Frequently Asked Questions
Q: What are tax lien certificates, and
why should I invest in them?
A: By definition, a lien is a
legal term that represents the right to gain possession
of someone else's property until the owner of the property
fulfills a legal duty to the person holding the lien, such
as payment of property taxes. With tax liens, local
governments have the right to lay claim to people's property
when they do not pay their property taxes.
Why don't property owners pay? The most
common reason why an owner doesn't pay is because they do
not have enough money for the taxes, or the owner is
just putting off paying them. Whether they've recently lost
their job or are simply strapped for cash, some people fail
to pay their property taxes on time, just as they might
fail to pay their electric or gas bill.
The problem is local governments depend
on the revenue generated by property taxes to provide
services and run their day-to-day operations, like repairing
roads, funding schools, and paying for law enforcement.
Property taxes can make up to 50% of a county's revenue.
If property taxes do not arrive on time, many county governments
find it difficult to budget or even function without this
income.
Instead of holding the lien until the property
owner finally pays their taxes, many states such allow
their county governments to sell off these liens in the
form of tax lien certificates.
Tax lien certificates work like this:
To get their money quickly, counties sell their liens
to nearly any private citizen in any city or state who wants
to buy them, and then issue certificates for the liens.
The state gets immediate cash flow, and
the investor gets to earn all of the future penalties
and interest on the tax debt of the property owner collected
by the county, as well as the chance to foreclose
on the property if the debt isn't paid in three years.
The vast majority of people who owe
money end up paying off the lien. But if they don't
pay, you can actually foreclose on their property
and become the new owner, just for the cost of what you
paid for the lien plus any administrative and attorney costs
to foreclose. You could potentially end up with an expensive
house and lot for just a few hundred or a few thousand dollars
(depending on how much the lien was for, and how much
your attorney costs)! That's rare, but it does happen.
Q: What kind of return do you get by
investing in tax liens?
A: It depends on the state.
In Colorado, for example, each year the Colorado Banking
Commission, guided by a state statute, determines the interest
rate a Colorado property owner must pay on his/her unpaid
taxes. The rate is changed yearly to be 9% above the best
rate a bank can get from the Federal Reserve. For example,
if the federal discount rate is 4%, add 9%, and you will
earn 13%. Interest in Colorado typically ranges between
11% and 15%. In 1995 and 1996, the interest rate was 14%.
The rate of return for the 1999 tax lien certificates
was 15% and the current tax lien interest rate for 2001
is 12%.
If 12% doesn't sound like much, consider
this: The average historical long term return for stocks
of the S&P 500 is just 11%. And with stocks, the market
can easily go down for several years before it goes back
up. With Colorado tax liens, you get a guaranteed return
backed by the government. That means you can beat the
average stock market return year after year without the
high level of risk.
Q: Is this for real? It sounds too good
to be true.
A: Tax lien certificates aren't
some shady investment that you buy from a broker or an investment
firm you've never heard of. You purchase these tax liens
directly from the state or county government (depending
on the state). The government isn't going to close up shop
and leave town. This type of investment was created by
state law, and state law protects you as the investor.
Q: Okay, so how do I get started investing
in tax lien certificates?
A: Not every state sells tax
liens. Some states sell them, but the rate of return
is so low that it isn't worth the hassle of dealing with
them. You can call the office of the state treasurer, or
a county treasurer in your state to see if tax liens are
available for purchase where you live.
If you are interested in purchasing tax
liens, you can buy a report from us that fully explains
every single step to start investing. It even includes
phone numbers and addresses for each state where tax
lien investing is most profitable! The contact information
alone will save you hours and hours of research.
Q: How much does the report cost, and
how to I order?
A: You can find a breakdown of our
prices and how to order at the top of this page. (Click
here.) In order to view the PDF file of the report,
you must have Adobe Acrobat Reader. If you don't have it,
you can download it for free by clicking this logo:
Do you think $27 is a lot to spend?
Look at it this way -- spending less than $30 is really
a painless drop in the bucket compared to the money
and valuable time you're going to waste on trying to learn
how to get started investing in tax liens this year.
I have a master's degree in journalism
and an MBA, and it took me weeks of research to gather
this material, and then even longer to put it together in
a way that is actually easy to understand.
What is your time worth? Even if
your time is only worth $5 an hour, it would probably
take you at least 40 to 80 hours of research to recreate
what has already been done for you. That's $200 to $400.
And honestly, isn't your time worth a lot more than $5 an
hour? I know mine is!
Q: What if I don't like the report?
A: We are absolutely sure you'll
agree that this report contains all of the information you
need to get started investing tax liens. But if for any
reason you don't find the report to be as informative
and useful as we say, simply mail it back to us within 60
days and we'll give you a no-hassle refund.
Q: What will I learn from your report?
A: Our 89-page report is packed
with information such as:
- The Precise steps to follow
to get started investing in tax liens.
- Phone numbers and addresses of
who to contact in every state where tax lien investing
is most profitable.
- Tips and strategies on buying tax liens
that will earn the biggest profits for you.
- General tax lien information that you
can use to find out how to invest in states that sell
tax lien certifcates.
- How you can start investing with
just $100 or even less and don't need big bucks
to profit.
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