Tax Lien Investing Basics: Six Things You Need To Know

Submitted by: Joanne Musa

If you believe the hype that you here about tax lien investing, you would think that you just go to a tax sale, buy some liens and make loads of money in a few months. But if that were true than everybody would be doing it! If you ve actually started to invest in tax liens then you know that there is some work involved in order to be successful. You know that you have to do your due diligence on tax sales properties. And you know that those double digit interest rates that everyone talks about can be bid down at the tax sale.

There are actually 6 things that you need to know about the state and/or county that you are investing in when you re starting out in tax lien investing.

1. The default interest rate

2. The bidding process

3. The redemption period

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4. The tax lien expiration period

5. How subsequent taxes are handled

6. Additional Penalties

These six things make a huge difference in your profit and make tax lien investing very different in different states. Let me give you three examples from states that are all bid down the interest states, but because of the other 5 factors that we mentioned investing in each of these states is quite different.

In New Jersey the default interest rate is 18% and the interest rate is bid down at the sale. But it is quite a different process from other bid down states because in NJ the interest rate can be bid down to 0% and then premium is bid for liens. That means that you do not get any interest on the certificate amount and you do not get any interest on your premium. The redemption period is 2 years and the lien expires in 20 years. So why would investors pay premium for liens and not get any interest on the lien amount? Investors are willing to pay premium for tax liens in New Jersey because once you are a lien holder you have the right to pay the subsequent taxes on the property if the owner doesn t pay them. And you get the default interest rate (18%) on your subsequent tax payments. You also do get a penalty of anywhere from 2-6% on the lien amount when the tax lien is redeemed, depending on the amount of the lien. I ve simplified the process a little, but that s basically how it works in NJ.

Florida is similar to New Jersey in that the default rate and the redemption period are the same. But bidding in Florida is a little different than in NJ. In Florida you do not get to pay the subsequent taxes on your lien. If the owner doesn t pay the taxes, the property will wind up in next year s tax sale. The interest rate is bid down at the tax sale, and the lien expires in 7 years. Bidders will not bid the interest down to zero, but will frequently bid down to .25%. They do this because they will get the 5% minimum penalty when the lien redeems.

In Arizona, the default interest rate is 16%, and the interest is bid down like in Florida and New Jersey. But the interest is rarely bid down to 0%. The redemption period is three years and the lien expires in 10 years. You can pay the subsequent taxes but you only get the interest rate that you bid at the tax sale on your subsequent tax payments. Some counties in Arizona actually force you to pay the subsequent taxes in that if you don t pay them they will sell your lien with the current lien in the next tax sale. The interest rate in Arizona counties is rarely bid down to lower than 6% and most bids (at least in the online tax sales) are awarded at or close to double digits. Part of the reason that investors in Arizona are not willing to bid down to very low interest rates, like in Florida, or 0% as in New Jersey is that unlike Florida and New Jersey, there is no penalty in Arizona. And there are additional costs for purchasing liens and for paying subsequent taxes, which you do not get back when the lien redeems. It s the cost of doing business with the county tax office.

So you see that tax lien investing, even among, these states which have similar interest rates, bidding procedures, and redemption periods is very different do to how they treat subsequent tax payments, and whether they have penalties or not. There are also states that have very different bidding procedures, redemption periods, expiration periods and treatment of subsequent tax payments, which can change the game quite a bit.

In Maryland for instance, the default interest rate varies with the county. Premium is bid at the tax sale but it doesn t all have to be paid unless you actually get to foreclose on the property. The redemption period in some counties is only 6 months, and the lien expires in 2 years. You do not pay the subsequent taxes unless you foreclose on the property. There are no additional penalties that the investor will receive when the lien redeems except for payment of some legal costs if the foreclosure has been started.

So you can see that it is really important to know about these 6 factors in the state and county that you are investing in. Know the rules before you bid and you will be able to build a profitable tax lien portfolio!

About the Author: Find out more about the basics of tax lien investing, like what is the difference between a tax lien and a tax deed, where s the best place to invest and how to get the tax sale information in the Tax Lien Investing Basics course at

TaxLienInvestingBasics.com

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Advantage Of The Halifax Equity Release Scheme?

Submitted by: Mable William

The Halifax equity release scheme or as it is officially called by the Halifax, Retirement Home Plan is an interest only mortgage that is available to retirement people. With an interest only mortgage the outstanding balance always remains the same throughout and you make monthly payments of interest to the lender.

With traditional roll-up equity release you do not make any repayments of interest but the interest is being rolled up, meaning the outstanding loan is growing all the time. Typically, with current interest rates the loan will double every 12 years or so, this means that if you borrowed ?10,000 in 12 year’s time you would owe ?20,000.

For those retirees that can afford the monthly repayments from their pensions or state benefits then the Halifax equity release plan makes perfect sense. Oddly, the plan is not available from the Halifax themselves; you have to seek advice from a specialist equity release broker. Getting advice is vital for this type of plan as the consequences of getting it wrong can be very costly and maybe cannot be put right during your lifetime.

Does Halifax equity release plan require a repayment vehicle?

The simple answer to this is NO it does not. As the Halifax equity release plan is an interest only mortgage for pensioners, no form of repayment is required. This is one of the unique features of the plan.

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Your individual mortgage with the Halifax equity release scheme is allocated a term of 40 years, this should be ample to run for the rest of your life. In contrast to traditional interest only mortgages where the term allocated is generally a maximum of 25 years, the 40 years allocated should mean you will die prior to the term ending.

Can I pay off the Halifax equity release mortgage early?

Yes you can. You will, however, need to check that you do not have any early exit charges on the rate that you chose.

The Halifax equity release scheme or as it is officially called by the Halifax, Retirement Home Plan is an interest only mortgage that is available to retirement people. With an interest only mortgage the outstanding balance always remains the same throughout and you make monthly payments of interest to the lender.

With traditional roll-up equity release you do not make any repayments of interest but the interest is being rolled up, meaning the outstanding loan is growing all the time. Typically, with current interest rates the loan will double every 12 years or so, this means that if you borrowed ?10,000 in 12 year’s time you would owe ?20,000.

For those retirees that can afford the monthly repayments from their pensions or state benefits then the Halifax equity release plan makes perfect sense. Oddly, the plan is not available from the Halifax themselves; you have to seek advice from a specialist equity release broker. Getting advice is vital for this type of plan as the consequences of getting it wrong can be very costly and maybe cannot be put right during your lifetime.

Does Halifax equity release plan require a repayment vehicle?

The simple answer to this is NO it does not. As the Halifax equity release plan is an interest only mortgage for pensioners, no form of repayment is required. This is one of the unique features of the plan.

Your individual mortgage with the Halifax equity release scheme is allocated a term of 40 years, this should be ample to run for the rest of your life. In contrast to traditional interest only mortgages where the term allocated is generally a maximum of 25 years, the 40 years allocated should mean you will die prior to the term ending.

Can I pay off the Halifax equity release mortgage early?

Yes you can. You will, however, need to check that you do not have any early exit charges on the rate that you chose.

About the Author: Retirement Solutions is an indpendent financial adviser and specialist in equity release. We can also advise you on the Halifax equity release plan. Visit

retirementsolutions.co.uk/halifax-retirement-home-plan-mortgage

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