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:
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.