I am a C.P.A. and I had not heard of tax lien investing until a co-worker asked me about it at work. I did a little research and was shocked to find that it really is a simple investing plan and has very few negatives. However, it does require cash so it is not an investment for those looking to make money for free. I found out that there are two ways to make money with this type investing:

1. The investor researches how and when to purchase tax liens from the county through auction. The investor pays the county the taxes due at that time. The property owner later pays the county the tax plus interest and penalties. The county redeems the investor’s tax lien certificate by paying the investor the tax plus interest.

2. If the property owner does not pay the taxes, interest and penalties, then the certificate holder has the opportunity to foreclose on the property. The investor then owns the property and can sale it or keep it as a rental property.

Some of the overall advantages of investing are that:

1. It is relatively risk fee. The investor either receives their initial investment and interest or takes ownership of the property.

2. Interest rates are set by each state, They are usually more than 12% and can be as high as 18%. There is no other risk free investment that pays this level of return.

3. The initial investment can be from less than $100 on up. Investors can get started with only a small investment. Most mutual funds require $1,500 to $2,500 minimums, which keep many people from being able to invest.

4. Investing is so easy that anyone can participate. This investment is not limited to real estate gurus. Anyone can invest in real estate using this method.

5. A little known fact is that tax lien certificates can be owned by self directed IRA’s. This makes tax liens a tax free investment and therefore a very attractive investment.

Now that I have researched tax liens and see the advantages available, I am going to get started investing. At least I will get my initial investment back which is more than the stock market can offer right now.