Real estate debts are becoming popular investments

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Interesting article about tax liens on the news wire.

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Real estate debts are becoming popular investments

TVPWire -- Everyday, more and more investors are putting money in tax lien certificates.

Tax lien certificates are like bonds on delinquent property taxes, largely a product of the recent real estate downturn. County governments like Mohave County, Arizona are trying to curb budget deficiencies by enlisting the aid of real estate investors. By selling the tax debt at high interest rates (up to 16 percent in Arizona), they’re able to continue to provide for government infrastructures without interruption.

Schools, police, roads, and other government programs are the direct beneficiaries of tax lien sales. Without the financing that comes from these auctions, county governments would need to cut their annual budgets.

“It’s an amazing investment opportunity created by the government,” said Don Sausa, tax lien expert. “Tax lien instruments can give you high returns, plus they help the community overall.”

With interest rates almost four times higher than CDs and market accounts, it’s no wonder tax lien auctions are becoming popular. Another reason for its popularity is because of its security. Depending on the state, if tax liens are not paid off within two to three years, investors could foreclose the property and own it outright.

“It brings in tax money that otherwise we wouldn’t get,” said Janet Baker, a county official with Mohave County. “Thankfully, there are investors out there willing to pay for other people’s taxes.”

Sample Rates of Return
Alabama Up to 12%
Arizona Up to 16%
Colorado Up to 14%
Connecticut Up to 18%
Florida Up to 18%
Indiana Up to 15%

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