The ONLY Five States Where You Should Buy Tax Lien Certificates

The ONLY Five States Where You Should Buy Tax Lien Certificates

I get the questions all the time…what are the best states to buy tax lien certificates in?  Like all real estate investments, the natural answer to this is to only buy delinquent tax certificates in areas that you know best—your local market or areas you have other real estate investments in.  However, the explosion of online auctions and wealth of due diligence information on the web has now given us the ability to invest in just about any state that sells tax liens.  I’m not limiting my buying to just Arizona and Colorado which are near me, I now can buy anywhere in the nation.

So, now, there is competition among states for investors—what separates them are their statutes governing tax lien investing (do they favor the investor or the taxpayer?) and the ease of buying the liens (are the auctions online and is the assessor’s information up-to-date?).  Feel free to post your comments and reasons why you think I’m wrong, but below are the only states I feel you need to invest in.

Florida Tax Lien Certificates

Florida tax lien certificates should be at the top of everyone’s list for many reasons: the ease of buying liens at the online auctions, the laws and processing of tax payments are very investor friendly and the online information from assessment data to tax data is very current and accurate compared to other states.  Florida sets the bar for all the other states that sell their property taxes and will set the trend going in the future.  The main downside that there is a lot of competition out there the bring rates down quite a bit—but with Florida being the largest tax lien certificate market out there, you can usually find a niche to buy at higher rates. You can also find out more about Florida tax lien certificates in my Kindle e-book called: A Beginner’s Guide to Investing in Florida Tax Lien Certificates.

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Iowa Tax Lien Investing – Just the Basics

Iowa Tax Lien Investing – Just the Basics

Iowa is a great state for tax lien investing specifically because of its high interest rate of 24%.  That’s 2% a month and a fraction of a month is counted as the whole month.  It also has the best statutes in favor of the tax lien investor—you get a free and clear deed without going thru a judicial foreclosure or quiet title action if you follow the statutorily-set procedures.


The Auction

The delinquent tax auction is held each year in June.  Any liens that aren’t sold then go to another sale in August.  Most counties use a random selection method for their way of awarding liens.  Basically, all the interested investors get into an auditorium and are assigned a number.  If your number comes up on a tax lien and you want it, you get it.  Otherwise, it goes to the next random investor.

Subsequent Taxes

The original buyer of the tax lien has the first right to purchase any subsequent taxes.  They can be purchased anytime as long as they are 15 days past the due date.  Any subsequent taxes that are not paid by the original investor can be sold at auction to another investor.

Foreclosure

Foreclosure can begin one year and nine months after the tax sale purchase.  Foreclosure must be filed within three years of purchase or the lien expires worthless.  In a following article, we will discuss the steps for foreclosure.  You must follow these steps exactly, ensuring that every interested party is notified, in order to have a free and clear deed at the end of the process.

And, Finally

Typically, the tax rates are fairly low in Iowa and the real estate market is stable.  As long as you’ve done your due diligence correctly, you can make gains on the real estate quite easily, should you receive deed.  But, most liens are likely to redeem and you can pocket that 24% annual return for yourself.