Primer to Tax Lien Investing

Plenty of time is needed to learn the basics of tax lien investing, let alone real estate investing. But, if you put in the effort then you will be given the riches you want through one of the most stable, prevalent, and gratifying investment opportunities out there: tax lien investing. If you master one area of real estate investing (tax lien investing), then know that there are still many more avenues that you can employ in your trip to create multiple streams of income.

But before you explain how to start using tax liens and/or tax deeds as a strategy for real estate investing, let's look at exactly what tax liens are. Many forms of government (local, county, or state) use taxation as a way to earn money used to finance their operations. One of these forms of taxations is called property tax. Simply, the government charges a fee to the owner of a property. The fee is based on an amount determined by the local government.

This taxes, are used to finance the local government (typically the county). But what if the property owner is not able to pay the tax, for some reason? The government puts a lien on the property for the amount of defaulted tax amount, hence the term 'tax lien'. In other words, the property will not be sold until the government is paid what it is owed, and this amount is recorded by using the tax lien certificate.

However, a tax lien certificate is not a source of earnings, and therefore no money goes to the government after placing the tax lien. So how does the government get the money that it requires to give to all of it's voters the supreme service we have come to visualize with government workers? The local government sells the tax lien or tax deed.

In case you weren't paying attention, this happens to be where we take our first step into tax lien investing: investing in the tax lien. When you buy the tax lien, the government gets paid instantly Financial budgets are met and the government is ecstatic. However, we have traded your hard earned money for a document in hopes that investing in the tax lien will earn you a handsome return. Before we learn why you would want to buy one of these certificates, let's talk little more about how you would get one.

Several people don't even learn that tax lien investing exists, let alone how to locate a tax lien certificate or even buy one. So think of all the other would be tax lien investing advocates out there as rough competition. Regardless of what most 'gurus' will teach you, these tax liens are very desired and sought, so keep your tax lien investing tips to yourself!

What is it the tax lien investors know? These investors recognize that there are tons of counties that use tax liens or tax deeds. Every one of these counties have their own government, and every one of these governments does things a a little differently than the others. Begin by examining the different counties in the country using www.naco.org

I recommend you begin with tax lien investing if you have a small amount of funding and, like me, would like a stable ROI for your capital. Doing this will also limit the locations in which you can buy, and thus let you focus your research.

But, if you would like to get real estate property cheaply, then tax deeds are a stronger pursuit. Regardless, as you familiarity with one you can and will begin learning about the other and eventually do both.

Let's return to purchasing the first piece of tax lien investing, the tax lien itself. To begin, we're going to need to build a plan of action. Here is one that I recommend:

Contact the local tax collector (or treasurer) and find out when the next tax sale will be. After you find this out, you will need to find out where the sale will take place and plan to be there. Then, build a list of tax liens that are going to be sold by getting a list from the office (if available) or searching the local newspaper that lists government announcements and sales.

We should now have a list of future tax liens, where and when they will be sold. However, you're only part way there. We need to find the rules of the sale for the tax liens. This can, again, be located by talking to the local tax collector (treasurer).

Now you will need to find out what the interest rate for the tax lien will be and how it was derived.

Once you have obtained all of this information, you can then get the answer to the juiciest question of them all. Are there any unsold tax liens? If the answer is yes, then start there!!

Typically you will get a 'yes' to the last question and you will then get a list of the unsold tax liens and look it over eagerly. Some say that there are counties with many more certificates than available investor funds. How simple would this be for you if you're wanting to begin tax lien investing?

What if the list is not existent? Typically other departments maintain the list and you can be sent in that direction instead. Regardless, if a list exists at all, locate it. It will be the simplest cash you will get from most real estate investing strategies.

Try contacting several counties and finding the answers to all of these questions. Many of them will be similar and several of them will be different. Yet you will start to learn this part of the real estate investing industry, namely: tax lien investing.

You will probably find a lot of counties with zero unsold tax lien certificates before you find one that has a list. But when you finally locate this gold mine, hold on to it and watch your money grow.