People often ask, “Dustin, what happens if I buy a tax lien and it doesn’t redeem?” It’s a great question and highlights the importance of understanding the risk of tax lien investing. Here’s the answer: you end up owning the property for the cost of the tax lien.
This is why tax lien investing is considered one of the safest investment options in America. It’s essentially a win-win scenario. If the homeowner redeems the lien, you receive your principal back with interest. If they don’t, you acquire the property outright, free and clear of mortgages.
Why Tax Lien Investing Is a Smart Option
The biggest opportunities often arise when liens don’t redeem. Typically, property taxes are only 1%-2% of a property’s market value. If the homeowner fails to pay, you secure the property at a fraction of its worth. However, the risk of tax lien investing comes into play when proper research isn’t done. It’s crucial to evaluate the property and its potential before committing to a purchase.
Consistency Leads to Great Deals
The more you invest in tax liens, the more chances you have to secure incredible deals. Here’s an example:
- Suppose you buy 100 tax liens in a year.
- Around 97% will redeem, giving you back your principal plus interest.
- The remaining 3% will result in owning the property outright, mortgage-free.
These are impressive odds that underscore the potential of tax lien investing.
Tips to Reduce Risk and Maximize Success
To minimize the risk of tax lien investing, follow these key tips:
- Do Your Research: Understand the property’s value, condition, and location.
- Stay Consistent: Consistency in purchasing liens improves your odds of success.
- Understand the Process: Familiarize yourself with the rules and redemption periods in your area.
Thanks for reading this post! If you have questions, success stories, or want more information about Tax Lien & Deed Investing, like, comment below, or reach out. My team and I are here to support you!
-Dustin
