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[I486]Investing In Tax Certificates

by Carlos Scarpero, Car

A tax lien is simply a lien that is placed on real estate for the non payment of real estate taxes. In many states, the county government will sell the lien to the general public in order to balance their budget. The investor is issued a tax lien certificate that is backed by the property. The investor then collects any penalties that are owed by the taxpayer when they redeem the lien. The penalties in most states for tax certificates are high.

How high you ask? Is 24% a year high enough for you? Obviously, it varies by state, but that is the statute in Iowa. But what about risk? With a tax lien you either get a high rate of return on your investment or the property. That's a lot better than the bank cd's. By the way, guess who is one of the nation's largest investors in tax liens? Banks! So, why not cut them out of the loop and go straight to the source.

The best part about tax liens is the price. Nearly all are under $5000, with most being in the $200 to $1000 range, which is easily within reach of the average investor. Unlike many speciality investments, there are no special requirements or licenses required to invest in tax liens.

So, now that you know the basics, you need to find out how and where to get your hands on tax liens. Tax liens are sold one of three ways: at live auction, over the counter, or by internet auction.

Live auctions are generally held once a year in the county courthouse. You get a bidder number and the actual bidding process varies by state and local laws. Sometimes you bid down the rate, other times you bid up the price.

Another way to buy tax liens is over the counter, which is just a fancy way of saying mail in bidding. To buy over the counter, you simply call the county and get a list. Then just need to you pick out the property you want to bid on and send in a check. These are almost always at the full interest rate of the lien. In most jurisdictions, over the counter (or OTC) liens are the ones that did not sell at the auction. However, in some rural areas, counties have been known to sell tax liens exclusively over the counter.

The newest and most exciting trend in tax liens is internet bidding. The county holds an auction on its website (generally for about a week) or a third party website like Bid4Assets and the investor simply places a bid from the comfort of his home computer. How easy is that! No traveling or hassles required.

Now that you know the basics, what are you waiting for? Go learn your local regulations and buy some tax liens today!

How many times have you heard people grumble about taxes? Eventually, they get tired of simply complaining about how much money in taxes they have to pay and move on to how much money on taxes the rich DON'T have to pay. It can be frustrating, can't it, knowing that people with less money get fewer breaks than people with loads of money? It's frustrating because it isn't fair. And if you happen to be one of the people on the low-income/high tax-percentage side, then you may experience some resentment.

Well, the fact is, no amount of grumbling and complaining is going to make the powers that be suddenly make things fair for you. This is because of the Golden Rule: ?He who has the gold, makes the rules.? Chances are, they are going to make the rules in their favor. They're going to keep all the good tax breaks to themselves. They are going to tell you there just isn't enough money to go around, even as you watch so many people drive around in so many expensive cars and eat in so many posh restaurants. Even politicians who promise tax breaks to the downtrodden masses?even the ones who are sincere in their desire to help the average working stiff?are limited in their ability to affect the system.

That's why you are going to have to take action. Don't be one of the downtrodden masses. If you want more money, you are going to have to go get it yourself. And yes, you too can get more money in the form of tax breaks.

In his Rich Dad book series, Robert Kiyosaki advocates figuring out what the rich do to be rich, and do that. Except that you don't have to figure it out. He didn't even have to figure it out, because he had a rich ?dad? to tell him the secret of the rich: investing. Especially in real estate.

?One of the reasons I chose to work predominantly in the B and I quadrants are the tax advantages,? he says in his book ?Cash Flow Quadrant.? The cash flow quadrant, after which he named the book, is his rich dad's diagram of the four different kinds of people, with respect to where they get their money and their philosophy about procuring money which, oddly enough, match up. In other words, people who are Employees have one set of values while the people who are Self-employed have another.

Kiyosaki prefers to belong to the Business and Investment quadrants because that, he says, is where the money is.

You know the saying, ?If you can't beat ?em, join ?em.? That is good advice, especially if the guys you want to beat are the rich. It's actually great news that they are getting so many tax breaks. That means that, when you become one of them, you will get those same tax breaks, IF you know how.

Here's how. You become one of them by using investments to make your money multiply. You can do that while remaining also in the E and S quadrants, if you are well-paid, but Kiyosaki advises that you join the B quadrant, by building a business system that will essentially work on its own without much input from you. Then you can either keep it or sell it, but you must invest.

Investing, preferably in real estate?condos, rental property, land and the like'is your ticket to financial freedom.

Article Source : Tax Sale Property In

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Both Carlos Scarpero & Alex Anderson are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Carlos Scarpero has sinced written about articles on various topics from Fishing, Residual Income and Computers and The Internet. Carlos Scarpero is an experienced real estate investor who specializes in land. On his tax lien and tax deed blog at