How To Make Safe Investment Income

May 25, 2011 - PRLog -- Any good source of investment income must have -
* Low risk to capital.
* Large and predictable payments of earnings.

America's county and municipal governments are eager to offer that - and I don't mean bonds.
* Return of investment guaranteed by the government.
* Unusually high yields guaranteed by the government.
The investment is tax lien certificates.

Tax Lien Certificates - What They Are
County and municipal governments depend on property tax revenue. Property owners sometimes fail to pay their taxes. If they don't pay after many warnings, the government sells tax lien certificates -
* Investors pay the tax owed. The government gets its money right away.
* The property owner gets an extra 12-24 months to pay up.
* Investors get high yield investment income guaranteed by the government.

Tax Lien Certificates - How They Work
Each state sets its own interest rate and terms. 12% - 18% per year is common.
* Check the interest and terms for a state. Do a web search on "tax lien certificates [name of county and state]."
* Certificates sell at auction. They go to whoever will take the lowest - still high - interest.

If the property owner pays early, investors get a guaranteed minimum profit.
* 5% is common. Check the local rate.
* Investors do better with early payment. 5% in a month beats 18% in a year.
* Property owners avoid penalties by paying early. They often do.

Investors get paid by the government. Not the property owner.
* No worries about collection.

If the property owner pays his tax in a year, investors get their investment plus interest. If the property owner pays his tax in two years, investors get their investment plus double interest.
* Simple interest with no compounding.

Owners that don't pay property tax often don't pay their mortgage either.
* Banks will foreclose on the mortgage and auction off the property.
* Investors get paid that juicy minimum interest - guaranteed by the government.
* Investors get paid before any other creditor.
* It works the same way if the property owner sells the property himself.

If the taxes go unpaid for the full 12-24 months, the county auctions off the property.
* Again, investors get paid.

If no one buys the property at auction - rare – the investor becomes the owner.
* In this case, the property is the return. Not cash.
* Wait! Investors don't want the property. But they can avoid this by doing some homework. (Sorry - there is a bit of work involved.)
Keep risk low and investment income high.

Only buy tax liens on known property.
* Make sure the property exists.
* Make sure it’s accessible by road - no land in forests or swamps.
* Make sure the property is worth much more than what the cost of the tax lien certificate.
* Property near water or developed land is good.
* Go with undeveloped property - land. Buildings can get tricky.

Go with property owned by individuals - not development companies, banks, or trusts.
* Corporations and trusts can make legal trouble.
Investors get paid when the property owner pays.
* The date is not known in advance.
* Worst case would be an auction after 12-24 months.

Tax lien certificates cannot be easily sold. In a few counties, if the investor is not not paid in a year, he has to pay property tax for the second year. Check the local rules. To get started -
* Check the county website or visit the county courthouse.
* Check the local paper. The county must advertise tax lien certificate sales in advance.
* Ads are in "Legal Notices."
* Visit the property. See that it's OK and worth good money.
* Attend the tax lien certificate sale.
* Don't get caught up in competitive bidding. Know what interest is acceptable before arriving.

Tax lien certificates are true safe money. They're among the safest, highest paying sources of investment income today.

Find out more about investment income at http://safemoneyproducts.com/investment-income. Subscribe now at http://safemoneyproducts.com/subscribe to get 4 Free Reports and bi-monthly Action Alerts.

# # #

Safe Money Products, written by Dr. Bob Rubin, is a financial newsletter. Bob’s investment philosophy is to buy assets with both strong growth potential and limited risk. Bob researches both commonplace and little known investment opportunities. Visit http://safemoneyproducts.com for more information.