Many of our successful clients have no interest in acquiring real estate, and feel much more comfortable just earning high interest only. You can definitely invest in tax lien certificates and earn the high interest rates of, say, 25% or 36%, and basically eliminate the possibility of acquiring the property.
If you want to earn the high interest rate and eliminate the possibility of foreclosing on the properties, then you must acquire tax lien certificates on the right types of properties. There are 3 different categories of properties that we’ve identified over the past 20 years that redeem over 98% of the time. For example, single-family homes (primary residences) in nice neighborhoods that have a mortgage that’s not “underwater” is just one category of properties that have an almost 100% redemption rate. If an investor wants to earn high interest only and basically eliminate the possibility of owning the property, then we teach them how to only acquire tax lien certificates in these 3 categories.
The U.S. Tax Lien Association uses our proprietary 12-point research process to quickly screen out properties in the 3 different categories that redeem over 98% of the time. This is the same research process we teach in all of our trainings.
Tax Lien Certificates – What if I do want to acquire the property?
If you’re interested in acquiring real estate, then you’re going to want to invest in “Tax Deed” states, and also use the “TR-Property” acquisition strategy.
Tax deed states don’t offer tax lien certificates. Rather than offer a tax lien certificate that gives the property owner 1 – 4 years to pay their delinquent property taxes, the tax deed county will take no action for 3 – 5 years. During this period of time, interest and penalties accrue, but the property owner is in no danger of losing their property.
Tax Lien Certificates – How the tax deed process works.
So here’s how tax deed states work: let’s say it’s a state that allows 5 years delinquency. Once property taxes are 5 years delinquent, the county forecloses on the properties; following the foreclosure these properties will be offered at a tax deed sale. By law, the opening bid must be the total of the back taxes and penalties only. When you acquire one of these properties at tax deed sale, you’re purchasing and owning the property free and clear. Remember, in a Tax Lien Certificate state you’re not acquiring property – you’re merely acquiring a first position lien on the property.
Tax Lien Certificates – The TR-Property strategy for acquiring properties.
The “TR-Property” acquisition strategy is used in tax lien certificate states, and not in deed states. Because of the volume of tax lien certificates offered at a tax lien certificate sale, and the relatively low number of investors who attend, countless counties have thousands of tax lien certificates that do not get purchased. The myth is that these are the leftovers that no one wanted. Nothing could be further than the truth. We’ve been consistently investing in tax lien certificates for over 20 years, and we know for a fact that this is simply not true. The truth is, typically there simply aren’t enough investors to acquire all of the desirable tax lien certificates available. These non-purchased tax lien certificates become county-held, and when the redemption period expires, the county will foreclose and take title to the properties. The county will then offer these properties to investors. By law, the first time the county offers these properties, the opening bid can only be the amount of the back taxes and penalties owed. You can acquire these valuable properties at the sale, or from the comfort of your own home via “assignment purchasing.”