Tax Lien Investing - Getting Guaranteed Return Rates With Little Risk

You may or may not have heard of tax liens before. In this article, I will just give you a little introduction to tax liens and how they may be a good investing strategy for you.

Property tax must be paid by individuals and businesses on every parcel of land in America. Depending on the state and county, property tax is generally required to be paid once or twice a year. The amount of tax on a property is generally determined by the value of the land. Since the revenue of property taxes is used by counties to fund essential municipal services like police departments, fire departments, and public schools, they must receive property taxes from everybody in a timely fashion. The problem is that for whatever reason (money problems, divorce, negligence), homeowners and business owners don't always pay their property taxes on time. That is where the tax lien investor comes into play.

After a homeowner/landowner fails to pay their property taxes for a certain period of time, a tax lien is created and placed on the property. The amount of time that must elapse before a tax lien is placed on a property varies from county to county across the country. Once a property tax lien is placed on a property, any investor can pay the back taxes and then earn incredible interest rates on that money, anywhere from 8 to 50 percent (or more depending on when the property taxes are finally paid by the property owner).

Let me give you a summary of how this works...

1. Property owner doesn't pay their taxes on time and is usually hit with a late payment penalty.
2. The county sends the property owner one or more notices about being late and informs property owner that a property tax lien may be placed on this property if the property taxes are not paid by a certain date.
3. If the "certain date" passes, and the property owner has still not paid the property taxes, the county places a property tax lien on the property.
4. The property now has a tax lien on it, and that tax lien is added to the inventory of tax liens to be sold.
5. The tax lien is sold to the highest/best bidder at a public or online sale or auction. The occurrence and frequency of public tax lien sales vary by state and by county.
6. By buying a tax lien, the real estate investor is essentially paying the property taxes for the property owner. The investor pays this money directly to the county office and has no interaction with the property owner. From the date of the tax lien purchase, the investor earns an incredible, guaranteed interest rate on the tax lien "certificate".
7. After a few weeks or several months, the property owner finally pays their back taxes plus penalties.
8. After receiving the money from the property owner, the county then mails a check to the investor. The check covers the initial investment plus all interest earned on the tax lien certificate.

There is also a chance that you'll get the property when you purchase a tax lien certificate. Each state has a redemption period, which is usually two or three years in length. A redemption period is essentially the period of time between the property taxes due date and when the county or tax lien holder can start the home foreclosure process on the property owner.

A property tax lien takes precedence over all mortgages on the property, which means that it is possible to acquire the property "free and clear", meaning the mortgage(s) are erased! The bottom line... you are either going to make a nice profit, or you are going to get a property for pennies on the dollar.

Are you looking for a better way to invest your money in 2009 and beyond? Or maybe you are just looking to make a little (or a lot) of extra money on the side? Then, you owe it to yourself to find out more about tax lien and tax deed investing.
To receive your awesome Tax Lien Investing Kit, that has helped thousands of investors, just like you learn how to build their own profitable portfolio of tax lien certificates or tax deeds go to http://bit.ly/14x4th9

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