Today, I’m going to share a little-known way to collect 12%-15% yields…

These yields are safe… and they don’t require you to buy any stocks, bonds, or options. They’re a great way to diversify your income portfolio and reduce exposure to stocks. However, most people don’t even know they exist.

Below, I’ll share everything you need to know to get started…

[ad#Google Adsense 336×280-IA]Every year, local municipalities require taxes to be paid on properties – the taxes are for sewer, trash, and police.

But every year for many reasons, people don’t pay those taxes.

Since the city needs that money, it sells “tax-liens” against the homes of the tax evader.

The government regularly auctions these tax liens on the courthouse steps (at least once a year and as often as monthly).

The beauty of this opportunity is the tax collector charges steep penalties and fees for late payments.

In 2014, Texas charged 25%, Georgia 20%, Illinois 18%, and Florida 18%. When the property owner pays his taxes and fees, you get your capital back, plus extra fees.

The best part is 95% of these liens are paid off by the property owners within a couple years (sometimes, within months). Thus, you can easily and safely earn 12%-15% a year on your money by investing in these liens.

Worst case is the taxes and penalties aren’t paid, and the property has to go to auction. Once it’s sold, you get your money back. Because taxes are usually only 1%-2% of the value of the property, it’s almost impossible to get back less than your initial investment from the proceeds of a foreclosure sale. In some states, you can actually get the property for just the cost of the taxes and penalties you’ve already paid. But this is rare.

This is how it works: I know of one lot in Florida that was given to the owner as part of a divorce settlement. It wasn’t his regular home, and he couldn’t be bothered with paying the taxes. So you could bid on the lien at auction.

Within two years of that date, you either pursue a foreclosure on the property – worth close to $200,000 – or you receive a payment of $2,000 plus 15% a year in interest from the owner. Either way, you’re sure to get your money back within a year or two. And as I mentioned, most liens are redeemed long before a foreclosure proceeding.

How can you earn 12%-15%? First, find out if your state is a tax-lien state. Not every state handles back taxes through lien auctions. Here’s a list of tax-lien states: Alabama, Arizona, Colorado, Florida, Illinois, Indiana, Iowa, Kentucky, Maryland, Michigan, Missouri, Montana, Nebraska, New Jersey, North Dakota, South Carolina, South Dakota, Vermont, West Virginia, and Wyoming.

State law determines the interest, penalties, and fees the owner has to pay to redeem the lien from you, the investor. In some states, the owner pays a minimum penalty (5% in Florida) no matter when the lien is redeemed – even if it’s two days later.

If you live in or want to invest in one of the tax-lien states, call the courthouse and find out what time of year and what type of auction it holds. In some states, the auction bidding is for interest rates the investor will receive.

For example, in Florida, bidding starts at 18% and goes down to 0.25%. In other states, potential buyers bid on the nominal amount of taxes owed and go up, but with an interest rate attached to the final balance. In some states, it’s a mix of the two. These are local details the court employees can explain.

That’s why I love to visit the courthouse and talk with the people in the property departments. They have books and records easily available, although not always understandable. And by hanging out in person in the offices, your questions are quickly answered. A few counties now have online records you can peruse from home, as well.

Once you’ve picked out the properties, visit all the ones you’re interested in bidding on at least a week or two before the auction. Be sure to set the limit you’re willing to accept. Once the auction happens, you’ll easily lock up returns of 12% on your money and in amounts as little as $500-$1,000. Anyone can invest.

One more thing, I also recommend buying a few books on tax liens a couple months before the auction so you know exactly what to expect. One book I’ve found useful is Profit by Investing in Real Estate Tax Liens by Larry Loftis. He explains the differences between deeds and liens and the various types of bidding across the country.

Most folks don’t know about them, or think they’re too complicated… But tax liens are a safe and easy way to collect double-digit income outside of traditional securities. If you’re looking for another safe source of income, consider them today.

Here’s to our health, wealth, and a great retirement,

Dr. David Eifrig Jr.

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Source: Daily Wealth