Maybe this has been answered before, but here it goes-
Who has invested in tax deeds/liens/ notes and has experienced the pros and cons of each?
What are you investing in now and why?
Thanks!
I tried tax deeds / liens here is my opinion - If you are bidding online, no competitive advantage against hedge funds especially with out of state. Unless you go to in person sales, I did not find value.
Notes - Been doing these for years now - NOT PASSIVE in any way shape or form. If you have less than $25,000 you are probably better just investing in a fund unless you are 100% sure you want to pursue and build a note business but recognize to expand it to raise money you will got 3 years without making money and have to spend money on systems and operations.
Maybe this has been answered before, but here it goes-
Who has invested in tax deeds/liens/ notes and has experienced the pros and cons of each?
What are you investing in now and why?
Thanks!
I tried tax deeds / liens here is my opinion - If you are bidding online, no competitive advantage against hedge funds especially with out of state. Unless you go to in person sales, I did not find value.
Notes - Been doing these for years now - NOT PASSIVE in any way shape or form. If you have less than $25,000 you are probably better just investing in a fund unless you are 100% sure you want to pursue and build a note business but recognize to expand it to raise money you will got 3 years without making money and have to spend money on systems and operations.
Investor · Seatac, WA · Member since 2017 · 134 posts · 121 votes
3y
I've invested in tax deeds and notes. My first note was actually seller financing a property I bought at tax deed.
I agree with what Chris said. Tax deeds and liens involve a lot of competition, and in my case, by the time the auction came up, most of the properties had been removed, so I spent a lot of time researching stuff that had disappeared.
You can have that problem with notes too, but it's different. If you're buying off a platform (e.g. Paperstac), then you might have some competition, but there's no deadline that people are bidding against. If you're looking at tapes from other investors/hedge funds, there are deadlines, but the number of people bidding and having the same criteria as you is much lower. And there's typically an actual person on the other side you can talk to, it's not all automated.
There are also a lot more notes than there are tax deeds/liens. And more flexibility depending on your investment style. I also agree with Chris that if you're investing in non-performing, you will not see returns for at least a year, typically longer in the current environment (courts are still catching up from the pandemic lockdowns).
If you are a small note investor...less than 10 notes, you can get away with not investing in a lot of systems/tools. I did most of my management on Trello (free) and worked directly with vendors (lawyers, property preservation, etc). As you scale, you'll want to look into other tools.
You also want to make sure you get some education with notes. I do not advocate signing up for an expensive program, but do weekend classes, attend conferences, do some reading. You don't want to jump into a non-performing note somewhere and not have some background in what to do.
