Almost every county in the United States of America has property taxes that go unpaid every year. If property taxes become past due, counties in many states actually sell certificates for the amount of the unpaid taxes. The reason for this is so that the county can recoup the money immediately to be able to meet budget. How each county does this is different, but essentially, you buy a certificate that can have interest rates of up to 18 percent attached to them. You’re making a bet that the property taxes are eventually paid, and you gain the interest.
Why would you want to do this? Nine out of ten times, it seems, these certificates become redeemed and you’ve made easy money. It’s actually not a very complicated process, and many of the sales are actually done online.
Here are a few articles that explain the process quite well:
Tax Lien Investing Basics (Part One)
Tax Lien Investing Basics (Part Two)
How to Buy a Tax Lien
The reason I wanted to write about this is that I’m sure most people don’t even know this kind of investment exists. While there is some risk to it, like with just about any investment, it’s a lot better than a savings account in terms of interest. But definitely understand the risks. Here’s a good article about them: Five Risks of Tax Lien Investing.
Not every state offers these certificates, but many do. Of course, do a ton of research before investing in in these. It’s a lot safer than the stock market, though, and if you choose the right certificates, apparently it can be really easy money.