How Do Tax Lien Certificates Work?

By dhinternational  /  May 17, 2011 / Comments Off on How Do Tax Lien Certificates Work?

How do tax lien certificates work? Well, lien certificates are utilized by real estate investors to bring in large-scale profits by claiming possession of properties at a fraction of its worth, or bid on low-profit loans to help householders hold on to their properties by giving them more time to bring up funds required to pay off their tax debts.

Tax Lien Certificates

Tax Lien Certificates

When these property taxes have been missed for a certain period, the county then has the right to confiscate the property and can either have it auctioned or sell it.

Some of the municipality governments forfeit properties during the first year of delinquency hence making larger profits, while other counties allow even years of unpaid taxes to accumulate before making any action. The back taxes being owed have a distinct effect on the landowner’s power to pay off back taxes and of course, the investor’s chance to bring in profit.

When buying tax lien certificates, it is crucial that you must understand that you are not actually purchasing the property. You are loaning the householder cash to pay the back taxes, with of course the assurance of repaying the loan with the fixed amount of interest.

Investing in tax lien certificates is considered to be absolutely risk-free and simple, especially to those investors who fully understand the process.

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