A. Few people have heard of tax lien investment. It is a type of alternative investment with guaranteed returns (provided by government) and a potential for a big upside,
What is a tax lien?
A lien by definition is a claim against an item.
Every piece of real estate - vacant law, raw land, or land with buildings on it - is subject to property taxes . Many property owners just pay their property taxes along with their mortgages; but sometimes the property owner doesn’t have a mortgage or maybe the owner passed away, this creates a chance that the property owner fails to pay for those property taxes before the due date. Instead of raising taxes for those that actually pay taxes, the county places a tax lien on the property. The tax lien affects the ability to transfer ownership to another party. After the tax lien is issued it gives the county the ability to collect the debt in another way, through tax lien certificates.
The county issues the tax lien certificate and then announces the sale of the certificate (as expected, different counties have different dates for such sales). Whoever owns the certificate will have guaranteed interest on investment by the county government!
The tax lien investors don’t pay the taxes for the property owner, the investors simply purchased a certificate in the same amount that the property owner owed to the county. The investor doesn’t own the property at this time; he or she only owns the certificate. However, the investor may have the right to take ownership after the redemption period ends if the property owner doesn’t pay his or her taxes.
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