Question to seasoned Tax Lien Investors

generally speaking, when you're looking to buy tax lien certificates, are you hoping to foreclose or rather to earn interest on your money?
Also, what kind of due diligence do you do before committing the funds (i.e. driving by, searching the title etc) ?

Thanks!

Edited: 06/26/2010 at 09:34AM

James Hiddle

Real Estate Investor · Altus, Oklahoma

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Icon_minipost Sep 01 '09, 05:13 AM

Yes most who invest in liens hope for foreclosure but the chances of that happening are slim despite what the so called gurus tell you. Most end up paying the backed up taxes before the redemption period expires.

And as far as due diligence yes you should check out the property plus check to see if there are any 1st position liens like IRS liens in place.

Edited: 06/26/2010 at 09:34AM

George P.

Real Estate Investor · Baltimore, Maryland

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Icon_minipost Sep 01 '09, 10:21 PM

Thank you James - where can one check for IRS liens ? Thanks

Edited: 06/26/2010 at 09:35AM

George Roberts

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Icon_minipost Sep 12 '09, 04:36 AM

Originally posted by Mr_Investor

Yes most who invest in liens hope for foreclosure but the chances of that happening are slim despite what the so called gurus tell you. Most end up paying the backed up taxes before the redemption period expires.

And as far as due diligence yes you should check out the property plus check to see if there are any 1st position liens like IRS liens in place.

GREAT ADVISE!

Edited: 06/26/2010 at 09:41AM

James Hiddle

Real Estate Investor · Altus, Oklahoma

2515 posts
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Icon_minipost Sep 12 '09, 05:08 AM

Originally posted by George P.

Thank you James - where can one check for IRS liens ? Thanks

Your title company should have that info.

Edited: 06/26/2010 at 09:41AM

Matt Joseph

· Michigan

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Icon_minipost Sep 14 '09, 09:13 AM

Originally posted by George P.

generally speaking, when you're looking to buy tax lien certificates, are you hoping to foreclose or rather to earn interest on your money?
Also, what kind of due diligence do you do before committing the funds (i.e. driving by, searching the title etc) ?

Thanks!

Generally, 97% (or more) of tax lien certificates are redeemed. So if you are buying tax liens in hopes of getting the property, you'd better buy a lot! Its a numbers game.

Most investors are looking to get the high interest rate and if they get the property, its a bonus.

Edited: 06/26/2010 at 09:42AM

Ned Carey

· Maryland

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Icon_minipost Sep 14 '09, 11:24 AM

Originally posted by George P.

generally speaking, when you're looking to buy tax lien certificates, are you hoping to foreclose or rather to earn interest on your money?

That depends on the investor. While all investors have some desire to foreclose at bargain prices many look at that as a bonus and just invest for the interest.

In today's interest rate environment, even the low rates that tax sales are bid down to sound good.

Also, what kind of due diligence do you do before committing the funds (i.e. driving by, searching the title etc) ?

Because my goal is to actually acquire the property I usually bid in transitional neighborhoods and on vacant properties.

Because you are in first position there is not much need to due things like full title searches. Your biggest risk is bidding too much. I have never run into an IRS lien so I don't worry about them.

Edited: 06/26/2010 at 09:42AM

George P.

Real Estate Investor · Baltimore, Maryland

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Icon_minipost Sep 14 '09, 11:03 PM

Originally posted by Ned Carey

Originally posted by George P.
generally speaking, when you're looking to buy tax lien certificates, are you hoping to foreclose or rather to earn interest on your money?

That depends on the investor. While all investors have some desire to foreclose at bargain prices many look at that as a bonus and just invest for the interest.

In today's interest rate environment, even the low rates that tax sales are bid down to sound good.

Also, what kind of due diligence do you do before committing the funds (i.e. driving by, searching the title etc) ?

I drive by every property and check the front and rear and do a general assessment of the condition. I also run comps, usually by a public record service like Realist (Similar to Hains criss cross, Dataquest, Real Quest etc) those reports will give me most of the info I need.

Because my goal is to actually acquire the property I usually bid in transitional neighborhoods and on vacant properties.

Because you are in first position there is not much need to due things like full title searches. Your biggest risk is bidding too much. I have never run into an IRS lien so I don't worry about them.

Thank you Ned
great blog by the way!

Edited: 06/26/2010 at 09:42AM

Ned Carey

· Maryland

255 posts
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Icon_minipost Sep 17 '09, 02:52 AM

Originally posted by George P.

Thank you Ned
great blog by the way!

You are welcome and thanks for reading

Edited: 06/26/2010 at 09:44AM

Christopher W.

Residential Real Estate Agent · Orange County, California

290 posts
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Icon_minipost Sep 17 '09, 03:18 AM

Also keep in mind that you will have to pay subsequent taxes as well. I didn't know this when I started buying them and had one bought out from under me at the next year's sale. Oh well, at least I got my 16% for the year on that one. Not too bad.

Edited: 06/26/2010 at 09:44AM

G.D. Haizlip

Real Estate Investor · Atlanta, Georgia

103 posts
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Icon_minipost Mar 06 '10, 08:15 AM

George P,

It seems like you received a great deal of valuable input, but let me just add a comment/two.

Important: When doing your General "Due Diligence" check with your County Office for all lien types that may be attached to the property (e.g, 1st and 2nd mortgages, mechanic liens, and IRS Liens, etc..). Some offices may maintain a separate computer, book or reference area for IRS Liens, so Ask them, or the Tax Collector or the Designated Collector of Taxes in your area for that information.

Finally, be sure to follow-up on the input already provided to you here (on BiggerPockets).

Much Success As You Invest!

Edited: 06/26/2010 at 11:56AM