Investing in Properties that owe back taxes.

[Michael Randle]

Occasionally I see people who invest in Tax Liens or you hear on the ratio 'Invest in government guaranteed tax foreclosures blah blah guaranteed 1,000,000% return on investment'.

But I am interested in what/how people invest in this area.

I know that if someone does not pay their local taxes the city can foreclose on them. But besides this step one I do not know how people make money with this whole process. I know there are primary and secondary liens etc etc.

If someone can point me into a non-bs (non-sell me something or some service) direction as to how an investor makes money when people stop paying there taxes that would be greatly appreciated.

Thank you!

[Ned Carey]

@Michael Randle

No, you cannot simply pay off someone else' taxes and have any rights, you just did them a favor for no reason.  Tax liens are sold at pubic auction, and you must compete to buy them. 

Tax lien vs Tax Deed - Important Difference

TX is a "tax Deed" state unless I am mistaken. They do not sell tax liens. They sell a tax deed, a subtle but important difference.  Both could be called "Tax Sales" but a tax deed gives you  ownership rights. A tax lien only gives you the right to collect the taxes. However with a tax lien, you can foreclose and take the property if the owner does not eventually pay.  Many if not most states that sell tax deeds give the owner a period of "Right of redemption" where they can reclaim the property by paying the tax deed holder both the lien and interest and or penalties.  You'll have to ask  TX tax deed experts the particulars on TX law.  

No a tax lien does not give you that right to evict until you complete a foreclosure. A tax deed does give you that right, depending on a specific state's laws. 

If you "buy a property" with a tax lien" the tax lien gets paid off when you buy the property. If you buy the tax lien against the property, they you can do what you say after you foreclose and take the property.