00 to $2000.00 per month. That equals $8,400-$24,000.00 in annual income.
A well-developed tax lien portfolio has no peer when it comes to low-risk, high-gain investing. You make money whether the homeowner redeems their taxes or not-it's a true win-win situation.
Brent Crouch is the owner of TaxLienProperties.net. He has dedicated this site to providing information on purchasing tax lien properties at pennies on the dollar.