Certificate of Deposit - Know the Facts About Making Money

A certificate of deposit better known as a CD is a deposit made based on time. It is a very common product that is offered to customers of credit unions and banks.

CD'S are act similar to a savings account because you are considered to be risk free because a CD is insured by the FDIC. There are some differences in savings accounts and CD'S such as a set term for maturity. The CD will have a fixed term such as 3-12 months and also will have a fixed interest rate. The reason is that for you to get the full maturity you must hold it the allotted time. At the time of maturity you will be able to withdrawal the principle amount plus the interest that has accrued.

What a financial institution does is it will give you a higher rate for agreeing for a longer term. This differs from a savings account which generally gives you a lower rate because you have instant access to that money.

Most CD'S have only fixed rates but in some cases you will see banks offering a bump up rate which will be adjustable. If you get into a situation were the interest rate is on the rise then you get into a CD that will allow you a one time adjustment.

It is good to know that there are some things you must know about interest rates. In general if you have a larger amount to deposit then you will get a higher interest rate. If you have a longer term then you can also get a higher rate over the length of the CD. If you find a smaller bank a lot of times they will offer a higher rate to attract new customers.

Basically how a CD works is you need to decide on how much you are going to deposit then when you go to the bank you make your deposit. You will then receive a book that will have the deposit amount and rate on it. You will receive periodic statements so that you know how much interest you have earned.

You can also have the interest made on the CD paid to you on a monthly basis but be aware that you will not benefit form compounding interest. Also CD'S usually have a minimum amount that they require to deposit.

If you do not cash out your CD at the end of the term then usually the bank will roll it over for another term that was the same as before

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Bryan Burbank is an expert in the field of Finance and Loans.

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Making Money With Pending Tax Deed Sales in Real Estate Investing

Tax certificates are pre-tax deed sales. Every year municipalities sell these financial instruments to have cash flow to run the local government. Delinquent property taxpayers can later pay off the tax liens, wait to pay them if they sell their home or do nothing and eventually have a tax deed sold and lose their property.

Tax certificates are bid on an interest rate basis with the first bid being the highest interest rate starting first. For example, assume the maximum allowable rate for a tax certificate is 18%. The first bid would be for 18% and the next, and higher offer, would be 17%, then 16% and so on. The lowest interest rate bid is more favorable to the property owner who eventually has to pay the taxes due plus the interest rate that was finally accepted as the "high" bid.

I reviewed a series of final auction rates recently and noticed that the average closed sale rate was 9.75%, not bad when Certificate of Deposit rates are 2%. Tax certificates should not be judged as to safety against CDs as they can be risky and the perspective purchaser should read the disclosures and risks that the municipalities provide in written format. After a certain number of years of tax certificates being issued, a buyer of the next tax certificate can request a tax deed be issued. The tax deed and the open tax certificates are put up for auction as one item and the public gets to bid a dollar amount, instead of an interest rate, for the payoff and ownership of the property. This is the last chance the property owner has to save his property by paying all the past due certificates.

The only reason investors would buy tax deeds is because the property has equity in it, even if it has to be repaired or the structure demolished to create this equity. The original property owner has lost this equity as a result of the sale but he doesn't have to. This is where very savvy investors have made tons of money by contacting the property owners and purchasing the property before the tax deed sales.

The enormous benefit that an investor gets is that he is not in competition with other investors in an open bidding format. He can analyze the property, which he has to do anyway to bid on the tax deed, but he can make an offer to the property owner directly and give the owner some money, small as it might be, it is better than nothing at the tax deed sale. Combine this aspect of a motivated seller with an investor using creative financing techniques to buy the property and you have a perfect storm of getting distressed properties before they are lost to a tax deed sale. Since very few investors realize the power of this prospecting technique, the field is wide open, and combined with using subject to, owner financing, options and land trust transfers, the investor can turn these purchases into virtually little or no money deals instead of coming up with the full amount of the tax certificates owed.

In summary, this pre-sale purchase of the property by an investor is a win-win situation for all the parties involved - the property owner get some equity out, the investor makes money, the municipality gets their property transfer taxes paid (they already got the property taxes at the original certificate sale) and, presumably, the end-buyer gets a good deal on his purchase.

Dave Dinkel has over 35 years experience in real estate investing which has given him a unique perspective into the real estate market. Dave is the author of the best-selling e-courses http://www.fsbopowersellingsystem.com/ and many other e-courses for investors and homeowners. Dave's focus in the past few years is educating the public in a manner that doesn't amount to paying for a master's degree. His recent contribution to this end is the e-course "48 Ways to Create a Massive Buyers List" which can be seen at http://www.MakingaBuyersList.com.

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