What is the best place to invest online with tax liens?
What are the best states to invest in tax liens online?
Most people want to know which states have the highest interest rates and that is where they want to invest. But things are not always what they seem, especially to the inexperienced investor. The states that have the most legal interest in fiscal bonds also have the most competition.
Some counties in the state of Iowa, for example, had online tax sales for the first time in 2013. Iowa has the highest interest rate of all the states that have online tax lien sales: 24% per year, per what you would think would be a good place to invest online, but that may not be the case. Most of the links in online tax sales were bid up to 1%. That is not the interest rate. Investors will earn the statutory 24% interest on their lien, if the lien is redeemed. What was lowered is the percentage of ownership of the property in the event that the bond is not redeemed and the investor forecloses. If you bid below 100%, you do not get full ownership of the property in case you have a chance to foreclose. That may not be enough leverage for the property owner to pay for the bond. After all, even if you foreclose, you won’t be able to take possession of the property or do anything without the owner’s permission, even if you have a 99% ownership interest in the property!
The next 2 states with the highest interest rate for online tax lien investing are New Jersey and Florida. Both have a legal rate of 18% per year, but this rate is lowered on sales tax. Some of the New Jersey municipalities began having online tax sales in 2012, and a few more joined in 2012. Not only did the interest rate drop to 0% for most of the links sold, but high were paid as well. premiums, and premiums were paid even for small links, it just didn’t seem worth it to the individual investor.
In Florida, the interest rate is generally reduced to only 25%. Investors are willing to bid so low because they know there is a 5% minimum penalty they will receive instead of the 25 interest they bid. They’re counting on the links to be redeemed quickly, but if their links last the entire 2-year redemption period before the property owner redeems, the 5% penalty turns out to be only a 2.5% annualized return. The penalty is not an annualized interest rate. It is a direct fine that is paid on the amount of the certificate.
So what state is a good state to invest in tax liens online? One of the states that I suggested in my last tax liens investment workshop might be a better bet for online investing this year is Arizona. You’re not likely to get double-digit returns when investing in any of the states that have online tax sales, so get that out of your head. But it’s still possible to get high single-digit returns in Arizona on residential properties and get double-digit returns for bonds on vacant lots. Also, this year, many of the Arizona counties that have online tax sales have enacted a “One Time Bid Rule” for 2014, which prohibits individuals or entities from registering multiple bidding numbers. If you are bidding on Arizona tax sales this year, you will have to pay attention to this new law, as it not only prevents funds and institutional buyers from registering multiple numbers of bidders, but also prevents spouses from making offers at the same time. sale of taxes if they file a joint tax return, and prevents you from registering as an individual and as a business entity This new rule is intended to level the playing field between institutions and individual investors. We’ll see if it works!