You see, the government isn’t in the business of collecting debts. It doesn’t have the time, resources, or patience to do all of that. So it would rather get as much of the money it’s owed as quickly as possible. And that’s where tax yield investing and the tax lien auctions come into play.
When you fail to pay your taxes on time, you face a penalty on top of those taxes you already owed. And when it’s going to take you some time to pay back what you owe, there’s usually interest involved. So people who are interested in tax lien (or tax yield) investing can pay off the debt, sometimes for a fraction of the actual amount. And then they can collect the debtor’s payments, which will include the original debt, plus fees and interest.
The interest charged on these tax liens differs from state to state. So do the fees. So does the way they process and assign tax debts…
But the interest alone can get up as high as 25% in some instances. And the liens are typically paid off on short-term schedules lasting only a few years at most. So, through a small initial outlay, tax yield investing can set you up with a profitable, relatively steady income stream.
And so far, everything the salespeople are saying about tax yield investing seems to be right on point. But here’s where reality diverges from marketing…
Who Lost 4.3 Million Tons of Lithium?
For more than 40 years, an oil company has been using brine to produce oil on its 671-square-mile property in northwestern Alberta.
And for almost as long, it’s been known that this brine is abundant in a metal called lithium... the building block of today’s rechargeable batteries.
At today’s prices, that estimated 4.3 million tons of lithium dissolved in these brine ponds is worth more than $320 billion.
The problem is, until recently, nobody could effectively extract this lithium from the rest of the solution.
It took a young tech company headed up by petrochemical industry veterans and an agreement with the oil producer, but today that massive lithium resource is about to go into commercial production.
You’re going to want to see this before the story progresses any further.
How Easy Is Tax Yield Investing?
That’s the ease with which these folks say they’ve set up their income streams. If you believe the marketing, these folks just sit around in their fancy houses polishing their fancy cars. Can tax yield investing really be both that profitable AND that easy? Well, yes and no.
You see, it really can be a profitable business. But tax yield investing is just like any other business. It requires work. If you want to get into tax yield investing, you have to seek out tax lien certificates that are going up for auction. You have to bid on those certificates, too. But before you do that, you need to investigate the properties securing the liens…
That’s because, when you’re tax yield investing, if the debtor doesn’t pay the debt, you’ve got two choices: Write off the loss, or foreclose on the property and sell it. So you need to know if the property could sell for what you’re investing to buy the lien. And if you do have to foreclose, you need to know how to flip houses (or businesses).
But let’s say you get the perfect tax yield investing situation: a debtor who makes regular and timely payments until the lien is satisfied. Even those tax yield investing scenarios require effort… The state got its money. It’s out of the game now. So it’s up to you to notify the debtor of the transfer of the debt. And it’s up to you to set up a payment schedule. It’s also up to you to follow up on those payments and make sure they come in on time.
But you’re still not done working yet. You see, when you’re tax yield investing, you’re making short-term investments. Tax liens usually get paid back within a few years at most. So that means at least every three years, you’re going to have to go back on the hunt for more tax liens to bid on and then service. It could be more frequent. And every time you invest in one of those liens, there’s a chance you might own that property later on down the road.
The Bottom Line on Tax Yield Investing
So yes. You can make a very good living through tax lien (or tax yield) investing. But it’s not quite as easy as the people selling the courses want you to think it is. It requires research. It requires legwork. It requires steady communication. And it includes the risk of owning a property that needs major work before it can be sold.
Personally, I don’t have the extra time all that would take. So I enlist a more passive strategy to collect yields from real estate other people own. It’s been incredibly successful for me and the members of my investment community, The Wealth Advisory, where we’ve used it to beat the markets for years. And all the while, we’ve been generating steady, growing, truly passive income streams.
Our strategy allows us to invest in some of the most profitable and highly sought-after real estate in the world. This includes industrial buildings like warehouses, specialized manufacturing facilities, and even government buildings. And through these investments, we collect steady income as the owners are obliged, by law, to share the vast majority of profits with investors.
You can learn more about this impressive passive real estate investment that beats tax yield investing every time here on our website. And if you’re interested in joining my community and getting access to a portfolio of specially curated income-generating opportunities like them, I and the rest of the TWA family would love to welcome you as our newest member.
To your wealth,
Jason Williams
@TheReal_JayDubs
Angel Research on Youtube
After graduating Cum Laude in finance and economics, Jason designed and analyzed complex projects for the U.S. Army. He made the jump to the private sector as an investment banking analyst at Morgan Stanley, where he eventually led his own team responsible for billions of dollars in daily trading. Jason left Wall Street to found his own investment office and now shares the strategies he used and the network he built with you. Jason is the founder of Main Street Ventures, a pre-IPO investment newsletter; the founder of Future Giants, a nano cap investing service; and authors The Wealth Advisory income stock newsletter. He is also the managing editor of Wealth Daily. To learn more about Jason, click here.
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