How Much Can You Really Make Buying Tax Liens?

How Much Can You Really Make Buying Tax Liens?

With so much hype about tax lien and tax certificate investing, the question comes down to how much can you really make from buying tax liens?  The advertised, statutory rates in some states are as high as 24%.  Most states fall somewhere between 12% and 18%.

But, can your really earn that much?  If that was the case, wouldn’t just about everyone put their investments and retirement dollars into tax certificates?  You’ve probably seen courses where they talk about how to buy tax liens and promise huge returns.
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South Carolina Tax Lien Basics – The Overbid

South Carolina Tax Lien Basics – The Overbid

This year’s South Carolina tax lien auctions are finishing up.  But, for those of you heading to the auction or just want to learn more about this great state for tax lien investors, I wanted to summarize how the penalty rate works in South Carolina. You can also find more detailed information in my Kindle e-book on South Carolina tax liens.

Penalty Rate

Unlike most states, South Carolina doesn’t charge a default interest rate on the outstanding tax amount.  Instead, they pay a 3% penalty at the beginning of each quarter after the sale.  So, if you purchase a lien at the October sale, you’ll automatically receive the 3% if it were to redeem the next day.  However, you will not receive additional interest until January when you’ll earn another 3%.  You earn this 3% penalty each quarter for four quarters or a total of 12%.
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