Don’t Buy Tax Lien Certificates Until You Read This!

Some real estate gurus make investing in tax bonds seem like a sure thing. That it is guaranteed to generate huge interest rates and that is “guaranteed by the government.” Unfortunately for you, they omit some facts and are stretching the truth a bit.

First of all, you need to understand that tax sales are auctions, and in most states, those extremely high interest rates are reduced to extremely low rates. Why would investors do that? It’s simple, sometimes there are other penalties that you will receive if the link is redeemed. In New Jersey, for example, the penalty is between 2% and 6%, depending on the amount of the link. In Florida there is a 5% penalty. Also, once you own the link, you can pay the subsequent taxes and get the maximum interest on it.

Second, you need to understand that there is no guarantee that you will get paid for your link. Of course, if you don’t get paid, you can go into foreclosure after the redemption period is over. But no one guarantees that you will be paid! What these gurus mean when they say that the links are “guaranteed by the government” is that the laws are on your side. If you don’t get paid, you can eventually foreclose on the property. The only thing that guarantees your investment is the property! That is why I do not recommend investing in links by mail or online. Would you buy a property that you didn’t see first?

When you buy a tax certificate, even if you are not buying the property, there is always the possibility that the link will not be redeemed and you will have to foreclose on the property. What if the property has no value? What if it is impossible to build land? So you are stuck with worthless property that no one will want to buy from you, and if you don’t continue to pay taxes on it, it will eventually go back to the county that sold it to you.

Yes, there are risks involved in investing in bonds and no, it is not a sure thing. However, it is a great way to invest your money if you know what you are doing. If you are considering buying a program to learn how to invest in lien certificates or tax deeds, beware! Don’t buy an ebook, training program, or course from someone who spruces up the business of investing in lien certificates and tax deeds and makes it look like you can’t fail and there are no risks. The truth is that you can fail and there are risks to avoid. Instead, buy one of these products from someone who will tell you what the risks are and how to avoid them. This will give you a better chance of being successful in purchasing profitable tax lien certificates and tax deeds.