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Why should I invest in tax liens?

Don't just invest in tax lien certificates because I told you to!

Hopefully you realize the earning potential inherent in tax lien investing. But if you still need some persuasion, here are some good reasons to invest in tax liens over other available investing options.

Safe

Tax liens are sanctioned and run by the government. Your investment is protected by state law and secured by actual real estate! What other kind of investment option provides that kind of backing?

Minimal competition

While many people "in the know" invest in tax lien certificates, on the whole this investment option is unknown to the general public. Most people still think that putting their money in stocks, bonds, mutual funds, or money market accounts are their only options.

High return on investment

As already stated your return on investment can be anywhere from 5% to 25% depending on the state. And if you take into account early payoffs and calculate your effective ROI you can earn anywhere up to 300% interest in a state like Texas. Imagine if you could still earn your standard 3% interest on a CD, but withdraw all your money after 1 or 2 months of investment! It would suddenly make CDs a lot more worth it, right? Well, this is in essence why tax lien investing is so great.

Lets take a look at some other investing options and see how they stack up to tax lien investing.

Investment Type
Interest Earned
Safety of Investment
Savings Account
1%
Safe
Money Market
1-2%
Safe
CDs
1-3%
Safe, but interest dependent on length of CD. To earn 3% money is tied up for a long time.
Stock Market
Average growth approx. 11%
Not safe. Figure will swing wildly on a year to year basis. Anywhere from -30% to +30%.
Tax Lien Certificates
5-300%
Safe. Government run. Secured by real estate. Enforced by state law. Fixed interest rates.

Further, what do you think banks do with your money when you invest it in a CD? They turn right around and invest that money in things like tax liens. Earning significantly higher interest rates with your money!

How do you find out about tax lien auctions in your area? Either call your town hall and ask for information. Or check your local county's website, you'll most likely be able to find the information you need there.

Still not convinced? Or maybe you're simply curious to learn more about tax lien investing? If you're interested in some more detailed reading, check out some of the wonderful books on tax lien investing available for sale. But if you want to cut straight to the chase there are also tax lien investing programs available for purchase that'll get you started right away investing in both tax liens and tax deeds.

Or if you're still not sure, check out some other great general resources that can help you if you're still asking yourself: Why should I invest in tax liens?

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