Tax liens are a great way for an investor with little money to get in to the real estate market. I often encourage a new student to buy a few liens so that they can start putting dollars to work quickly. The returns are very good, usually between 12% to 18%, and the redemption periods are often two years or less.
Where do I start? First of all, you need to find out if the state you are interested in sells tax liens. Some states only sell deeds. (That discussion is for another day.) You then contact the county that you are interested in buing a lien. The office you want to contact is often called the Tax Collector. Find out where a list can be found in order to look at available liens. You will usually make your purchase through this office.
This is only a thumbnail on how to start. You can call in to the advisory line and get more help on what to do.
Good luck in whatever venue you chose to invest.
Roy Voeks
Official RE Coach
Have little to no cash to invest right now,however tax leins is where I plan to begin. What's the least amount of cash needed for an interrested novice like me?
OCritt - could be any amount of past due taxes - perhaps even $100. Keep in mind (1) if the property has a mortgage, the bank will always step in first and pay off the past due taxes before it goes to tax sale, (2) if the property goes to tax sale, there typically is a redemption period, depends on the state, but often 1-2 years. So if the owner comes up with that $100 they can pay that back plus the interest. If they don't pay up, then you can acquire the property (again, research your area because it's very specific).
Good luck!
- Tom