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The Tax Lien Crusade The fight to make a centuries-old investment strategy available to every citizen

By Arif Bhatt

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Brian Petersen, CEO of Tax Lien Code

Large institutions have been taking advantage of tax lien investing for centuries, even using lobbyist influence to keep the practice in place in many states. Though it's available to all, the perceived difficulty of the strategy has scared off individual investors. Now an increasing number of experts and educators are developing strategies and support systems to streamline a potentially lucrative investment strategy.

"Complicated investment terminology can scare off individual investors—big companies set that up by design, by the way—and no one likes the word 'lien'," says Brian Petersen, CEO of Tax Lien Code and leading expert in the strategy. "But I can explain tax lien investing simply in one sentence: When a property doesn't pay its property taxes you can buy a certificate of the government's lien against that property, and these often have guaranteed or very high rates of return. They also generally have priority over other forms of debt, like a mortgage. Because these certificates are sold at auction, large players have an incentive to keep individual investors in the dark and lessen competition. I'm here to change that. Education and information should be clear, simple, and available to all."

Tax lien investing is a strategy that is particularly well-suited for economic downturns. The 2008 market crash and recession led to a 40% spike in the national volume for tax liens, up to 18 billion. With the pandemic aftermath and uncertainty in the current world market, many are anticipating another boom to tax lien volume, leading to potentially lower prices for certificates at auction as the market floods.

"Yes, the whole industry is anticipating a flood of tax liens," says Petersen. "But what we at Tax Lien Code always tell our students is that when an investor buys a tax lien certificate, they are helping communities, not hurting them. The local county gets paid the taxes owed. This money is used to pay for roads, school and other public services. On top of that, the property owner who was at risk of losing their home or business is given more time to pay the money owed while still staying where they are."

"My fight is to make more people aware of the opportunity of tax lien investing, and the benefits it can provide to the investor and the community. The resources are in the billions. Our classes are taught by certified instructors. Our students learn how the market works in their favor and how to best capitalize on investing in tax liens. We're here to help people, give them a second chance and make sure that no one loses money."

Tax lien certificates are entirely administered by specific counties, and no face-to-face interaction with tenants is ever needed. In addition, most states and counties have their own property tax rates, and the rate of return is also fixed by the county and backed by the real estate value of the property under lien.

Default rates in most counties during normal economic environments range generally average between 10-20 per cent. Predictions for default in any downturn are more than 30%, and some counties in the US are already there.

"Tax lien is a form of real estate investing," continues Petersen, "but without the hassle of interacting with tenants or buyers. And it's working for our audience. In the last 3 years our Tax Lien Code students have purchased over 30,000 tax liens totaling over $38 million in redemptive value. I'm happy to see that money in the hands of individual investors, and not on the balance sheet of a large corporation."

While tax lien investing has long been a viable investment strategy, the boom in simple step-by-step training courses, combined with widespread economic uncertainty, is leading many individual investors to put it at the top of their investment strategy. It's about time.
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