Buying tax liens is the latest, hottest real estate investing craze. Online courses, late night infomercials, the latest real estate guru’s “systems” to make millions buying tax liens – they’re cropping up all over the place. Unfortunately, all these products only sell you on the bright points of investing in tax liens. They rarely include the very real downsides of tax lien investing, and before you get your heart set on investing this way, there are a few things you should know.

First of all, you’re going to need a lot of cash when buying tax liens. You are generally required to pay the entire amount of your bid at tax sale. If you’re thinking all you need is the amount owed for the back taxes, think again. You’ll be bidding against many other bidders at the auction, and most of the time, the properties you’re bidding on will be bid up to close to the retail value of the home.

Also, you’ll be lucky if you are even able to make a successful bid. You’ll likely be bidding against agents for large tax sale investing firms, for whom buying tax liens is a full-time business. Since these companies have more to invest, they can afford to take a smaller return on their investment, leaving you out in the cold much of the time.

If you’re buying tax liens with the intent to hold and then foreclose, you’ll hit a few roadblocks there. You won’t be able to inspect the properties before you bid, so there’s a sizable risk that you’ll bid on a property that has major repair work that needs to be done that you don’t know about. Also, you’ll have to wait a year or more to foreclose in most cases, since in most state the delinquent owners have that period of time to bail the property out of foreclosure. Then you’ll have to go through the lengthy “quiet title” process to notify other lien holders before you can get the deed to the property.

The flip-side of that is, if your intention is to purchase tax liens for the purpose of collecting a great interest rate when the owners pay off (and they do, most of the time), then great– that will be the best way to be successful. However, there’s no way to know if the owners will actually end up paying off the lien. You may very well end up owning a property that is a money pit and wipes out any of your previous gains. The truth is, buying tax liens isn’t a great way to invest.

The best way to invest in tax foreclosure property is to carefully select the right properties, and then seek out the tax delinquent owners and offer to purchase directly from them. Frequently, owners of tax sale property are not desperate owners that can’t pay their bills, but absentee owners who aren’t aware of the tax sale situation, or who have given up on the property and decided to let it go.

Are you getting excited? These owners are an investor’s dream: highly motivated to sell (time’s running out!), and often resigned to losing the property and getting nothing (read: willing to sell for cheap). Find these absentee owners– former landlords, unwitting heirs, failed investors, people who bought land planning to build on it, etc.– and you’ve potentially found a source of investment property that you actually can get free and clear for pennies on the dollar.

By: Maggie Dawson

About the Author:
This little-known method of investing in tax foreclosure properties is known as “deed grabbing” amongst the small number of real estate investors that practice it. It’s not difficult to do, and best of all, there’s very little competition in this field. Due to the current economic climate, there are more tax foreclosures than ever before, and will likely continue to be for some time.

To continue learning how to determine which properties will be good investments, how to find their owners, and what to say to them once you’ve got them on the phone, go to http://deed-grabber.com.

To take a free deed grabbing mini-course via email, visit http://getdeedsnow.info.

M. Dawson is a Chicago area writer, real estate investor, and entrepreneur.

You have probably heard about the investment opportunities in tax liens and deeds. They can be quite lucrative – possibly the most lucrative and safe investment you will ever find, if you have the necessary knowledge. This article is going to cover the first lesson you will need to learn when it comes to tax lien and deed investing… the difference between the two investments. So, let’s start with tax liens.

The definition of a lien is: a claim against an item by another party, which utilizes that item as security for repayment of a loan or other claim. A tax lien is placed on a piece of property by the government when the owner fails to pay their property taxes. Now here is where the investor comes it… the government sells these liens at county auctions to investors. The investor who wins acquires a first position lien on the property. Then, the property owner has a fixed period of time to pay off the principle and all interest and/or penalties accrued–ALL of which goes to the investor.

If the owner fails to pay the taxes, interest and/or penalties you get to foreclose on the property. However, this happens about 2% of the time with liens. So, most of the time they are a hands-off investment and the interest and penalties are often time very hefty.

Now when you are bidding at an auction for a tax deed, you are actually bidding for ownership of the property. This means that if you win the auction, you become the rightful owner of the house or lot in question. With tax deeds, you have to do more meticulous research because you want to be sure you don’t end up with a worthless piece of real estate.

You also have to be careful with tax deeds because certain states, such as Arizona and New Mexico, do not extinguish the liens after the auction. This means that you- the new owner of the property- have to pay them off. All you have to do to avoid this is check with the county you’re bidding in, and do the proper research on the property before bidding on it.

Tax deeds are more challenging to deal with, but the returns can be phenomenal.

Some state use a hybrid system that includes both the lien and deed protocols. Here is how it works. At the auction, when you win the bidding, you become the rightful owner of the property – just as with tax deeds. However, the owner has a set period of time after this to pay back all taxes, penalties and interest owed in order to reclaim the property. This system is potentially the most rewarding of all.

So, there is your first lesson in tax liens and deed investing. I suggest learning more about this amazingly profitable and safe investment, however, before you jump into it. Good luck!

By: Andrew Kryzak

About the Author:
Did you know that you are only seconds away from learning how to achieve consistent 20-300% returns on the money you invest with complete government certified safety? Discover the new and innovative strategies that will take you to heights of investing success you have never reached before. Leave stock, bonds, mutual funds and all other ordinary investments in the dust. Click on: Tax Liens and Deeds to start now or visit http://TaxLienInvestingGuide.com.

The Annual Washington DC Tax Sale is a public auction of properties required by statute.

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If these uncertain economic times have you wondering about safe, alternative investment options, then you should consider tax lien and tax deed investments. With the right tools and a little research, you can achieve returns as high as 16% to 36%.

How does it work?
Local tax authorities collect property taxes in order to fund their municipal infrastructure such as their school system. A property’s tax rate is a percentage of the property’s assessed value. When a property owner is unable or unwilling to pay the taxes, the taxing authority has a couple of options for recourse. One option is to place a tax lien on the property and sell it at auction, but only after a statutory waiting period of 2-5 years. Or they can sell the property tax lien to investors who will eventually be able to foreclose on the lien.

When considering this type of investment option, it is important to understand some potential pitfalls. In many cases, these are easily remedied, but only if you know what to do.
First, examine the usability of the property. The best thing is to go out and take a look at the property you wish to purchase or bid on. Although there may not be anything wrong with the property itself, you may find that it is not useful for building. Things like measuring mistakes, zoning issues, and a poor or inaccessible location can ruin the value of a property and make resale a nightmare.

You can easily avoid these situations by following a few simple steps for every property that you are considering.
o Get the plat map. This is simply the record of the property’s survey and can be obtained from the county.
o Visit the property. If it is difficult to get to, then chances are it is not a property you want to invest in.
o Find out if the property is in a flood zone.

A second problem you may run into is that a property’s value is less than the amount of taxes owed. You typically see this in properties that have low value from the start or when it takes too long for the property to be offered at a tax lien or deed sale. Additionally, the county adds penalties every year to property with delinquent taxes. The back taxes itself, the year over year penalties, and the accrued interest can all add up and remove any potential for a good resale price. A property with an annual tax bill of only $200 can have thousands of dollars worth of unpaid taxes, penalties, and fees. Getting a good estimate of the property’s value is the best way to avoid getting into an unprofitable situation.

A third problem to watch out for is environmental issues. This is a problem many investors fear the most especially when buying vacant land. Follow these simple steps to minimize the risk:
o Obtain a list of condemned properties from the county
o Visit the property and take a look around. If the property is occupied, you may not be able to do this.
o Contact the state’s office for environmental issues (for example, the “Arizona Department of Environmental Quality”). They will be able to let you know if the property in question has any known issues.
o Look at the property records to see if any environmental concerns have been recorded.

Learn more about tax lien and tax deed investing at http://www.landprofitsreview.com ,and check out my course entitled the Land Profit Generator. Also, you will have the opportunity to sign up for our free list that brings real estate investing tips and discounts right to your inbox. No spam, just content!

By: Scott B Phillips

About the Author:
Scott Phillips
http://www.landprofitsreview.com

Judicial Liens A judicial lien is involuntarily placed against the real property of a debtor and a final judgment must be entered for an auction to occur. The final judgment is entered in the county which the debtors property resides and the most common types of judicial liens are those held by Home Owners Associations for none payment of dues, contractors who have performed work and county code violations.

Once the debtor fails to make payment the Creditor can enter a Claim Of Lien in the county and from there the process of foreclosing on the lien begins. Judicial property liens, after final judgment is entered, are auctioned by the Clerk of Courts and the resulting conveyance to the winning auction bidder is a certificate of title. This conveyance has the same rights and title as a property purchased at a mortgage foreclosure auction (all mortgage foreclosures in Florida are judicial). The property purchased at this auction is conveyed without warranty but no additional steps are necessary to secure a marketable title. Having a marketable title does not necessarily mean that title insurance is available. You will still have to satisfy any mortgages and superior liens before insurance can be issued.

Note: Judicial liens can not be foreclosed if the lien is held against a homestead exempt property except in the case of county, municipal and government liens.

Furthermore, judicial liens have a different order of superiority than that of other judicial property auctions. In a judicial lien foreclosure all mortgages are superior and Federal liens trump all, in a mortgage foreclosure only mortgages that were entered into and recorded earlier are superior (2nd mortgage forecloses then 1st mortgage is superior). While there are extreme and rare exceptions to the rule, these are the guidelines we use in analysing a perspective property.

Tax Liens A tax lien is a non judicial lien involuntarily placed against the real property of a debtor and is the result of the non payment of annual property taxes and a final judgement does not need be entered. Tax liens are sold by the County Tax Collector and an annual auction is held for those parcels and properties residing within the county for which the taxes remain unpaid. Tax liens encumber the property of debtor but carry no right or title to the property. Once the property tax lien is held for 22 months an application for tax deed can be made.

The result of this application is a tax deed auction commonly called a “tax lien foreclosure”. or “tax deed auction”. The conveyance resulting from the tax deed auction is a tax deed. A tax deed issuance offers immediate possession unlike a judicial foreclosure that is privy to the 10 day redemption period after the auction (This 10 day window after the judicial auction is for the sale to be reviewed and if the highest auction bid amount is found to be unjust, by a judge, the sale may be voided).

Also, a tax deed is not an insurable conveyance. The title to the property is clouded by the prior owners and parties of interest who have titled and untitled recorded interest in the property. To remove these clouds of title it is required that the conveyed interest “tax deed” be held for 4 years while paying taxes unchallenged or complete a quiet title action. The tax deed owner may also decide to transfer that interest in the property to an unsuspecting person via Special Warranty Deed or Quit Claim Deed and offers limited or no warranty of title whereby the title will not be defended against adverse parties.

By: James Mikel

About the Author:
James A. Mikel, second generation real estate investor. Want more? I offer real information for investors.
Information For Investors

I get a lot of questions from subscribers to taxlienlady.com that want to know how they can purchase tax liens or tax deeds through the mail. They specifically want to know about left over tax liens and tax deeds. These are tax lien certificates or tax deeds that are “left-over” from the tax sale. In other words no one bid at them at the sale and they were struck of to the county, state, or municipality. In most states if the delinquent tax property is not sold at the tax sale, it is struck of to the county or municipality. A few states allow the assignment of tax lien certificates or tax deeds to investors. There are pros and cons to purchasing leftover or assignment liens or deeds from the county.

On the positive side, there is no competition; you don’t have to bid against other investors. For liens and redeemable deeds, you may be able to purchase a lien or deed in which the redemption period has already ended, or is close to being over, in which case you may wind up with the property. For some deed states, since the county, state, or municipality has already taken title to the property, you may not have to go through a title clearing process (quiet title or title certification process). You’ll have to check with the county to find this out.

On the negative side, leftovers are usually not worth bidding on in the first place and that’s why they were not sold at the sale. In smaller counties, and in states where the tax sales are conducted by the municipality (New Jersey, and the New England states) there is usually nothing worthwhile that is left over. To find leftover tax liens or deeds, you have to go to counties that have very large lists (a few thousand properties) to begin with. And you’ll have to sift through a lot of junk to find good properties.

Sometimes you can find a nugget of gold in the leftover tax sale list. I know a couple of tax lien investors in Arizona who do this regularly as well as a couple of tax deed investors (in Texas and Pennsylvania) who have done this. With more and more people becoming interested in tax lien and tax deed investing and going to the auctions, there are less leftovers available than there used to be. My advice is to use extreme caution and be extremely rigorous with your due diligence when purchasing leftover liens or deeds. I also believe that investing long distance in leftover liens or deeds is a mistake if you do not have someone that can physically look at the property for you.

If you would like to find out more about how to find that nugget of gold in the leftover tax sale list, this is the topic of Tax Lien Lady’s next teleseminar interview with Brendan Monahan of Arizona Tax Liens on March 15, 2007. To register for the teleseminar at no charge go to .

By: Joanne Musa

About the Author:
Joanne Musa is a Tax Lien Investing Coach and Consultant who works with investors who want to learn how to buy profitable tax lien certificates and tax deeds. She is the president of Tax Lien Consulting LLC, a consulting firm for tax lien investors. She is the author of the e-books: Tax Lien Investing Secrets and Tax Lien Lady’s State Guide to Tax Lien and Tax Deed Investing, available at http://www.taxlienconsulting.com For more tips on investing in tax lien certificates send an e-mail to MoreTips@taxlienconsulting.com

Introduction
Colorado is a tax lien state. Colorado tax liens are perpetual liens and have priority over all other liens until property taxes are paid in full, or properly foreclosed as stated in the Colorado Revised Statutes. There are 64 counties in Colorado.

The interest paid on tax lien certificates is based on the Federal Discount rate on September 1 of each year plus 9 points. The Federal Discount rate on September 1 of 2008 was 2.25 percent. Adding the 9 points, the maximum interest rate earned on tax lien certificates for 2009 is 11.25 percent.

Property taxes for Colorado residents are payable in two installments. The first installment is due January 1 for taxes assessed for the previous year. The first installment becomes delinquent on February 28. The second installment is due on June 15 and becomes delinquent on July 31. The county treasurer and/or sheriff will make one or two phone calls to property owners who remain delinquent on their taxes. Property taxes that remain unpaid will be listed in a newspaper publication for four weeks prior to the tax lien sale. County treasurers are allowed to hold tax lien auctions between September 1 and the second Monday in December. Most counties hold their sales in late October or November.

Tax Lien Sales
Most Colorado tax lien sales use the Premium Bidding method. The opening bid for each property equals the tax owed plus interest and other related county costs. The auction is oral and competitive. The bid amount can increase in increments of $1, $ 5, or more, depending on the amount of the lien and the Treasurer’s preference. The investor willing to pay the highest price for the tax lien certificate will be the winner. The winning investor pays a “premium” (the amount over the opening bid) for the tax lien certificate. The purchases is not reimbursed for the premium amount, and interest only accrues on the opening bid amount. The county captures the benefit of the premium.

There are a few smaller counties in Colorado that use the rotational bid process. In rotational bidding, each investor that is registered for the sale will receive a bidder number that will control the order in which they bid during the auction. The opening bid as well as the interest rate remains constant. The auctioneer will begin with the first investor and ask if they are interested in investing in the first tax lien certificate. If they want it, they will become the successful bidder and then the auction moves to the next property. If the first investor didn’t want the property, it is offered to the second bidder, third bidder, and so on, until each property is either sold, or offered to everybody in the room and there are no takers.

Some counties require a deposit prior to the sale in an amount equal to the amount you expect to spend. Should you exceed this amount during the sale, your ability to purchase a tax lien certificate will be suspended until an additional deposit is made.

After the Sale
Successful bidders are awarded a Certificate of Purchase, or CP, as evidence of the tax lien assignment. The investor owning the previous year’s tax lien now has the opportunity to attach this new delinquency to his/her pre-existing lien. This process is known as sub-taxing. The cost of a sub-tax equals the amount of delinquent tax due, and is available exclusively to the CP holder, some four months prior to the fall auction. This new amount will now begin to accrue 11.25 percent simple interest (based on 2.25 Federal Discount Rate). Redemption for the property owner becomes more difficult as they now owe twice the original tax amount.

The redemption period is three years, and starts on the day that the tax lien is first offered for public sale. The property owner has three years to redeem on the property. After the redemption period expires, the holder of the CP has the right to apply for a Treasurer’s Deed and foreclose on the property.

The administrative action to foreclose on a property in Colorado takes approximately six months. The average cost of title work and processing fees vary from county to county, but average around $800.00. The property owner may still redeem during the foreclosure process, but he/she is now liable to reimburse the CP holder for any and all costs incurred during this process. If a CP holder is successful in the foreclosure process, the filing of a quiet title action is recommended in order to perfect the title

Colorado tax lien certificates are said to be in good standing for a period of eight years from the date of issue. If no action is taken to perfect the lien before the end of the eight-year period, the certificate is voided and the tax liability is abated.

Assignment Purchasing
Parcels that are not purchased at a public auction become available “over the counter”. These sales are also referred to as Assignment Purchasing. Parcels usually become available one to two weeks after the close of the sale (auction). For more information, you should contact the County Treasurer’s office, or do some investigation on the county’s Web site.

By: Russell Hall

About the Author:
Are you looking for a better way to invest your money in 2009 and beyond? Or maybe you are just looking to make a little (or a lot) of extra money on the side? Then, you owe it to yourself to find out more about tax lien and tax deed investing.

If you’ve heard about what a great investment tax liens and tax deeds are, but you just haven’t done anything about it because you don’t know where to begin, click the following link to hear my story and let me introduce you to the exciting world of Tax Lien Investing.

Investing in tax liens is one of the BEST ways to build a steady stream of income in all markets. It will take a little research to learn the ropes but it is well worth the effort. You can easily earn up to 20% on your money with almost NO risk whatsoever. At themoneyhacker.com we want to show you how to get started…

Basically, counties raise money by taxing property. If the owner of the property fails to pay the tax, the amount of the tax becomes a lien against the property. The beautiful thing for investors is that this lien isupercedes any other judgements against the property including the mortgage. This means that if the homeowner doesn’t pay the property tax then YOU as the lienholder get title to the property ahead of the bank that holds the mortgage. For that reason, the bank itself will pay the lien off (with any interest) just to protect their investment. The best part is that the penalties for not paying these tax liens are HUGE. The laws vary by state but you can easily expect to earn a safe 12-20% from these instruments.

Why does the county sell these liens in the first place? Because they need the money now in order to pay for schools, police, etc. By state statute, each county is authorized to collect the taxes due that remain unpaid by selling at public auction, either a Tax Lien Certificate or a Tax Deed.

Learning how to buy these Tax Lien Certificates and Tax Deeds is a very real way to earn very good stream of income. The aim of this site is to help you understand how the process works how to profit from it.

If this is such a good way to earn huge returns then why doesn’t everyone do it? That’s what I asked myself until I started investing in tax liens. It definitely took a lot of research before I knew what to do and how to actually buy these things. After a couple of months of calling counties and getting lists of tax liens for sale, I discovered that you can buy these things online in alot of counties….the point is…it took alot of my time and energy before I figured that out and most people would’ve given up before that. But now, with the stock market down double digits already this year, I’m earning an average of 16% on liens across the country. So how do you get started?

There are thousands of counties in the United States, and each one holds separate auctions for their own tax liens. There are some good books on the subject, (I recommend this one as a great starting point ), and most of the counties have very good websites where you can get a list of tax liens available, auction dates and FAQ’s. Two excellent resources to access the various counties across the US can be found on our site.
There are a number of approaches you can take at this point. To keep it simple, I recommend researching your own county first. Read the treasurer’s page on the county website and find out :

- When will the county be conducting the next Tax Sale?

- Where will the sale take place? (Get the address, room, and time of sale)

- How can I get a list of the Tax Liens/Properties to be auctioned? (Sometimes, the county will have copies available at their offices. Most likely they will refer you to a local newspaper that prints the sale notice and list of properties or liens to be sold)

- How can I get the Rules of the Sale? (The terms and conditions of the sale including pre-registration requirements and methods of payment).

- If a it’s a lien sale, what is the interest rate? How is it calculated?

- Does the county have any unsold Tax Lien Certificates or properties from the last sale?

For example…let’s say you decide to research Maricopa County in Arizona (Phoenix). Go to the County Treasurer’s site and click on “2008 Tax Lien Sale Info”. As you can see – everything you need to know is on the county’s site. Auction date, terms, specific parcels, FAQ’s, EVERYTHING. The best part is…you can buy these liens online through their site… Investing in tax liens is deceptively simple. As you see, you can get all the information you need to know from There are a lot of “Guides” out there (and they’re not all bad actually…especially if you want to get into investing in tax deeds…) but everything you need to start earning 16% is here! Want a calendar of all county Tax Lien sales as well as which ones allow you to buy them online?

By: Chris Chamberlain

About the Author:
Chris Chamberlain started the journey to building streams of wealth online 4 years ago. 18 months later he left his 6 figure job on Wall St. because he was making more money in less time online. Now he’s started http://www.themoneyhacker.com to share his methods with others starting out where he was just a few years ago.