Join Mark and Scott on this week’s episode of #AOPI as they talk with Melanie Finnegan from Tax Lien Wealth Solution to discuss tax lien investment strategies.
Listen in as they discuss:
-The tax lien investing process
-The tax lien investing strategy
-Creating water flow and cash flow
And, more!
Melanie also shares the worst advice she has seen or hear given in tax lien investing. Tune in now to hear more!
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Investing in tax lien certificates is a less known but lucrative way to build wealth. Tax liens are imposed on properties in case the owner fails to pay their property taxes. When an owner doesn’t pay their property taxes, the government issues a lien against the property to cover the unpaid taxes. Property owners have a limited amount of time to pay the lien before the government forecloses on the property and sells it at a public auction.
Investors can buy these tax liens and acquire the right to collect interest on their investment when the property owner pays back the taxes. The seller of the tax lien then receives the full amount owed plus any interest. This makes tax liens a relatively safe investment option with consistently high returns.
Here are a few steps to follow in order to build wealth through tax lien investment:
1. Research and Learn – Investors need to know everything there is to know about tax liens, including the regulations governing the process. It is wise to attend seminars, conferences and buy books and other resources that will help you develop a deeper understanding of the procedure.
2. Look for suitable assets – Some states may offer properties that may have good value, while others may only offer small values. Investors should look for properties with the potential for long-term appreciation in addition to the value of the written tax-payment.
3. Create a strategy – Investors should have a plan in place to bid on liens and attend the auction with their margin of profit already set in their minds. They should take into account the amount of capital they can invest, the interest rate for the tax lien, and the timeline for the property owner to repay their taxes.
4. Purchase the lien – Investors can buy a tax lien or purchase a tax lien certificate (depending on state laws) for the amount that the homeowner owes in taxes. Once you own the lien, you’ll receive interest payments on the full value of the lien.
5. Monitor the lien – Investors must ensure that the property owner doesn’t reacquire the tax lien by paying off their property tax before the tax lien certificate expires.
6. Profit! – The majority of tax liens are paid within a year, providing investors with an opportunity to earn a profit without requiring a long-term investment.
Conclusion
Tax lien investment is a quick and easy way to profit from real estate investments without having to be an expert in the industry. The process is relatively uncomplicated for a beginner in investing and can lead to a substantial return on investment. However, it is critical that investors research, create a sound strategy, and monitor the lien to gain the most value on their investments. By following these steps, tax lien investors can build wealth and supplement their income with a low-risk investment opportunity.
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