Tax Lien CertificatesHas anyone ever invested in tax lien certificates? It sounds to good to be true. You can get interest from 8 percent to 36 percent by buying up the outstanding taxes of private homes.
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It is not too good to be true, but you do need to be careful. You would need to do your due diligence as though you were buying a rental property or something similar. If you are not careful, you may end up stuck with a parcel of land that is useless and you will need to pay the taxes on that parcel or attempt to sell it. For example. I knew of a guy who purchased a tax deed (similar to a lien) and did so without researching the parcel first. The parcel ended up being a 20 ft deep by 10 ft wide sliver of land between to houses. There was literally nothing he could do with it. He could not build on it because it was obviously too small. Nobody wanted to buy it from him for obvious reasons. Now, granted, the property tax on such a parcel is low, but none-the-less he had to pay it and received no benefit from it. A few years later he was able to sell it to one of the neighboring houses for like $100 (the neighbor knew this guy was up a creek). There are other horror stories like that as well with less fortunate results. Just do your homework. Call real estate agents if you are purchasing liens from out of state. Get a feel for the market. After all, you may end up with the property. Very lucrative, but also has some risk.