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Tax Lien InvestingThe basics of tax liens are in the fact that state, county and local governments need to raise money via taxation. Tax on property is one of these taxes. Usually, owner of a parcel of real property is assessed to a dollar amount to pay which is based on the value of that real estate. This tax is collected by the county where the property is located. Now, if the owner of the property cannot pay the tax, the amount of the tax becomes a lien against the property. The county needs the money immediately to fill budgetary needs, however. By state statute, each of the counties is authorized to collect the taxes due that remain unpaid by selling at public auction, either a Tax Lien Certificate or a Tax Deed. Your investment by buying either one of these types is called investing in tax liens. Even though these seem safe investments, and according to some reports, statistically more than 95% of tax lien certificates redeem, you may be one of those whose certificate will not. Thus, you should also think about diversifying your purchases of tax liens to reduce the overall risk.
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