Tax Liens – What Are they and How Do You Make Money

What is Tax Lien Investing?

As a real estate investor, you are probably looking for ways to create different forms of income streams. You may already be involved in buying and flipping homes. But there is another income stream you can look into. This is tax lien investing. Tax lien investing involves investing but in a different way.

Tax lien investing involves investing in such a way as to see a return on your money, and with very little risk involved. With tax lien investing, if you research well, you can actually come out ahead and have a good income stream to count on for as long as you want it.

Many tax lien investors get into this type of investing and do it successfully. They get a high rate of return on their invested funds. In some cases, they end up owning the property for a big discount.  Then they sell the property, while earning a huge profit.

So just what is tax lien investing? First of all, what is a tax lien? A tax lien is defined as a claim that is imposed by a governmental body to liquidate a person’s property until the tax and debt owed is fully paid. In a nutshell, this means that if the homeowner fails to pay his property taxes on time, the local, city, county, or state tax office, has the legal right to put a lien on the property, until such time as the homeowner pays the back taxes owed.

If the homeowner does not comply in a certain time frame, the governmental body has the legal right to hold an auction, which is often referred to as a tax auction, in order to secure the back taxes owed, plus penalties, interest, and late fees. They do this by selling a tax lien certificate to the highest bidder. This certificate certifies that the investor paid the back taxes.

When a real estate investor, or anyone who has the funds to do it, buys those certificates at the auction, that person becomes a tax lien investor. If you are considering being a tax lien investor, you just have to learn what it involves and do a good amount of research. If you do this, you can be successful as a tax lien investor.

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One Response to “Tax Liens – What Are they and How Do You Make Money”

  1. Avatar of Claire Young Claire Young

    I’ve heard of tax lien investing but never really understood what it was. This post definitely explained it to me and I enjoy reading about all the different ways you suggest to make money. Nice blog.


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