Research reveals across America you’ll find 3,000 counties and approximately 1,450 municipalities, they are all tax districts with the authority to collect taxes. Tax revenues, they collect is needed to fund schools, hospitals, police departments, fire departments, build and repair roads, and fund libraries and of course pay the public servant at each county office.

Tax lien certificate auctions come in all sizes; I’ve seen as many as 100,000 tax certificates available in Cook County, Chicago, IL to as few as 1,300 certificates in Santa Cruz County which is Nogales, Arizona.

State legislatures determine the rate to be paid on a tax lien certificate in their state. Florida for example has a mandated rate of 18%, while Arizona has a rate of 16% each state mandates their own rate. Additionally the rate can be different from county to county. For example in Maryland I’ve been to tax lien certificate auctions where the interest rate was 12% annualized and immediately across the county line in the adjacent county the rate was 24% annualized. The lesson here is, investors are required to know the rules of the county where you intend to purchase. One of the secrets to success for all investors is to read the rules and understand the rules and don’t listen to all the know it all’s in the auction room, or people hanging around the government offices. It’s been my observation that success comes from planning and having an exit strategy. At the tax lien certificate auction you are purchasing a passive investment other than buying the certificate there’s no work. Once you purchase the certificate then you wait to be paid, if the property owner refuses to pay the certificate owner will ultimately gain possession of the defaulted property. Here’s an example of how profitable it could really be (link to Bob, OK deal.)

Success comes from having strategies that work in your portfolio. In the highly populated counties Miami- Dade you’ll find hundreds of bidders for tax lien certificates. In the more rural counties where the population is thin, you’ll find the competition is much less. I’ve experienced tax lien certificate auctions where the treasurer laid out all the certificates on a big conference room table and said “you guys divide them up and when you’re finished come down to my office and pay for them.” Yes that’s unusual.

Successful tax lien certificate buyers practice just like professional sports people and musicians and concert pianists. Professionals invest time to attend auctions and watch, listen, observe, understand, develop strategies, know tactics. It’s not wise to wait until auction day and then hope for a good deal. “Hope” is not a good business strategy. Look around, this year there will be 2,500,000 auctions. With little practice determination, and discipline your chances of success can be very high.

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Keep in mind, “there is never much traffic on the extra mile”

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