Buy Tax Lien Certificates

Entire books have been written about the intricacies of this investment practice, and every municipality has different laws to keep track of. Only certain states (and sometimes, counties within those states) allow the buying of tax lien certificates. Before beginning, it is good to understand what you can and cannot expect.

The Basics of Buying Tax Lien Certificates

Purchasing tax lien certificates has never been easier than it is now, in part because of the Internet's proliferation of information. Everywhere, average people are able to scour the ads about this new investment opportunity, learning about properties in far away states. Tax lien certificates often guarantee at least a 50 percent return on your investment, and if a property owner defaults in payment, even more can be assured. It's still best to be thoroughly familiar with the system before beginning to invest.

Buying tax lien certificates requires money, first and foremost. Anyone legally allowed to purchase property in the US is eligible to buy them, but cold hard cash--not credit, loans, or payment plans--must be put down in order to do it. Generally, the county wants the money as soon as the auction (if there was one) is over, although some allow up to 48 hours for payment. Nonetheless, the cash needs to be in the bank before you begin.

Many auctions do not require the investor to be present, and some are conducted online. You must be diligent when purchasing property you have never seen before, as horror stories abound. The best advice is to review the lists of tax lien auctions, and decide what state or county looks like a good place to invest in. From there, call around until you are armed with the information you need.