Introduction

I. Introduction

1. Early 1970’s real estate has beat the stock market nearly 2:1.
2. According to the National Tax Lien Association, an estimated $14 billion in property taxes go unpaid each year creating a broad market for investors.
3. Each property is given a “tax assessment” value. The owner of the parcel pays a tax on the assessed value. In 2016, the rates by state ranged from a low of 0.27% in Hawaii to a high of 2.35% in New Jersey.
4. The average property tax rate for single-family homes in the largest city of each U.S. state hovers around 1.5%. The average American household spends $2,149 on property taxes for their homes each year, according to the U.S. Census Bureau.
5. If you want to invest in tax lien certificates, one of the first principles that you need to be aware of is redemption.
6. A tax lien certificate is simply a lien that the county has sold to an investor for the delinquent taxes. The investor then waits for the property to “redeem,” which simply means that the homeowner has paid off the tax lien with interest and penalties to the investor. If the homeowner does not pay off the tax lien within a specified period of time, called the “redemption period,” then the investor has the right to foreclose on the property and potentially pick up a property at pennies on the dollar!