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

Some real estate gurus make investing in tax bonds look like a sure thing. That you are guaranteed to get huge interest rates and that is “government guaranteed”. Unfortunately for you, they leave out some facts and are stretching the truth quite a bit.

First, 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 bonus is redeemed. In New Jersey, for example, the penalty is 2-6%, depending on the amount of the bond. In Florida there is a 5% penalty. Plus, once you own the bond, you can pay any subsequent taxes and get maximum interest on that.

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 foreclose after the redemption period is over. But no one guarantees that you will get paid! What these gurus mean when they say the levies are “government guaranteed” is that the law is on their 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 through the mail or online. Would you buy a property you didn’t see first?

When you buy a tax certificate, even if you are not buying the property, there is always the chance that the bond will not redeem and you will have to foreclose on the property. What if the property has no value? What if it is non-building land? So you’re left 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 thinking of purchasing a program to learn how to invest in bond certificates or tax deeds, beware! Don’t buy an e-book, training program, or course from someone who cloaks the business of investing in bond certificates and tax deeds and makes it seem like you can’t fail and there is no risk. The truth is that you can fail and there are risks to avoid. Instead, buy one of these products from someone who can tell you what the risks are and how to avoid them. This will give you a better chance of success in purchasing profitable tax lien certificates and tax deeds.