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pennies on the dollar
rule of 72
wealth building
face value
property management
amount of time
How To Buy Tax Lien Certificates
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How To Buy Tax Lien Certificates

If you want to learn how to buy tax lien certificates it's important to understand why you want to invest in tax liens and what you hope to achieve. Investing in tax lien certificates is not a get rich quick thing, it's more of a long term wealth building process.

Before you decide where you want to invest, you'll want to have some clearly defined goals. If your goal is simply to earn a better interest rate than what the banks are giving you, where you invest is not as important. As long as the property is worth a lot more than the face value of the tax lien, you will probably do well in any state that offers tax lien certificates.

If you are hoping to pick up a property for pennies on the dollar, you will want to learn the foreclosure laws within the state in which you are investing. Some states have fairly simple foreclosure procedures. If long distance property management isn't a problem for you, there are some real bargains to be found.

If your goal is to earn exceptional interest rates on your money, you'll obviously want to chose a state that offers the highest interest rates. If you don't mind crunching numbers, the rule of 72 demonstrates what a difference a few percentage points can make over a given amount of time.

The rule of 72

The rule of 72 shows you how long it will take for an investment to double in value given a fixed interest rate. I know most

people don't like math but bear with me here. 72 divided by the given interest rate equals the number of years it will take to double your money.

Here's an example:

The State of Florida offers a maximum interest rate of 18%.

72 / 18 = 4. So, if you are earning 18% interest, you will double your money every 4 years.

Lets expand on that:

Let's say you have a 32 year time line to work with. 32 / 4 =8. In other words, you can double your money 8 times in 32 years given an interest rate of 18%.

If you started off with $2,000 today and doubled it 8 times in 32 years you would be looking at $512,000!

Note: This example only demonstrates the power of compounding interest and the rule of 72.

Certain circumstances may lower interest yields and don't forget, you will have to pay income taxes on

your earnings along the way.

As you can see from the example above, learning how to buy tax liens can be quite lucrative over time.

Having clearly defined goals will help you exercise the self discipline needed to become a successful investor.

Then it's just a mater of doing your due diligence. The properties are out there and it's just a mater of finding

the right ones to fit you portfolio. Think of it as a treasure hunt.


Street Talk

franco1  

what a long term in vestment . it will require patient to rip the profits. thanks for updating us on the investment opportunity

Reply
  about 6 years ago
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