Live in nyc — tax lien strategy

[Michelle Backer]

I am trying to invest in tax liens in nyc 

Please give me advice. I am unsure whether or not this is a smart idea 

I live in nyc my whole life, so I know it well. I know the areas where people would be able to pay it off 

[Bruce Lynn]

1.  Read and understand the law and the process.  LOTS of online resources about NYC sales and opposition to them.

2.  If your sale is live, go in person 2-3 times with your list and see at what prices the liens sell or at what interest rate.  Don't bid the first 2-3 times, go to learn.

3.  While you are there network with everyone.  Ask questions.  Learn everything you can.  See if it makes sense to invest.

4.  Know how you have to pay.  Is it cash, same day?  Deposits before you bid?  or what is the system of payment.  Know how redemptions happen.  What happens if they don't redeem, how do you get the property?

5.  Know what you are responsible for...for example future property taxes, operating expenses, water bills, etc.  Seem like in many places for example bidders are responsible for outstanding municipal water bills.  So if you have to hang on to a property where people are stealing water and have for many years, you may get stuck with a huge water bill.  I'm making up numbers, but heard of a nearly vacant office building in NYC that might sell for $1mil at the normal mortgage foreclosure sale, but has $8mil in operating expenses.  Needs full rehab.  The lesson is, you may have to pay a lot more in expenses than just for the lien to in the long run get a profitable property.

6.  YOU will have a ton of competition.  It will not be easy money.