Tax lien investing – safe investments with a government guarantee.
If you’re looking for a safe way to invest your money, you should think about tax lien investing. This type of investment will allow you to invest your money for a relatively short period of time (only a few years instead of decades) but without taking a high risk. Essentially, tax lien investing means that you are paying the taxes on somebody else’s property.
Once you purchase a tax lien for the amount of money that the property owner owes on their taxes, you are guaranteed to get the money and the interest that accrues while the property owner tries to pay back the government. However, instead of just giving a loan to the home owner, you are technically loaning money to the government – so if the property owner does not pay, you are still guaranteed to get something out of the deal.
In some cases, if the property owner does not pay the money that is owed, you might end up with the property instead. However, this is relatively rare. In most cases, the tax lien is paid off in about two years – which means that you’ll be getting your money, plus a lot of extra from the high interest fees that the government will charge to the property owner, in a relatively short period of time – guaranteed.
However, not all areas will allow you to participate in tax lien investing. Before you can start this, you will need to find an area that allows people to buy tax liens. In about half of the states in the United States, you’ll be able to buy tax liens. If you do not live in a state that sells tax liens, however, you can still invest – you just need to buy the tax liens of another state.
This is even easier than real estate investing in its purest form, since you will not have to worry about property values when you are tax lien investing. If you end up with the property instead of your money back, you will end up with more money than you paid on the taxes, and if you are paid, then the property values really won’t matter.
The easiest way to start with tax lien investing is to ask a state government that sells tax liens today.