What are Tax Liens?

Before you find out how to buy tax liens online, let me briefly talk about what are tax liens and how they present an opportunity of a real estate investment. There are certain taxes that real estate owners need to pay every year. If a home owner ignores paying these property taxes, he can escape for only so long, before the local authorities impose tax liens on the property.

They have the right to seize the property and sell it to recover taxes. Though this is what ultimately happens, the owner is given an opportunity to redeem himself, through issuing of tax lien certificates. A tax lien certificate is an agreement of a loan issued by a third party to a tax defaulter at a fixed interest rate. The interest rates imposed on such loans are quite high. These tax lien certificates are generally sold by county courts in auctions. Buying tax liens online saves you the time which may be normally spent in investigating them personally through travel.

A real estate investor can buy a tax lien certificate as an investment and benefit from the high interest rate. If it so happens, that the property owner is not able to repay the loan, then in some states, the holder of the certificate can buy the property at a substantially low price. This is what I meant by one man's pain is another man's gain.