4 States With The Highest Tax Lien Interest Rates In 2024

Today, we’re diving deep into the world of tax lien investing, focusing on the tax lien states with the highest interest rates in 2024.

As someone who’s fairly new in this game, I know how crucial these rates can be for maximizing your returns.

So, let’s break down the top 4 states where your investment dollars can work overtime.

Illinois

Image Credit: https://www.britannica.com/topic/flag-of-Illinois

Illinois takes the crown with interest rates that can soar up to an eye-popping 36% per year.

Yeah, you read that right – 36%!

It’s like the Prairie State is practically begging us to invest.

But before you start daydreaming about all those returns, let’s break down what you need to know:

Rates vary significantly by county, so thorough research is key.
The redemption period typically ranges from 2-3 years, giving property owners time to pay up.
Competition can be fierce, especially in more populous areas like Cook County (hello, Chicago!).

Now, here’s a quick pro tip: While everyone’s fighting over liens in the big cities, consider focusing on less-known counties.

You might find better deals with less competition.

Just make sure you understand the local economy and property values before diving in.

Iowa

Image Credit: https://commons.wikimedia.org/wiki/File:Flag_of_Iowa.svg

Next up, we’ve got Iowa offering a rock-solid 24% annual rate, neatly divided into 2% per month.

As an investor, here’s why I love this setup:

You get predictable, steady monthly cash flow.
The redemption period is typically 1.5 to 2 years.
There’s often less competition compared to some other high-interest states.

One of the quirks of investing in Iowa is their online auction system.

It can be a bit tricky for newcomers, so here’s a tip:

Take advantage of their demo system before you start bidding with real money.

It’ll save you a lot of headaches (and potentially costly mistakes) down the line.

Florida

Image Credit: https://en.wikipedia.org/wiki/Flag_of_Florida

The Sunshine State lives up to its name with interest rates that can reach up to 18% annually.

But there’s more to Florida than just beaches and theme parks when it comes to tax liens:

Interest rates can vary between counties, so shop around.
Most counties now use online bidding systems, making it easier to participate from anywhere.
The redemption period is typically 2 years, giving you a decent window for earning interest.

Here’s an insider tip: Look for counties with fewer big institutional investors.

Places like Miami-Dade might offer high rates, but the competition is brutal.

Consider counties in central or northern Florida where you might have a better shot at winning bids.

New Jersey

Image Credit: https://nj.gov/nj/about/symbols/

Rounding out our top four, New Jersey matches Florida with interest rates up to 18% annually.

But the Garden State has its own flavor when it comes to tax liens:

Interest rates are often determined by bidding, which can drive rates down in competitive auctions.
The redemption period is usually 2 years, but can be extended in some cases.
Some municipalities hold their own sales, separate from county auctions.

Word to the wise: New Jersey’s rules can be more complex than other states, i’d strongly recommend joining a local real estate investing group if you’re serious about New Jersey tax liens.

The knowledge you’ll gain from experienced investors can be invaluable in navigating the state’s unique landscape.

So, What’s Next? Actionable Steps for Aspiring Tax Lien Investors

Now that we’ve covered the top states for high interest rates, you might be itching to jump in.

But before you do, here are some concrete steps to set yourself up for success:

Deep Dive Research: Don’t just stop at state-level information.

Dig into county-specific rules, past auction results, and local economic indicators.

Knowledge is power in this game.

Start Small and Diversify: I can’t stress this enough.

Don’t blow your whole budget on your first few tax liens.

Spread your investments across multiple liens, counties, or even states to manage risk.

Set Up a Robust Record-Keeping System: Trust me, come tax time, you’ll be grateful for meticulous records.

Track everything from purchase dates and amounts to interest accrual and redemption details.

Network with Other Investors: Join online forums, attend local real estate meetups, or consider partnering with a more experienced investor for your first few deals.

The insights you gain can be invaluable.

Understand the Full Process: It’s not just about buying liens.

Know what happens if a property doesn’t redeem.

Are you prepared to foreclose?

To become a property owner?

Understanding the entire lifecycle of a tax lien is crucial.

Create a Bidding Strategy: Especially for states with competitive auctions, have a clear strategy.

Know your maximum bid and stick to it. It’s easy to get caught up in the heat of an auction.

Stay Informed About Legislative Changes: Tax lien laws can and do change.

Stay on top of any legislative updates in the states you’re investing in.

Consider Professional Help: While it’s possible to go it alone, working with a lawyer or tax professional, especially when you’re starting out, can help you avoid costly mistakes.

Wrapping Up

Remember, while high interest rates are alluring, they often come with higher risks and competition.

Always do your due diligence, understand the local laws, and never invest more than you can afford to lose.

The world of tax lien investing can be incredibly rewarding, both financially and intellectually.

It’s a niche that requires continuous learning and adaptation.

But for those willing to put in the work, the potential returns – especially in these high-interest states – can be significant.

So there you have it, folks – a deep dive into the states offering the highest tax lien interest rates in 2024.

Whether you’re a seasoned investor looking to optimize your portfolio or a newcomer intrigued by the potential of tax liens, I hope this guide gives you a solid foundation to build on.

In my opinion, the best way I’ve found to learn is by doing and “failing forward” as they say.

I bought my 1st investment property in 2020 during the middle of (you know what..cough..cough), and I had no clue what I was doing despite spending months researching how to invest in real estate.

But guess what? I did it.

And learned a ton of valuable lessons along the way!

So,If you’re truly interested in tax lien investing, consider subscribing to my newsletter and following along my journey from landlord to “leinlord” as a new tax lien investor.

As Leinlord grows, my goal is to provide a “behind the scenes” inside look at the tax lien auctions I participate in and thoroughly profile any properties that I win.

You’ll get to ride along with me as I walk through my risk analysis, deal structures, ROI calculations, bidding tactics, and exit strategies all documented for the world to see (even my L’s).

So please show your support and sign up for my newsletter OR if you are a Google Chrome user hit that “follow” button!

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Additionally, if you’re interested in booking a consultation to talk tax lien strategy feel free to schedule a one on one here.

P.S. I am still fairly new to tax lien investing but willing to share what I’ve learned so far, so please keep that in mind before you book!

I’m not an expert… (yet)

Look forward to having you in the Leinlord community!

Sources:

Illinois – https://www.dupagecounty.gov/elected_officials/election_and_voter_information/property_tax/tax_redemption/tax_redemption_process.php , https://www.lakecountyil.gov/292/Tax-Redemption-Process

Iowa – https://www.millscountyiowa.gov/246/Tax-Sale-Information , https://www.storycountyiowa.gov/487/Tax-Sale

Florida – https://www.nolo.com/legal-encyclopedia/what-happens-if-i-dont-pay-property-taxes-florida.html , https://www.hillstax.org/taxes/real-estate-tax/delinquent-property-tax/

New Jersey – https://www.nolo.com/legal-encyclopedia/what-happens-if-i-dont-pay-property-taxes-new-jersey.html , https://www.metrickesq.com/blog/new-jersey-tax-sale-foreclosure-timeline/