tax liens in Arizona

7 Replies

I bought some tax liens in Maricopa county when I lived in California.  I made some OK money.  There are a few things to watch out for:

1. You have to pay a fee for each lien (when I bought it was like $5 a lien).  But the people can pay them back at any time, so if you buy the lien on Monday and they pay on Tuesday you will get your money back and your 1 days' worth of interest, but you will be out the fixed fee.  For larger tax liens, this wouldn't really be a big deal but when I bought mine I bought about 20 smaller ones to spread my risk.

2.  Make sure that you do your due diligence on the property.  Maricopa has a good county GIS website so it is much easier than it used to be.  But you'll see strange parcels of land, like 2k sq ft islands between 5 homes with no road access that have tax liens.

3.  If you really get into it you'll want to decide if you are trying to find properties where you are trying to go through the foreclosure process or if you are just trying to get some interest.  Those are very different types of properties and the due diligence will be different.

Large financial institutions buy tax liens all over the country and always have.  They have full-time staff that do nothing but due diligence.  But there are always some left over and I'm sure a few of them are good investments, especially in this low rate environment.

  The funny thing is that I moved to Maricopa county 2 years ago and I haven't bought any since.  I've thought about going down to the county office to see what I can get OTC, but I just haven't made it down there.

@David M. - If the owners don't redeem the property from you after the 3 year period, usually the bank will because the bank doesn't want to loose their collateral over a few thousand dollars in back taxes.  If it has no mortgage or somehow the bank misses the fact the property has lots of back taxes, then you would start the foreclosure process to take ownership of the taxes (if you are the senior tax lien holder).