Recently I was reading the weekend edition of USA today and came across a financial advice article written by one of their contributing editors.
Init, the author gives advice on where to put your savings in order to earn a higher return than the meager 1% to 2% you'd get from a savings account. Admittedly, that's more difficult to do at a time when the Federal Reserve is slashing short-term interest rates. But you do have some choices and they are not the choices that would immediately come to mind.
 
As a member of the general reading public, you may not think twice about where banks and other financial institutions invest their money. But if you do think about it you will realize that they need to make investments that yield a much higher rate of return in order for them to pay you interest or dividends on your investments. You may be really surprised to learn just how much more they do earn.
    
Banks and other financial institutions have been investing for decades in what are called Tax Lien Certificates or TLCs for short. What are TLCs? Basically, they are first priority liens on real estate that are sold at public auction.
 
To understand more fully what that means, we need to step back for a minute and talk about real property tax collection. Counties create tax Liens across the United States as the result of non-payment of real estate taxes. Local government needs real property tax revenue to run the business of government so they sell either a lien on the real estate (at much higher than market interest rates) or the real estate itself to collect the back taxes.

Banks and other institutional investors have enjoyed high yield returns on their money, many times by using the capital provided by the small investor, such as you and I. In exchange for the use of that capital, they paid the small investor interest rates that were a fraction of their own return. Their returns on TLCs can be 12%, 16%, 18% or more. And it is an investment that is secured by the real estate upon which the taxes are in default. You can't get much safer than that.

So, why haven't you heard about TLCs? How can you cut out the middle man so to speak and obtain those high rates for yourself? There is no real secret to safely obtaining these types of yields, if you know where to look. While each state has its own statutes relating to delinquent tax collection, some general information holds true across the country. Some states, in order to enable the counties to collect delinquent taxes allow for the sale of TLCs bearing a high rate of return. Others allow the counties to sell the property outright. This would be called a Tax Deed Sale, Tax Foreclosure sale or some other similar name. While Deed sales can be even morelucrative, they are the subject of another article.

Focusing on TLCs and the high rate of return they offer, it is relatively easy to obtain information about sales. They are all public auctions and are advertised in the legal notices in you local newspaper. Yes, those very notices that most of us ignore can be a goldmine for the average investor. The notices of sale are normally published a number of weeks before the sale. You can also call your tax collector and ask if they conduct Tax Lien sales and when they are scheduled in your county. They can also provide you with a copy of the rules of the sale. Some even have prepared brochures outlining the statute, how it works and listing FAQs.

In short, just by asking, you can obtain the information that you need to successfully buy TLCs. In short, you can cut out the middle man and invest the way your bank does. Then sit back and laugh at choices that include 2 and 3% interest rates.

Lillian Villanova is the author of What Your Bank Doesn't Want You to Know About Where to Invest Your Money. It contains specific information about how anyone can succeed buying Tax Lien Certificates and Tax Deeds starting part-time from home, even with little or no operating capital. She can be contacted at successteam@hotmail.com