Call Us (678) 408-0595 —

Benefits and Risks of Tax Liens

Like any other method of investment, tax liens come with their own set of pros and cons. Tax lien certificates can be an exceptional choice for the investors with the knowledge and experience to succeed, but they can become a trap for those who are unprepared. In today’s blog, learn what mistakes you should watch for and what benefits you can enjoy if you know how to navigate this niche investment market. If you are interested in taking the leap, turn to GA Tax Lien to get the training you need to succeed! We have a number of boot camps and seminars available to help you learn what you need to know. Explore our site to find the right workshop for you, or contact us today to learn more!


Good Return on Investment

If you have done your investigation of tax lien investment, then you have probably heard of one of its greatest advantages: a good return on investment (ROI). You can receive a fixed rate of interest on each tax lien certificate you own, and that rate can be as high as 36 percent depending on your state of residence. Better yet, statistics show that almost every single tax lien is paid back in full, so those without real estate investment experience don’t often have to worry about foreclosure and flipping houses. Simply enjoy the steady returns!

Low Buy-In

For many types of investments, you need large amounts of money simply to get involved. Mutual funds, for example, often require thousands of dollars up front. Tax lien certificates are often auctioned off to the highest bidder, but you can find options that cost hundreds of dollars instead of thousands. Tax liens are a significantly more accessible method of investment, making it very beginner-friendly, whether you are looking for an alternative to your dead-end job or you’re an experienced real estate investor who wants to diversify!

Not Market Dependent

Another great benefit of tax liens is that the returns are not dependent on movement in the market in the same way stocks or bonds are. Your ROI is built off of an interest rate, making it a stable and predictable form of income. Tax liens do have their own ups and downs, of course, but they are often opposite the peaks and dips in real estate. If the housing market dips, tax lien certificates can be a good countermeasure taken by knowledgeable investors.

Can Take Ownership of Property at Low Cost

While many property owners pay back the amount listed on their tax lien certificates in full, if they don’t do so within the allotted timeframe, you can gain ownership of a property at a cost well under market value. The deed is transferred to you, the investor, and you can foreclose on the property and do with it what you wish. This is one of the benefits that often draws real estate investors into the niche of tax liens!


Your Responsibilities

One thing to consider before jumping into the world of tax lien certificates is that this method of investment does require more time and attention than others. You will have responsibilities as the owner of a tax lien, such as informing the property owner that you purchased their tax lien and what their interest rate will be. You also need to be aware of the rules, regulations, and limitations surrounding tax liens. For example, liens typically expire sometime after the redemption period, and if you do not take action, you will lose the right to collect unpaid taxes.

Possible Ownership of Low-Value Property

Many of the hassles and downsides of tax lien investment are associated with the process of foreclosing on a property after the owner does not fulfill their repayment responsibilities. Foreclosure happens in only a fraction of these cases, but you should plan ahead for the possibility when you first invest in a tax lien certificate. If you don’t, you may find yourself saddled with ownership of a low-value property that is difficult to sell — not to mention the associated property taxes that got the original owner in trouble.

Face Other Liens or Claims

Another danger you may face as an investor if you do take ownership of the property is the possibility of other claims or liens on the property. For example, the Internal Revenue Service (IRS) or other creditors may be able to claim the property if the original owner declared bankruptcy. For this reason, it’s essential that you do your research on the property before you buy its associated tax lien certificate.

Learn More with a GA Tax Lien Bootcamp

The downsides of tax liens may seem daunting, whether you are worried at the prospect of foreclosing on a property or getting overwhelmed by your responsibilities as an investor. With the right training and support, however, you can conquer this investment niche and build a steady income. GA Tax Lien is here to give you the resources you need!

Not only does GA Tax Lien offer tax lien boot camps for beginners, we also facilitate a mentorship program that will help you achieve your dreams. We even offer classes for real estate brokers and agents where they can earn continuing education (CE) credits and gain important insight into tax liens that will benefit them and the investors they work with. Explore our site to learn more about all that we have to offer, and contact us today to register!