Tax Lien Certificate Explanation
Ever heard of a tax lien certificate? Dave has, and tells Jim why it's just another get-rich-quick scheme.
QUESTION: Jim wants to know about tax lien certificates as an investment. Dave scoffs at this one.
ANSWER: A tax lien certificate is a get-rich-quick scheme. I bought and sold real estate for years. In all my years, I met one person who made money and a bunch who lost money. It’s a hassle for no money; a needle in a haystack. It’s someone who gets behind on property taxes and in some states, they sell a certificate, and then if the person doesn’t pay off the holder of the certificate, the holder of the certificate becomes the owner of the property. In some states, there’s a guaranteed rate of return on them.
I’ve never seen anyone really make money on them, and if I do, it’s all in increments of $2,000 or $5,000, so you end up with something as thick as a phone book to invest $100,000. It’s a lot more midnight-cable TV tapes than the real thing. I wouldn’t fool with tax lien certificate investing.