It’s not the US federal government.
The Feds can print as much money as they want whenever they need it.
Tax yields are short-term loans to local governments.
Specifically, the thousands of cities and counties spread across all 50 states in the US.
The primary source of revenue for these local governments is property taxes.
If you own your own home, then you know you pay property taxes every year.
Local governments use this revenue to pay for the public services they provide.
Like schools, hospitals, sanitation, public parks, the police and fire departments, and much more.
They fund the teachers’, firemen, and police officers’ salaries.
And when homeowners don’t pay their property taxes, the local government can’t pay for these public services that are vital to the community.
But the government can’t just seize the property, and doesn’t want to own real estate for the same reasons bankers don’t.
They don’t want to deal with all the headaches and hassles.
They just want the property tax revenue.
And the past couple years have shown that this investment is pandemic-proof.
With everything that’s going on in the world right now, local governments are desperate for cash.
And they’re willing to make a great deal with investors to get it.
When a property owner fails to pay the property taxes on time, the local government gets the money by selling a tax yield investment.
Doing this allows the government to quickly collect the revenue it needs without having to deal with a long, drawn-out, and costly collections process.
The tax yield is sold to an investor like you or me.
In exchange for providing the capital they need, the government provides a double-digit return on the investment.
Some offer returns as high as 20% or more.
Even better, the property (a home for example) serves as the collateral.
Since the tax yield is a tiny amount compared to the value of the home, most of the time the homeowner pays the investor back for the property taxes.
Plus a double-digit return on the investment.
But in cases where the homeowner does not pay, the investor can get the home for the price of the property taxes.
Usually at a small fraction of the home’s market price.
Did you catch that?
If the homeowner does not pay the taxes...