Is it possible to earn an interest rate of 16% or more, secured by real estate, with collections handled by a government agency?
The amazing answer is, "Yes!"
In The 16% Solution, Joel S. Moskowitz explains how you can get these returns by investing in tax lien certificates.
Local government agencies have a problem. People don't currently pay their property taxes. In order to improve their cash flow, the counties in many states (unfortunately, California isn't one of them) sell the receivables for property taxes, called tax lien certificates, to investors. The investors receive the penalties and interest from the taxpayers. The tax lien enables a qualifying lien holder to foreclose on the real estate and has a lien position superior to a first deed of trust.
Moskowitz compares how the returns and rules vary from state to state, and provides detailed contact information for you to get started.
Since the travel expense to buy a tax lien is an acquisition cost, the expense is (eventually) tax deductible (when the lien is paid off). Some "vacation" states that offer tax lien certificates include Arizona, Colorado, Florida, New York, Massachusetts and Vermont.
If you participate in the auctions to buy these investments, tax liens can require a considerable investment of your time. Some of the liens unsold at auctions can be purchased by mail. In some cases, you will want to visit the site of the property before making the investment. You might need to hire a local attorney if you foreclose on a tax lien.
If you have a significant amount of cash to invest and you're looking for high, secured returns with the potential of receiving a windfall through foreclosure, you might want to look into the advantages of tax lien certificates. A good starting point would be to read The 16% Solution.
Buy it on Amazon: The 16% Solution: How to Get High Interest Rates in a Low-Interest World with Tax Lien Certificates, Revised Edition.
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