How To Profit Off Tax Delinquency

Know what you are purchasing

When you initially buy a lien, you are not buying an actual piece of land. Instead, your investment is on the debt or delinquent taxes of the property, who has fallen behind on payments. The buyer is given first position on the title of the property over others after he/she has paid the outstanding taxes. However, every State is different. Make sure you know the interest rate and return per year. Sale dates vary from State to State as well. Each state usually has one or two predetermined months any given year. The timing is important when calculating potential returns on your lien.

Calculating Rate-of-Return on the Lien Certificate

When you try to buy a certificate, it is sold at face value plus interest and administrative charges. The lien interest rate is either bid down or the entire purchase price is bid up to a premium bid. The property owner must repay the lien amount to the certificate holder plus an interest rate between 16% and 18%. The property owner also has a set redemption period to pay the lien. If the lien is not paid by the set deadline, the certificate holder can foreclose and obtain the property deed.

If you are a member of Spiegel & Utrera, P.A.’s General Counsel Club and have questions about buying tax liens, call (800) 734-9900 or clubassist@amerilawyer.com for assistance. Remember, as a member of the  General Counsel Club, you receive unlimited legal, business, credit and tax advice all year long.

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