When you buy a tax deed there is really only one way that you can make a profitable return on investment and that is to sell or rent the property. However, when you purchase a tax lien certificate, there are three ways that you can profit from your investment. These three ways are summarized in this article. Read on to find out more about them.
The first and most obvious way to make a profit on tax lien certificates is with the redemption of the lien. The delinquent property owner redeems the lien and you, as the lien holder, will receive the certificate amount of the lien plus any interest and penalties that have accrued. Since an annualized rate of interest is offered in most states, you will earn more money the longer the lien is outstanding and before it is redeemed.
If the lien is not redeemed, and once the redemption period is over, you may start foreclosure proceedings on the property in order to be paid what you are owed on the lien. Depending on the state that the tax lien certificate was issued, the foreclosure process can be real easy or real hard. In certain states you only need to petition the county court, or go through an application process, to get the deed to the property. In other states you will have to go through a foreclosure process with an attorney which may take a lot of time and money. If the property has to go through a foreclosure sale, you may not receive the property, as it will go to the highest bidder at the foreclosure sale, but you will get paid on your lien.
Still, in some states, there is a third way that you can profit from your tax lien investment without foreclosing or redemption, and that is by assigning your lien to another investor. Certain states allow for the "assignment", or sale, of a tax lien certificate from one investor to another. This is a way that you can capture the profit on your lien without having to go through the state's foreclosure process. Obviously you are relinquishing the possibility of obtaining the property, but you are realizing your profit that much quicker.
Yusoff Allian is a Tax Lien Investing Expert and Consultant who works with investors who want to learn how to profit by purchasing tax lien certificates and tax deeds. He is the president of Alliax Holdings, LLC, a real estate & investment holding company. He is the author of the e-book: Tax Sale Wealth - The Essential Beginner's Guide To Profitable Tax Lien & Tax Deed Investments, available at http://www.taxsalewealth.com/sales.php
Source: www.ezinearticles.com
