When a homeowner fails to pay their property taxes, a lien is placed on their home and the tax lien certificate is later auctioned off to investors. During a tax lien sale you are purchasing a debt to be collected on. Essentially, you are paying the homeowners overdue tax burden and the homeowner will pay you back with interest. Once you hold a tax lien you will continue to accrue interest on your investment. The interest rates can range anywhere from 5% to 50%! Every time a homeowner sends a tax payment to the county, you will receive a check in the mail for your portion.
Anybody can participate in a tax lien auction and they are very popular because of their low risks and high interest rates. Usually, a tax lien sale is held once each year by the county, as a public auction. If you are interested in participating in a Tax Lien or Tax Certificate Sale, contact your local county office for specific information and details about these sales.
Visit our Education Center to get more information about buying foreclosures in your area.