Andre C. Hatchett: Investing In Tax Liens 101


Tax Liens101: This is a very basic overview on investing in Tax Liens.

There are many ways to invest in Real Estate in the USA, but one that is not widely discussed is investing in Tax Liens. What is a Tax Lien? This is when a homeowner doesn’t pay their property tax for an extended period of time. The time frame varies from state to state. Then the County will have an auction. Let’s say Jane didn’t pay her property taxes for one year. She lives in Bridgeport, CT. She owes  $11,000 in back taxes. You go to the auction and pay Janes property taxes. Now Jane owes YOU the $11,000 with an additional 18% interest. Here’s when it can become very lucrative. If Jane doesn’t pay you back, you can take the house.

Taxes take precedence over all other liens on homes. Even the mortgage. So if Jane owes $200,000 on her mortgage it doesn’t matter. Failure to pay you back means you take over the property without any mortgage.

The next step in that process would be to foreclose on the property. Costs to foreclose on a tax lien can run from $750 to $2,500, and Attorneys’ fees range from $1,200 to $3,000.Why are property taxes so important? Property taxes are used to pay School Teachers, Police, Firemen, and other Public employees. What state has the highest interest rate? Illinois at 36%. Where do you find out about upcoming auctions?

Call your local County clerk’s office and they will provide you with a list. I am not a finical advisor, and have not personally bought a Tax Lien as of yet. But I know a few people who invest in them on a regular basis, and are doing very well from it.

For more detailed information here are some helpful links: Start Investing In Tax Liens NOW! taxlienlady

February 19, 2014

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