To encourage tax-delinquent property owners to pay their past-due taxes, the government charges them interest and/or penalties (think of it like a late fee), which is passed directly to the investor….that’s you!
Unlike the stock market, when you buy tax lien certificates your interest rates are mandated by United States law. For example:
12% in Alabama (40-10-122),
16% in Arizona (42-18053),
18% in Florida (Sec. 197.172),
24% in Iowa (Sec. 447.1),
36% in Illinois (Sec. 21-355),