Why Invest?

1. Rate of Return



In many jurisdictions, the tax lien investor can get returns of 10 to 25 percent or more. While it is possible to get lower returns because of an investor's desire to buy more liens, savvy investors also can get higher yields by investing in "penalty" jurisdictions.



2. Flexibility



Investors can choose the type of jurisdiction in which they would like to purchase a lien, the size of the lien they would like to purchase, the type of property they would like as a collateral, and the interest rate they would like to receive. Whate these investors cannot control is the time within which the property tax is paid.



3. Collateral



Not only are investors' investments secured by real estate, they also have a first position lien. That is, the lien comes before a mortgage or trust deed and any other liens on the property, other than something like a "weed" lien where the property was abandoned and the county had to mow it for sanitary purposes.



4. Time



Time involved is light to moderate. In fact, the investor may initially spend more time learning how to invest than investing itself.



5. Liquidty



Unfortunately, a tax lien certificate is illiquid and investors cannot expect to receive their principal and interest until the full redemption period has expired which can be as much as 2 years. However, if an investor buys multiple liens at multiple times, the redemption periods can be coordinated. In addition, many liens are transferable and can be sold to another interested party.

6. Stability

The tax lien certificate does not flunctuate in value. The interest rate is fixed. In penalty jurisdictions, the interest is actually is a penalty which means that the yield will increase if the owner pays off hte lien faster.

7. Commissions

Unlike other investment opportunities, tax investing does not involve a broker and thus no commission to be paid.

8. Government

This type of investment is administered by the government.

9. Enforcement

The statutory remedies almost never require any kind of formal legal action but usually just involve legal notices and county-assisted procedures.

California

Sale Type: Deed

Interest Rate: N/A

Bid Mehod: Premium bid

Redemption Period: N/A

Sales Dates: Varies by county

Fresno - 1st Monday in March

Kern (Bakersfield) - March/July/November

Los Angeles - February/August

San Diego - February

San Francisco - April

Over the counter: No



A property acquired at a tax deed sale in California would be acquired free of all liens and emcumbrances, except for any special assessments, easements (which always run with any property upon coyeance, and possibly an IRS lien.

Hybrid States

A hybrid state is technically a deed state although it has much in common with a lien state.

The investor actually acquires title to the property, subject, however, to the prior owner's right to redeem and get the property back. Should the prior owner redeem, the investor will receive an interest rate or penalty payment on his/her investment. The prior owner has a specified redemption period (six months to three years) to redeem the property and reacquire title.

The following are hybrid states:

Connecticut

Delaware

Georgia

Hawaii

Louisiana

Massachusetts

Pennsylvania (counties may operate under the hybrid system where the property is improved and has been legally occupied 90 days prior to the sale)

Rhode Island

Tennessee

Texas

Online Purchases

Several states are now conducting their sales online -either exclusively or in partnership with the auctions. From the state's point of view, this type of sale is faster and more economical. It can also be an advantage from an investor's point of view. One obvious benefit is that you can buy from another county or state without having to travel. Different counties have different rules on how the purchases are handled. Oh, and buyer beware with this method. You never really know what you are getting if you are not able to visually inspect it.

Virginia

VIRGINIA

Norfolk

Florida

Here is the information that I know about purchasing in the state of Florida as well as the listing of the counties that I have found.

Brevard
Clay
Miami Dade
Polk
Volusia
Walton

Tax Deed Certificates

On this post, we address the issue of tax deed certificates.

In a tax deed state, the investor actually acquires the title to the property. There is no interest rate or redemption period involved sicne the investor receives the property itself.

The following states are tax deed states:

Alaska

Arkansas

California

Idaho

Kansas

Maine

Michigan

Minnesota

Nevada

New Hampshire

New Mexico

New York (also allowed to conduct tax lien sales)

North Carolina

Ohio (historically a deed state but counties with population over 200K are also allowed to conduct lien sales)

Oregon

Pennsylvania (counties may also operate under the hybrid system where the property is improved and has been legally occupied 90 days prior to the sale)

Utah

Virginia

Washington

Wisconsin

Tax Lien Certificates

In this section, we will address the issue of tax lien certificates. With a tax lien certificate, the investor only has a lien on the property and does not have any other rights in, or title to, the property. The investor receives a statutory interest rate until the property tax is received. The property owner has a statutory redemption period within which he or she must pay the tax bill. This period generally ranges from six months to four years. About one-half of the states are lien states.

The states are as follows:

Alabama

Arizona

Colorodo

District of Columbia

Florida

Illinois

Indiana

Iowa

Kentucky

Maryland

Mississippi

Missouri

Montana

Nebraska

New Jersey

North Dakota

Ohio (Ohio is historically a deed state, however, counties with populations over 200,000 are allowed to conduct lien sales.)

Oklahoma

South Carolina

South Dakota

Vermont

West Virginia

Wyoming

Welcome.

Hello and welcome to my blog on everything that I know about tax liens and tax deed certificates. Now that you have found my blog, you no longer need to pay money for one of those courses that train you how to purchase the deeds and liens.

I will not only share with you all of the notes that I have taken from various on- and off-line sources, but I will even give you all of the links that I have uncovered. And, of course, you may feel free to share any of yours.