Please clear the air on Tax Lein Certificates vs Tax Deed sales

[Michel Steele]

Tax Lein Certificates and Tax Deed sales are a hot topic, so it seems 

I'm still not sure I understand the difference between a Tax lien Certificate and a Tax Deed. I know that a Tax Lein is paying the taxes owed and then you wait for maturity(owner pay taxes) if they do you can collect interest and your investment back. What I don't understand is if you buy a Tax deed do you own the land or property you bid on? I live in Florida and when I look at the two different areas for Tax Lein and Tax Deeds they seem to intersect. 

[Shannon Keating]

Tax Lien is purchasing a lien against the property . The investor is paying the taxes. The home owner has redemption period to pay the taxes plus interest. When this is done you get your original investment plus interest (varies state to state). If the home owner doesn't pay the back taxes with in the allotted time the investor initiates foreclosure proceedings. Even after successful foreclosure there is  usually a redemption period allowing the homeowner to come in and pay everything, back taxes, interests, and any out of pocket expenses incurred by the investor. Bottom line typically you get your investment plus interest. Sometimes you get the property. 

Tax Deeds are generally auctioned after the homeowner is delinquent for several years. The County auctions to get the delinquent taxes, interest & service fees. At the end of the auction the investors owns the deed to the property. Please check as each state has different rules on redemption period. So even at the end of the auction the deed should "rest" during the redemption period to insure the investor does not renovate the property only to have the owner come in and redeem all costs. Even if this happens the investor gets their money back but you have also lost potential time as the property sits during redemption.

I like both strategies as options of diversification. Last June we purchased a great home great neighborhood in Tulsa OK at the June Tax Deed auction. Success story on this one. The property did require significant remodel but we remained under ARV. So we have a buy & hold property with instant equity and easy rentability.

I hope this helps...