Why Tax Lien Certificates Are a Safe Investment

When you look around you will find that most high yielding investments are unsafe and unstable. For instance, take a look at the stock and currency market; even though your profit can be enormous your loss can be catastrophic. Then when you look at bank CD's or Bonds they are very safe but your profit is very small and you'll be lucky if you keep up with inflation.

Well logic has it that the more money you can make, the greater risk people are willing to take. But tax lien investing is a completely different story; you can be earning a high return and still taking a small risk. Of course there is no investment where no risk is involved, but tax lien certificates provide a minimal risk. The reason for this is that each municipality desperately needs the property tax money, so they put up a system that will benefit investors and them. They set it up in such a way that the tax lien investor will only take minimal risk, and in the same time get the necessary revenue.

Now let's talk about the details as to why this investment is safe. First of all statistics show that almost all tax liens get paid up, some say that less then 1% of all tax liens actually go to foreclosure. The reason is very simple being that property taxes are only a small percent of the actual value of the property depending on where the property is located, it can be between 1%-5% of the actual value. If in the event a property owner can't afford to pay up he always has the option to make a quick sale of the property for a discount and pay off the tax lien and get some money out of it. After all it's better then losing his property altogether. There are only a small amount of tax liens that actually make it to foreclosure.

As we wrote before the value of the property is in most cases much greater then the tax lien, so if you do end up with the property you will be seeing a nice profit. I am not saying this is an easy feat because property comes with headaches, but the reward is well worth it. So happy investing!



Click here for more tax lien articles.