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An Excellent Rate of Return Buying Tax Certificates

By Hitesh Seth
Filed under: Taxes Property         Words in this Post: 461



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One of the appealing features of purchasing tax certificates is the unusually high rate of return on your money. On average, the annual rate of return is from sixteen to eighteen percent. In addition, in some states fees and late charges can be added to increase this return rate even more. The best approach to this type of investment is to investigate the rules and regulations of your state, and go from there.

Assume, for a moment, that you purchase a property tax certificate and place it in your retirement program. This way, there is no current tax liability on the interest accrued.

Purchasing a tax certificate is an excellent strategy to obtain a high investment return, a resort, a lake-front cottage, a second home, or an agricultural property. Purchasing tax certificates becomes t he cornerstone for conservative investments. It is better and more reliable than some stocks, and even some mutual funds. It is an investment that allows you to take control of your own investments.

From my experience, an aggressive approach to building wealth is purchasing a high yield tax certificate. It is aggressive, yet it is very conservative. In addition, the market is best during difficult economic times. There will always be tax certificate sales and opportunities to increase your wealth through this little-known vehicle.

In many cases, if the owners do not pay you the amount of the taxes, plus your interest and penalties, you can end up owning the entire property. When this happens, your return on investment can be 200 percent, 1000 percent, 2000 percent, or even higher.

If you are the winning bidder at a tax sale, you are obligated to pay the back taxes on the property. Generally with the county’s help, you ultimately collect the money from the homeowner. The owner has a certain time period in which to repay you. If they do not do so, you are legally entitled to foreclose on their property. If they come up with the money with which to repay you, they keep their property.

It is best to bid on certificates attached to properties you want to own. Don’t burden yourself with a tax certificate on a property, such as a service station, where potential lawsuit exposure exists due to fuel storage tanks in the ground that may eventually leak. Keep your investment simple with single-family dwellings. This is a remarkable way to accumulate wealth, one purchase at a time.

Also, as a tax lien investor there is no requirement that you auction the property, as in bank. When the time period has expired, you can do whatever you want with the property. You may take occupancy, sell it, rent it, or even give it to a church or charity. You are literally the new owner without a formalized foreclosure procedure.

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Author: Hitesh

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