When purchasing tax lien certificates, there are rights provided to the homeowners to redeem their properties back. The rights depend on the counties that handle the tax sale. If the homeowners exercise their rights to redeem, then they must pay the county back the initial investments of the buyers plus interest and other fees. This happens in most cases.
Here are two scenarios that would happen in tax lien investing:
a. Property not redeemed – The investor gets the property free and clear of any mortgage. The investor also gets the chance to apply for a deed and own the property at a price just for its back taxes.
b. Property Redeemed – The investor gets back his initial investment plus interest. The investor makes lots of profits out of this.
Tax lien investing is a very profitable business but make sure to do it right in order to lessen the risk of losing money.