This has been a crazy year for stocks. We have seen some amazing highs, with the Dow hitting new records and we have seen a lot of that fervor quickly go away. Well that’s the nature of the paper trade you just never really know what you are going to get. All of the most sophisticated software tools and analysis won’t give you the result you are seeking, a steady, safe, predictable, and high rate of return.
In many ways that desire is oxymoronic at best. You know, a safe high yield investment. It’s about risk reward, right? The more you risk, the higher the potential return should be? I may be a bit over simplistic in saying that as I understand how you can minimize losses with stops, puts, etc., but that takes a lot of energy to implement a good system. Time is not a commodity that I have much of so there has to be a better way.
After asking that question many times, I stumbled upon the answer in real estate. Now I am not going to tell you to invest in duplexes or to go and find houses that you can fix up and sell. Those are very viable business options but they aren’t for everyone. What I found is called Tax Lien Certificates or Tax Deeds (depending on where the property is).
Tax lien certificates are a safe, government backed investing option that should be apart of your portfolio. Rates of returns can be anywhere from 12-50% and that return is backed by the taxing authority of your local county government.
This is how they work in a nut shell, a homeowner can’t pay their property taxes so the county attaches a lien to the property. Given that the county needs money for schools, roads, etc, the allow investors, like you, to pay those taxes on behalf of the homeowner. The county charges the homeowner penalties and interest on their outstanding tax bill and passes the interest revenue to the investor. In rare instances you can end up buying the house for pennies on the dollar because you invested in the tax lien.
Now to be fair, this is the 30,000 foot overview of investing in tax lien certificates and there is obviously more to it. I spent a lot of money investigating this so that I could diversify away from all of the volatility in the stock market. Given that I was already in the real estate game, it was an easy fit for me. So go ahead and investigate tax liens for yourself to see if they fit your investing goals, especially if you are tired of losing money trading stocks.
Happy Holidays!
Tags: tax lien certificates, tax deeds, how to invest in tax lien certificates, how to buy tax deeds, guaranteed returns
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