How To Buy Tax Lien Certificates

Need to know how to buy tax lien certificates? Buying tax lien certificates is an easy and often lucrative process. Thousands of people invest in tax liens every year hoping to make a handsome profit, and many do. However, you do need to know how to buy tax lien certificates efficiently and responsibly. Here are the most important points to remember when you begin your tax lien certificate investing:

  1. Your first step is to locate a state in which to invest. Remember that not all states are created equal. Some states are better than others. Rates of return determine which states offer the most profitable tax lien sales.
  2. Get lists of available tax liens in a specific county of a good state. These lists are usually published in the newspaper two weeks before the sale. You may also find the information you need through county websites in most cases. Navigate to their delinquent tax links to begin your search.
  3. You’ll now want to price filter the list of liens, highlighting liens that fall within the general price range you want to spend on each lien. After you’ve highlighted the liens you are interested in pursuing, it is time to do brief due diligence on each of the liens. This process shouldn’t take more than fifteen minutes per lien.
  4. Each lien listed will have a parcel number that you should write down. Your next step is to again go to the county’s delinquent tax section on their website and enter that parcel number for each specific tax lien.
  5. After you’ve entered the number, a property file name will come up. This property file will tell you the lot size, improvements (houses, garages, etc) and how the property is zoned. This file will also include assessed land and improvements value as well as total assessed value.
  6. A good rule of thumb is to research more tax liens than you expect to actually purchase, as you won’t necessarily be able to win all of them at auction. The more liens you are adequately prepared to bid on, the better chance you’ll have of winning several good liens.
  7. It’s most important to establish that the lien property has value. Remember, the property is the collateral for your investment. So, you want to make sure the property has equal or more value than the cost of the lien. Stress accuracy on each lien while doing your due diligence. You don’t want to get stuck with a worthless property that you’ll be liable for if you have the property default to you.
  8. After you’ve prepared the information on the liens you are interested in bidding on, it will be time to attend an in-person auction or an online auction. Here you will bid on the liens. You may win some and not others.

Becoming a holder of a tax lien certificate is not, as many assume, a guarantee you will be paid. While you are the first in line to be remunerated upon default, if you have not done your homework you could be strapped with a worthless piece of property that you are now responsible for in every respect. This is why there is such stress on doing due diligence. Know the actual value of the property in advance.



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