Tax Liens

Should You Invest in Tax Liens for High Yields?

Tax Liens is a profitable option for investment where tax lien certificates are issued to the investor by govt authority like municipal corporations. Tax liens are issued when the owner of the property is unable to pay taxes incurred from the property, it is then that the govt authorities call for auction of tax lien certificate so that the taxes are paid by the investor. A period of time is given to the property owner to pay the property tax failing which the lien is often foreclosed.

The tax lien investment was looked upon as the sort which would only appeal to the rich, who would be interested in large properties. But times have changed and people are looking at tax liens as a good investment because of the lower level of the risk factor such as stocks. Moreover, investors can invest a small amount of money for taxes of small properties to the bigger ones.

Tax Lien As a Profitable Investment

  1. The first and foremost work is to do a little bit of research on the properties that are being put on auction for tax lien in and around the city. One can find out about the details from the treasurer of a town or a city and the municipal corporations. Paying attention to news of such auctions is important. Moreover one might need to register for such an auction and there may be provision for online bidding also. The art of bidding is also an important knowledge that needs to be exercised during the auction.
  2. Tax liens have a good interest rate on them. This yields a profit to the investor. Most of the property owners try paying off the tax lien and in the process the investor not only gets back the investment amount but also the interest amount. Moreover, it becomes evident that the investment is safe even if there is not much profit. Then again, foreclosure of the property can bring in a huge profit by getting an entire property with such low investments as just the tax amount. Hence tax lien incurs huge profit with not much at stake.
  3. The tax lien investment has its pros and cons too. Even after foreclosure, the investor might be burdened with the task of repairing and maintenance work of the property. Investors need to be ready to invest in maintaining the property well. Usually, the properties that go under the auction are old buildings with weak structures. Hence the issue of extra investment remains with this kind of property. Then again, the entire process is completely under the control of govt authorities including rules and regulation of communication with the owner. The procedure can a bit overwhelming.
  4. At present, there are many tax lien investment companies which invite investor to buy tax liens. This gives a chance to gather investors to unburden them from investing a huge amount. This kind of company also provides fund managers and advice on buying certain properties and they keep the investors updated about the latest news of auctions. It gives the investor a chance to invest wisely with solicited suggestions.

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