Simple novice question: can you lose money after buying a lien?

Simple Answer:  Yes!   Books have been written on the right and wrong ways to by liens the number of ways to lose money are too numerous to list here.  If you have a specific deal you are looking at give us some details.  

@Bob E.   is right - there are many ways to lose money in real estate tax liens after you buy.  A couple off the top of my head:

• Property is worth less than the amount of the lien.
• Property is worth less than the amount of the each lien you have to buy before you can foreclose. (In some states you can't foreclose for a set number of years and you need to pay the taxes for each year or you lose the lien position)
• You don't foreclose before the lien expires.  Some state statutes have a set amount of years before the lien expires worthless if the owner doesn't redeem or the lienholder doesn't foreclose.
• Property is worth less than all the liens and foreclosure costs you incur.
• Property has EPA issues that need to be cleaned up if you end up owning the property after foreclosure.  (Example - lien on an old gas station with leaky underground tanks)
• Lien on an improved property is destroyed before foreclosure.

There are many other ways.  State laws all vary.

@Bob E.  @Jerry K.  thanks for the responses! Although it wasn't until after I posted this question that I realized my state doesn't sell tax liens. I am close to the borders of 3 other states so I could try there... Have either one of you had any experience with online auctions?

I have not.  I Mostly buy 1st position mortgage liens.  

@Adam Griffis  I invest in tax liens through online auctions in Arizona and Florida. You really need to know the aeas you are investing in, so I travel to those areas about every 18 months or so.

You really cannot buy a tax lien or deed without a prior and thorough due diligence which takes up your time and some resources. Once you understand it's an essential upfront cost, it's a good business. 

Good luck with it!