Housing Slump Creates Boom for Tax Lien Investors

Denny Mitchell, a commercial real estate developer with an active interest in investing in tax lien certificates, has turned his part time hobby into a wildly successful web community for new tax lien investors. In April of 2008, Mr Mitchell launched BuyTaxLiens.com thinking it would be a simple site for he and his friends to keep tabs on new tax sales online, but to his surprise the site took on a life of its own generating a rapidly growing list of loyal subscribers. This has spurred him to add features like free daily email alerts announcing new tax lien sales and periodic free video tutorials on tax lien investing driven by questions from his email list subscribers.

Although not often discussed in mainstream media, the underground world of investing in tax liens and tax deeds is nothing new. Wealthy family trusts and large institutions have been buying large portfolios of tax certificates across state lines for many years, essentially using them as a safe harbor in volatile economic times.

In 2009, it is projected that at least 29 states will be facing combined budget shortfalls of $48 billion. This in part due to the effect of delinquent property taxes squeezing local governments for cash as the fallout continues from the housing bust according to The Center on Budget and Policy Priorities, a Washington DC think tank. What this means for real estate investors is that for the foreseeable future there will continue to be plenty of tax liens available to purchase on properties throughout the country.

For those unfamiliar with buying tax liens...essentially when a property owner doesn't pay their property taxes for a given year, the local government must raise the cash another way to keep basic municipal services running like police, fire, and schools, to name a few. In order to do this they have public tax sales to sell notes known as tax lien certificates. Each state varies on how these sales are conducted and what level of return is paid. For example, Florida tax certificates offer returns as high as 18% per annum with 1st position lien rights even in front of the 1st mortgage of a bank, plus, the tax certificate holder inherits almost government like powers including the right to foreclose on the property in two years if not repaid. Texas offers returns on tax deeds as high as 50%! To learn more about tax lien investing sign up for free email alerts and video tutorials by visiting: http://www.buytaxliens.com

Like most industries, the web has been changing how investors find tax lien certificates online so its no surprise that there have been many paid sites popping up to serve this hot new online investment sector. By using the internet, many investors can now shop for tax deals anywhere in the country and find tax lien certificates on every property type including residential, retail, office, industrial properties and of course raw land. Shopping online also takes the pressure off by allowing more time and tools for due diligence and price comparisons.

"I encourage investors new to tax lien investing to first just watch live sales for a while and study the deals before buying anything - similar to virtual stock trading. Once they are ready to make their first purchase, begin with a very small tax certificate, say under $200-$300. After they do a few small deals successfully and get comfortable with the process, then start increasing the size of their deals along with the number of cities and property types in their portfolio. The best thing about our site is that unlike most sites, visitors can actually watch live auctions for free for as long as they like to get familiar with the process and even watch tutorials without buying anything. We have partnered with a few very well known online players to deliver a list of new tax sales to our subscribers everyday in a secure online shopping environment." Said Denny Mitchell, owner of BuyTaxLiens.com.

Considering the low cash basis required to get started and steady cash-on-cash returns, coupled with the quasi governmental powers associated with this type of lien ownership, tax liens are the new hot investment of choice.