Tax Lien Properties - How to Invest in Government Tax Liens and Tax Foreclosure Properties

While investing in numerous tax lien properties and tax foreclosure properties over the years, I have noticed that there is a lot of confusion about what ownership rights one gets from purchasing a tax lien property. Some people wrongly assume that they just got ownership to the actual property when they first buy a tax lien. Others wrongly assume that they own the property as soon as the tax deed is recorded. I would like to clear up some of this confusion.

Keep in mind, when reading this article, that the rules are different in every state . I will write about how tax liens work in Louisiana This will give you an idea of what to look for when you look into buying tax lien properties in your state.

When property taxes go unpaid, the city holds an annual auction offering individuals looking to buy investment property the opportunity to purchase as many tax liens as they want. Only one buyer is allowed per lien. If several individuals want to invest in the same lien the auctioneer still does not allow competitive bidding. He just supposedly randomly singles out one buyer. If there are no takers, then the government just adds more back taxes. They eventually takes ownership of tax foreclosure properties when taxes go unpaid.

So when does the new buyer of a tax lien actually get true ownership of the property? Not until 3 years after the date that the lien is recorded. The time between buying at the auction and the lien's recording date can sometimes take up to a year. One good strategy is for the investor to pay the yearly property taxes as they come due on his tax lien property; this is done so another tax sale is not held on the same property.

The tax lien investor earns a very healthy rate of return while he waits. When his lien is eventually redeemed, he will earn a repayment of everything he has spent on the lien, plus a 5% penalty and 1% interest for every month he waits. The law says that when the property's owner wants to redeem your lien, you have to accommodate his request. The lien investor just never knows when he will be paid so he needs to be able to afford to wait.

It is possible that you can score ownership of a property for just taxes, but almost always, the lien investor simply gets paid penalties and interest. The property owner usually knows the property is worth well more then just a few years taxes. Either way, if you can afford to be patient, buying tax lien properties are usually great investments.

The author has been a full time real estate investor for 16 years and has expertise in using many different investment strategies.
 The sky is the limit.If you are interested in learning more about Tax Deeds and Liens, you should click on the link below. It is a great place to get started if investing in real estate is what you are looking to do. Yes, you can still make a fortune in Real Estate with this Ultimate Real Estate system. >>> http://bit.ly/1ukjzFZ  
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