Tax Lien Investing

[Brady Ascheman]

Hi everyone,

I was just curious if someone could explain to me how they go about finding tax liens they invest in. I would love to connect with someone that currently does invest in these and hop on a call sometime if anyone is interested in teaching me how they do it. 

Thank you!

[Ned Carey]

@Brady Ascheman you buy tax liens from the county where the propetrty is located. Every county has their own way of selling them. Some sell at live auctions, some sell online with their own sites, some farm out the auction to auction comapnies that specialize in tax sale auctions. 

You have to check with the particular county website to see how, when and where they hold the auction. Some national sites that sell for some counties are ReaAuction.Come and Grant Street Group. There are others. What you do not want is third party sellers especially anything related to a "Guru" teaching about tax sales. 

You need to know that most things you have hearsd about tax sales have grossly uderstimated how hard it is and the risk involved. At the same time have grossly over estimated the profits.

I wrote more about risks in this thread https://www.biggerpockets.com/forums/70/topics/1141188-best-...

I am not trying to discourage you. I am trying to make sure you have realistic expectations. 

[James Hamling]

Quote from @Brady Ascheman:

Hi everyone,

I was just curious if someone could explain to me how they go about finding tax liens they invest in. I would love to connect with someone that currently does invest in these and hop on a call sometime if anyone is interested in teaching me how they do it. 

Thank you!

Step 1, know the laws governing and about such. 

Step 2, once get familiar with those in MN, you've now answered why can't find others doing or talking about it in MN.

[Jim Reynante]

Hi Brady-

=== Step 1: Research and fully understand tax lien certificates

- Many people I talk to do not fully understand what a tax lien is, how it gets levied on a property, how it works as an investment, etc.

=== Step 2: Determine what your budget is for tax Lien investing

- Yes, “It takes money to make money” And while it is possible to get some very profitable returns from tax lien certificates, it does require money to get started (you have to be able to purchase the tax lien certificate in the first place).

=== Step 3: Identify an area that you are interested in investing in tax lien certificates

- The rules and returns vary from state to state, and even county to county. So I recommend focusing on a single county and getting to know the area really well.

Understand the area, including:

- Demographics (e.g., avg household income, avg home price)

- Growth outlook (are people moving into the are or out of the area?home prices are trending higher)

- Related influences (e.g., is Amazon going to build a warehouse in the area and require 100 new employees that need housing)

=== Step 4: Find tax lien auctions

Find out about the tax lien auctions in the area(s) you are interested in, because not all counties sell lien certificates. Some counties only sell tax deeds (BTW, ensure that you do know the difference between tax lien certificates and tax deeds)

- Here’s a quick way to search for tax lien auctions on Google:

“<enter county name> in <enter name of state> tax lien (sales, auction)”

Just insert the name of the county and state. For example, if I want to know more about the tax lien sales in Jackson County Mississippi, I would enter:

“Jackson county MS tax lien (sales, auction)”

Google will return to me the results that match my criteria. At or near the top of the list should be the official Jackson County website that describes tax delinquent sales, FAQs, and other important information.

=== Step 5: Contact the county and inquiry about the their tax lien sales.

- Do they auction online or in-person

- When do they hold their auction? Once a year? Once a month? Randomly?

- Where can you get the rules/FAQ about their auction

- Get the list of properties scheduled for the next auction of lien certificates

=== Step 6: Due Diligence

- Review the auction listing and thoroughly research the properties for tax lien certificates you are interested in bidding

This is just a quick, high-level list of the activities I perform when researching for tax lien certificates. There is obviously lots more detail about finding auctions, researching properties, participating in auctions/bidding, return rates, what to do after winning a bid, etc.