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? |
