Skip to content

How To Profit With Tax Lien Certificates

Tax Lien Investing Facebook Group – Join Below

Menu
  • Home
  • News
  • Tax Lien Certificates
  • About Us
Menu

An intro to tax liens

Posted on by taxlieninvesting


Nov. 30 is the deadline for making your first installment payment for Bexar County real estate taxes, which inspires today’s topic: tax liens.

As a finance writer, all of real life is merely raw material for finance lessons, so I beg your pardon while I talk about tax liens in my life.

A while back in this space, I described my astonishment at how low property taxes were for “agricultural exemption” property that I happened to be eyeing for investment purposes. Long story short, I ended up buying a one-fifth interest in raw land in rural Bexar County, agricultural exemption included.

My property investment

This same property investment now makes its second appearance here, this time to illustrate the role of tax liens. Bear with me for a bit as I explain a sort of complicated situation.

I only bought one-fifth of the property, while the other four-fifths remain owned by four siblings (not mine) who inherited the property. While the family dynamic is opaque to me (they were strangers to me before my investment), I understand that some siblings have sufficient money and some don’t, and some siblings care to pay attention to details such as property taxes, and some don’t. Meanwhile, taxes on the parcel of land have gone unpaid for a few years.

This makes me extremely nervous for my investment.

Fail to pay property taxes, and you eventually run the risk of losing your property to the foreclosure power of the taxing authority, typically a city or town. Needless to say, I don’t want to lose this property, and if we leave taxes unpaid for too long, eventually Bexar County will take the land.

Tax lien lenders

Now, you may or may not have ever heard of “tax lien” lenders and investors, so if not, let me be the first to illuminate for you a fascinating little section of the real estate finance world.

Ever since I registered my name on the property deed as partial owner last spring, I have been inundated with solicitations from tax lien lenders. My name — along with the siblings — shows up publicly as owner of a parcel with delinquent taxes owed. Hence, the solicitations.

The tax lien lenders offer to pay our property taxes now owed on the property. Meanwhile, if we did the deal, the lenders would use the real estate as collateral for the loan in the event I (and the sibling heirs) fail to pay back the loan in the future. Tax lien buyers (or in Texas, tax lien lenders) have the power to act like the municipality, and eventually take over the property for themselves in the event of nonpayment.

In my complicated situation, with some of us owners unable to pay the taxes or possibly unwilling to put up money for the others for an indefinite amount of time, these lenders make some sense.

Partly I mention this whole anecdote because tax lien investing/lending is an obscure but important part of real estate finance.

Partly I mention this because tax lien investing may inspire a natural aversion. On the face of it, any lender who has the power to take away your property seems, I don’t know, scary? I mean, regular bankers seem unlikable enough. From a PR standpoint, however, the specific combined function of “tax collector” and “money lender” has an even tougher time getting a fair hearing. Those labels have served for thousands of years as biblical shorthand for enemies of the common people.

Personally, I have no problem with the solicitations to pay my taxes in exchange for an 8 to 12 percent loan. We might need that solution.

The ironic thing here is that — in my old investing life — I was on the other side of this situation.


My tax lien buying

I discovered tax lien investing in 2005 after buying a book called “The 16 Percent Solution,” in which the author explained a high-return and low-risk path to wealth through tax lien investing. Through my investment company, I first started purchasing liens in New Jersey and New York, eventually branching out into Connecticut, Vermont, Rhode Island and even Mississippi.

Incidentally, I was a very unwelcome (meaning: Yankee) participant in my one Mississippi tax lien auction. I’m just happy to have gotten out of there in one piece.

Tax lien investing and lending happens around the country, with state and local variations adding to the complexity. On the positive side, the interest rates earned seem very attractive, while the risk seems low. On the negative side — as I learned over the course of a few years of tax lien investing — it’s quite easy to lose money through tax lien investing as well.

As I purchased liens, I sometimes wondered about the complex situations that led people to become delinquent on their real estate taxes. Now I’m in one of these complex situations, and I sort of get it.

My situation

I don’t know when we will all be able to agree on paying the taxes. It may be a better idea to borrow the tax money — even if we have to pay 8 to 12 percent on the loan — than to risk losing the property outright to the county via foreclosure. A loan may give us enough time to figure out an eventual solution — either by paying the taxes or selling the property.

Michael Taylor is a former Goldman Sachs bond salesman and now writes the finance blog Bankers-Anonymous.com.

mtaylor0331@gmail.com.

Twitter: @bankeranonymous





Source link

Related posts:

Tax Lien Investment Process
This Baltimore Developer Is Breaking Down Barriers to Rebuild Communities
Tax Lien and Deed Training - Real Estate Investing For Beginners
Florida Tax Lien & Tax Deed Basics: State Overview!
Arizona owners can lose homes over as little as $50 in back taxes
Tax Lien & Tax Deed Investing Workshop with Stephen and Shade!
Tax Sale Basics: The Tax Lien Bidding Process
Tax-lien investing is a game even hedge funds can like – The Denver Post
Best Tax Lien Investing Courses of 2022
Jefferson County AL 2022 Tax Lien Auction - Deep Dive Into Property Research
California Tax Sales
Tax Lien Foreclosure Definition
Inside the tax lien journey- Episode 1
Property Tax Lien Investing Certificates
Tax Sale Tutorial: New Jersey & Florida Tax Lien/Deed Research
Online Tax Sale Basics - Tax Liens & Deeds - Part 1 (Why Tax Liens & Why Now)
Maine Tax Sales
NOTICE OF TAX SALE OF REAL ESTATE FOR UNPAID VILLAGE TAXES FOR THE YEAR 2020-2021 - Legal Notices
Over the Counter (OTC) Tax Lien & Tax Deed Tutorial with Stephen & Shade
Tax Lien Masterclass: 6 - 7 Figure Student Secrets
Tax Lien Investing - A fantastic investment strategy you may not have heard of.
Steve Clements and David G Towers talk about tax lien investing success from outside the USA
DIRT CHEAP PROPERTIES Through Tax Lien Investing!! | Real Estate for Beginners #taxliens#realestate
South Dakota Tax Sales
Learn How to Make Money in Real Estate

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Free Facebook Group – Join Today!

Tax Lien Investing For Beginners

50 State Tax Sales

Alabama Tax Sales
Alaska Tax Sales

Arizona Tax Sales
Arkansas Tax Sales
California Tax Sales
Colorado Tax Sales
Connecticut Tax Sales
Delaware Tax Sales
Florida Tax Sales
Georgia Tax Sales
Hawaii Tax Sales
Idaho Tax Sales
Illinois Tax Sales
Indiana Tax Sales
Iowa Tax Sales
Kansas Tax Sales
Kentucky Tax Sales
Louisiana Tax Sales
Maine Tax Sales
Maryland Tax Sales
Massachusetts Tax Sales
Michigan Tax Sales
Minnesota Tax Sales
Mississippi Tax Sales
Missouri Tax Sales
Montana Tax Sales
Nebraska Tax Sales
Nevada Tax Sales
New Hampshire Tax Sales
New Jersey Tax Sales
New Mexico Tax Sales
New York Tax Sales
North Carolina Tax Sales
North Dakota Tax Sales
Ohio Tax Sales
Oklahoma Tax Sales
Oregon Tax Sales
Pennsylvania Tax Sales
Rhode Island Tax Sales
South Carolina Tax Sales
South Dakota Tax Sales
Tennessee Tax Sales
Texas Tax Sales
Utah Tax Sales
Vermont Tax Sales
Virginia Tax Sales
Washington Tax Sales
West Virginia Tax Sales
Wisconsin Tax Sales
Wyoming Tax Sales
Washington D.C. Tax Sales

 

News

  • Is California a Tax Lien State?
  • Is New Jersey A Tax Lien or Tax Deed State?
  • Is Pennsylvania A Tax Lien Or A Tax Deed State?
  • Is Michigan A Tax Lien State?
  • Tax Lien Certificate States
  • How To Buy Tax Lien Certificates In Maryland
  • How To Buy Tax Lien Certificates
  • New Jersey Bankruptcy Law
  • How to Buy Tax Deeds
  • #Shorts Ask The Tax Lien Lady Live: Amazing Questions 📈👇

Trending

  • #Shorts Ask The Tax Lien Lady Live 📈👇
  • Inside the tax lien journey- Episode 1
  • How To Find Tax Lien Deals with Chantelle Owens
  • Tax Lien & Deed Questions & Answers!
  • How To Buy Tax Lien Certificates In North Carolina

© 2022 How To Profit With Tax Lien Certificates | Powered by Minimalist Blog WordPress Theme