Tax Lien Investments

Every state and county in the United States levies property taxes on real property. Every property has taxes due, with the exception of Indian reservations, including commercial property, vacant lots, residential homes, apartments, duplexes, shopping centers and high rise buildings. These taxes allow the counties to provide necessary services to the local community, services like police protection, the up keep of our roads, fire departments and schools. Our communities could not operate and function normally without property taxes.

Each year the local taxing jurisdiction (normally county tax collector) will assess taxes due on each property and send the owner notice of the property bill due from the prior year. If the owner does not pay his/her bill by a certain date, the county will levy a lien against the property for the amount of the tax bill. In addition the county will charge interest and cost to the owner. The county will send several notices sometimes delivered by the local county sheriffs office stating that the taxes are due and paying late will incur additional charges or penalties. 

Tax Liens
This becomes a problem for the county because if everyone paid their taxes late how would the county make its payroll and provide the necessary services like police and fire protection? This is why each county every year conducts tax lien auctions. The county will sell the lien to an investor at the tax lien sale to recoup those taxes the owner failed to pay in a timely manner. The investor will have a first position lien and that lien will accrue interest and/or penalty from the date of the investor's purchase. When the delinquent tax payer pays his property tax bill, he/she simply pays the county the delinquent taxes, plus the interest and/or penalty, and the county immediately cuts a check to the investor for his initial principal (tax bill) plus the interest rate or penalty return. In, short its a win, win for everyone, the  delinquent tax payer gets his property back, the investor gets back the money he paid for the lien plus the interest and the county gets the money it needs to run the local government. 

Bottom line: It's secured by a U.S. County and you get your investment back including a great interest payment or you owe the property you paid the taxes for free and clear!

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