The government collects lots of taxes from you, but did you know they will also collect profits for you? With tax lien investing, that is exactly what happens! Your Self-Directed IRA purchases a tax lien and sits back while the local tax collector collects the profits on your Self-Directed IRA’s behalf.

Many investors enjoy purchasing tax liens and collecting the higher than normal interest rates. Investors also enjoy the possibility that the property owner might not redeem the property which means, in many states, that the investor becomes the owner of the property by foreclosing on the first position tax lien. In most states, tax liens are in first position even if there is a first mortgage or deed of trust currently on the property.

 Florida: Maximum Rate 18% (1.5% per month, with a guaranteed 5% return regardless of time held)

 Arizona: Maxiumum Rate 16%

 Iowa: Guaranteed 2% per month (or 24% annual return)

Investors enjoy the creativity of tax liens as, in the case of foreclosure, they can decide whether to sell the property for a profit and/or hold the property and enjoy the income generated by the rent they collect.

Remember, in all cases, it is good to consults with professionals. In this case, it would be a good idea to consult with a realtor and/or appraiser to assess the value of the property prior to bidding on its tax lien. It is also advisable to consult with your attorney to make sure you have a full understanding of the tax lien law in the state you plan to purchase tax liens in. Remember, tax lien investing is a lot like purchasing a piece of real estate: check the location, the current market value, and make sure you have an exit strategy.