Hey there guys. I hope all has been going well for you. Lately, I have not been around because I decided to take a vacation back to my girlfriend’s hometown in Minnesota. That coupled with a change in my schedule at work has not left me a whole lot of extra time to work on the blog. Have no fear though I will be publishing several articles over the next couple of days.
Lately I have been doing a bit of thinking about the future so I thought that I might share it with all of you. I am well aware of the fact that there are many different ways that someone can achieve financial independence. I also know that there is no right or wrong way to achieve it. Thus far the core of my portfolio has been dividend paying stocks even though this was not where my interest in investing started at.
Initially I was very interested in real estate. This may have been influenced by the fact that Robert Kiyosaki spoke so highly about it in his book Rich Dad Poor Dad. Since I am very mechanical and able to fix most things, it seemed to make perfect sense for me to get into real estate. Despite not being able to put together my first deal yet, it is something that I am very interested in.
Until I find that perfect deal I will continue to save and invest my money in dividend paying stocks. I think that the dividend stocks are a great core to my investing portfolio because of their ability to compound. Lately though I have been giving some thought to the idea of using an alternative investment vehicle also. This particular vehicle isn’t one that I hear a lot of talk about especially in the DGI community. It is investing in tax liens.
What is a tax lien, you may be asking yourself. Simply put it works like this. If you don’t pay your property taxes, then your local government will auction off those property taxes. Every auction works differently. Some are where the highest bidder wins and some are where you bid down the interest rate owed, so be sure and know what the rules are of an auction if you are choosing to partake. Now for the winner of an auction they will make their money back in one of two ways.
The first way would be where the property owner decides to pay their taxes late. So you as the investor would receive your principal investment back plus a set interest amount. Just be aware that every state sets a different interest rate. The second way would be where the property owner doesn’t pay their taxes. After a designated period of time you would be able to foreclose on the property and then it would become yours free and clear. Which would provide me a way to move into real estate but not to need a lot of capital up front.
This is an idea that I have been kicking around but have not pulled the trigger on yet because I still have more research to do. If you have any experience or knowledge about investing in tax liens then I encourage you to please leave me a comment below.