I have been learning about tax lien investment for a while. I am looking to start my first tax lien investment in Arizona in February. My budget is $10k-$20k.Since I am living in San Diego, CA now, I searched and picked out all counties(6 I think) doing online tax lien sale and one county is drivable distance in AZ. It turned out that a couple of counties have the SAME DATE for the Auction. My questions are:
1. I wonder whether it's possible to register and bid online for different counties on the same day.
2. If I have to pick one county or two to invest in, what are selection criteria?
3. I found one county(on-site auction) is 2-hour drive away from San Diego. I would be happy to show up at the auction if it gives me some advantages over bidding online for other counties.
Thank you for your time reading my post. Feedback and advice are highly appreciated.
Specialist · Phoenix, AZ · Member since 2011 · 698 posts · 629 votes
12y
@Emma Chen Welcome to the world of tax lien investing. Here are some of my thoughts - and remember this is just my opinion. Others have success using liens using many other strategies.
1. I wonder whether it's possible to register and bid online for different counties on the same day. Yes, you will be opening up a separate online account in each county. I do this every year.
2. If I have to pick one county or two to invest in, what are selection criteria? This is personal choice. I always recommend investing in areas you are familiar with. I get to northern AZ about every 18-24 months and I drive around and analyze the areas. Maricopa is online and has the most liens in their auction because it includes the Phoenix area. 20,000 - 30,000 liens is not uncommon. Yavapai has a little over 3,000 liens this year. Coconino includes Flagstaff and it had just over 1,200 liens last year. Pinal county south of Maricopa had 4,300 liens last year.
3. I found one county(on-site auction) is 2-hour drive away from San Diego. I would be happy to show up at the auction if it gives me some advantages over bidding online for other counties. There is an advantage to being at an open outcry auction, but it moves fast and it takes some getting used to how the auction is conducted. Go in knowing there is an "old boys network" (which does include women who have been bidding for years) that show up and invest each year. They know the newbies in the audience and if you don't know the area, they will take advantage and bid you up (or bid way down if it is a bid-down auction) on liens they know are not very good. They will dump you with poor liens at lousy rates. However, if you know exactly what you want to bid on and have done your research, then you can get some great liens and good rates at an "in-person" live auction because there are less participants than an online auction.
There are also people who won't even consider bidding in the auctions and they just pick through the liens that did not sell looking for the gems that slipped through. These liens are bought directly from the county and you have no competition and automatically get the highest rate (16%). But you should know that most of the leftover liens are junk properties. You have to be really, really careful what you buy.