Investing in property tax liens can be an excellent way to generate passive income and potentially earn a high return on investment. When property owners fail to pay their property taxes, the government places a lien on the property. This lien gives the government the right to seize and sell the property to recoup the unpaid taxes.
Property tax liens are often sold at public auctions to investors. Investors who purchase these liens can then collect interest on the unpaid taxes until the property is sold or the taxes are paid. If the property is sold, the investor is repaid the amount of the lien plus interest.