How to Collect Your 16% ROI
How to collect your 16% is greatly detailed in the tax lien investing education section of our website, but here's a simplified explanation:
Around 90% of the tax lien certificates you buy will be redeemed when the property owner realizes they forgot to pay their property tax and brings them current with the local county by paying them and the 16% (pro-rated monthly) late fee.
Once the taxes are paid by the owner, the county tax assessor will mail you a check for the amount you paid for the tax lien certificate with the additional interest.
Example: You purchase the latest Arizona tax lien lists and you see a property that hasn't paid their taxes for the last year. You do the appropriate due diligence online and see that the property is a single family home. The back taxes owed are $3,000. You purchase the tax lien certificate on this property by paying the last year of taxes.
Two years later, the home owner pays his back taxes and the county tax assessors office sends you a check for your initial $3,000 plus the interest over two years of $960. YOU JUST MADE 32% ROI (16% per year)!
Learn more in the Education section of our website.
Around 10% of the tax lien certificates you buy will not be redeemed by the property owner within the first three years.
This typically occurs when the property is an office building or other commercial property owned by a corporation where the person responsible for ensuring the property taxes are paid has left the company or let it accidentally slip through the cracks (i.e. if they thought their property taxes were being paid via their mortgage company).
In this scenario, if the property taxes are not paid within three years, you have the right to foreclose on the tax lien and you become the new owner of the property.
You can then either keep the property and rent it out for a nice monthly cash flow or you can sell it for a quick profit.
Example: You purchase the latest Arizona tax lien lists and you see a property that hasn't paid their taxes. You do the appropriate due diligence online and see that the property is a small office building.
The back taxes owed are $25,000. You purchase the tax lien certificate on this property. Three years after your purchase date, the property owner has still not brought his taxes current so you proceed to foreclose on the tax lien.
Once the property becomes yours, you then contact a real estate agent and ask them to sell the property for you. You sell the property for $750,000, you pay your 6% Realtor fees of $45,000 and you pocket the remaining balance of $705,000. THAT'S AN AMAZING 2,820% ROI!
Learn more in the education section of our website.