What are the Risks with Tax Lien Certificates:
We all agree there's a degree of risk with every investment. Tax Lien Certificates are no different. Listed below are some of the risks to consider.
Investment Capital is tied up:
Your money is NOT LIQUID when you invest in Tax Lien Certificates. From the time you purchase until the tax lien certificate is redeemed, the money is unavailable to you. Never use emergency funds for investment capital which will be "frozen" for a time.
However, there can be an advantage to having your money (if you are an investor) or funds tied up for a while. You cannot spend it on something else! This can be seen as a forced savings plan.
The property owner goes bankrupt:
In the event the property owner enters bankruptcy you DO NOT lose your money. The Taxes do not go away in bankruptcy. It may, however, take longer for you to get your money back. You may have to wait until the bankruptcy is settled or you may have to FORECLOSE on the property.
TIP - Foreclosure! If you have $5,000 invested in a $75,000 home, it might just become your property through foreclosure. That would be an even bigger return on your investment!
Hold on - breathe! Most people would never allow you to take their $75,000 property for $5,000. It has happened, but it is rare. It could occur in the case of an estate with no other assets and no heirs.
If you Foreclose on a property, you are in the FIRST POSITION. What does that mean? The Tax Lien Certificate always has priority over other liens or mortgages. You could control the sale of the property at a loss to the market value and still come out with your total investment plus interest. The other lien holders will get whatever is left! That includes the bank, the mortgage company, etc.
It takes money to travel to and pay for food and lodging when you attend a Tax Lien Certificate Auction. This travel expense is directly related to the distance you need to travel, the farther away you travel the greater the expense. However, the risk is not how far you need to travel. The real risk is spending money on travel expenses and not purchasing a Tax Lien Certificate.
There may be Tax Lien Certificates in your own backyard. The grass is not always greener on the other side. Check at home first. If the State you live in does not sell Tax Lien Certificates, start with the States closest to your home. An alternative to Tax Lien Certificates is Tax Deed Certificates. More Info about Tax Deed Certificates.
Our products are tailored to purchasing Tax Lien Certificates through the mail in the comfort and privacy of your own home. We provide the necessary information for you to contact a county and purchase a Tax Lien Certificate via the mail. This saves a tremendous amount of time and money.
Tax Lien Certificate investments are not without risk, the bottom line is you will get paid sooner or later, BUT YOU WILL GET PAID!
Learn more about the Tax Lien Certificate REWARDS.