Tax Lien Certificates are one of the safest forms of investment around and yet some people have no idea how they work. Well, not anymore. You are going to learn what is a Tax Lien Certificates and how they can make you financial independent.

To explain what is a Tax Lien Certificate, we are going to learn this form Ted Thomas - America's guru on purchasing Tax Lien Certificates.

Here is what Ted Thomas says on the matter:

People ask me, "What is a tax lien certificate?" Let me explain that. It's simply a piece of paper which you or I may purchase from a local government. You can actually buy this tax lien certificate and take it home.

But first I want you to understand government tax lien certificates are the safest and the most lucrative investment in America today. Now, I know that's a bold statement. And here is why I could say that, with confidence and assurance. You see, when you invest in tax certificates, you invest with the government. And when the government is paid, or the tax certificate is redeemed, you get your check from the government. It's a simple process. You invest with the government, and you get a check back from the government.

OK, the question is, "What is a tax certificate?" It's a piece of paper that represents a debt a property owner has not paid. You probably own your own home or office building. In this great country, property owners have the privilege of paying local taxes if they own real estate. It may surprise you to learn that thousands and thousands of property owners do not pay their property taxes. Amazingly, they mismanage their money and they don't pay taxes.

Now due to this lack of payment, the local government now has a problem. As you know, local police, fire departments, schools and many of these services we've grown to expect are paid for by property taxes. If the government doesn't collect taxes, we wouldn't have schools, or police, or libraries, or fire departments. I'm sure you understand the problem. Traditionally, investment advisers and stockbrokers will say "High rewards means high risk."

Well, we're going talk about wealth without risk. I'd like you to open your eyes to government certificates that produce high rewards with little or no risk. These government certificates are issued by local taxing districts. When the property owner pays the taxes due, the penalty, that big ugly penalty, will be paid to you.

Now here's the deal. The local county issues a tax certificate which you may purchase on properties that have delinquent taxes. You can purchase those certificates at auction or over the counter. The rewards are amazing.

You are aware that if you pay taxes late, you will pay a penalty. But in the case of real property, the delinquent property owner must pay late penalties big time. Here's a few examples. Keep in mind, first they have to pay the taxes, then they must pay the penalty. In Arizona, they have to pay a 16% interest penalty. In Florida, they pay an 18% interest penalty. In Illinois, this is a big one, in Illinois, they pay 18% for the first six months, and if it stays outstanding another six months, it's another 18%. That's a total of 36% in the state of Illinois.

Government certificates have predictable rates and their payout to you is certain and your check is going to come from the government and they are secured by the real estate. Plus, there's no middleman where you're going to have to pay a bunch of commissions. You're going to learn how to buy them direct. Your security for this investment is a tax certificate which is the first priority lien on real estate. That means the tax certificate has a priority. In other words, it's a senior position to a mortgage.

The rules work like this, if you own a tax certificate and the property owner doesn't pay the taxes as agreed, by government mandate you get the property. Nice deal, don't you think? You get paid or you get the real estate. Let me repeat that. You either get paid 16%, 18%, 24% on your money or you get the real estate.

You invest your money in the government. Ultimately, you get a check back from the government. Simple as that. That's how it works.

Now I've got to tell you, after talking to hundreds of tax commissioners, tax collectors, tax assessors, they have all told me the same numbers. And the numbers are 95% to 97% of all homeowners will ultimately pay their taxes because they don't want to lose their homes. That makes a lot of sense to me. That's the good news. That means if you buy a certificate, your chances of getting paid back all of your money and getting that 16%, 18% or 24% return is 95% to 97%.

So now you know exactly how the Tax Lien Certificates work and how you can use them to make yourself financial independent.