Tax Lien Investing is the purchase of tax lien certificates on the part of local governments when property owners do not pay taxes on their properties. When the investor collects interest or penalties when the property owner repays the debt, he or she pays the outstanding taxes. Failure by the owner to pay within a stipulated time will result in the investor having ownership of the property via foreclosure. The value of the property is usually used to secure returns and hence it is a rather low risk investment. The high interest rates and possible acquisition of property are sources of income, based on the laws and the time frame of the redemption in the state.
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