Tax Lien Certificates

I think what the gentleman below was talking about are tax deeds. Tax liens are totally different. Tax deeds do require large amounts of money to be presented in order to bid on the properties at auction, because you are buying the actual property. With tax liens however, you are not buying the property, but buying a government lien on the property that gives you the right to foreclose if the property owner does not pay you back.

tax liens do require the money to be paid at the auction, or within a few days, but, you can invest as much, or as little as you would like. There are liens ranging from $50 up to hundreds of thousands of dollars. They are highly competitive, and a majority do get bid up above the lien amount.

That being said, you do need to know what you are doing. They are a safe investment, but no investment is without risk. risk comes from not understanding what you are purchasing. BTW, dont believe all the hype from scams like john beck and other so called guru's. They are out just to sell you something, and the majority have not ever purchased tax liens.

People get burned buying tax liens, but if you knwo what you are doing, they are a highly lucrative business. A lot of the properties sold at TL auctions are dumps, but there are decent properties as well. You will not find mansions for $1000 like some of those scams tell you, but, we have bought several liens for under $5000 and been able to foreclose on the property that is worth $100k. The great thing about tax liens is, you are first priority, so most other liens get wiped out in foreclosure, including the mortgage. It is a complicated business, but, it is lucrative if you understand it. We have recently started a non-profit group to provide information to tax lien investors so that we can get rid of the scammers like John Beck. You can go to WWW.NATLI.ORG for more information and download our free ebook.

Edmundo BravermanMost tax liens are issued by the municipality where the property is located. The county will usually hold an auction on a regular basis. These are generally well-attended events, so if you're thinking you'll just show up and steal a property for pennies on the dollar, be aware that there are probably a hundred other rubes in the room with the same idea.

Two words of caution:

1. Properties at auction for failure to pay back taxes are generally abandoned and severely blighted, in neighborhoods most people would not be willing to buy. This makes it difficult to determine the real value of the property and avoid overpaying for it.

2. It takes real money to attend the auction. Most of the auctions I've attended require that you show up with a cashier's check for $75,000-$100,000 or a letter of credit from your bank. Anyone who has ever tried to get an LOC from their bank can attest that it is easier to just get a cashier's check for a hundred grand. This keeps the pretenders out of the room. Most municipalities require 100% payment for the property on the spot, hence the guaranteed funds. I've only been to one auction where the municipality was willing to accept a 10% deposit and then give you 30 days to put the rest of the money together. Suffice it to say, this was before the market meltdown and I guarantee they are no longer that lenient.

If you're a beginning real estate investor, you're better off starting with buying foreclosures.

The WSO Guide to Understanding TARP

Depends on where the property is located. Generally, the lien holder is intitled to interest on the lien amount ranging from 6% to 25% per year. The property owner has a redemption period wherein they can pay off the lien plus interest. If the owner does not pay off the lien within that redemption period, then the lien holder can foreclose and take title to the property for the cost of the lien.