Investing in tax liens

3 Replies

I just learned about tax liens investments in a real estate investment seminar. I heard only good things obviously. Are there any cons of investing in tax liens other than the difficulty in finding one?

Actually they are easy to find. 

Yes you can lose money on a tax lien. I have lost tens of thousands of dollars investing in tax liens. I have also made hundreds of thousands by doing so.

Obviously if you lose tens before you make hundreds you are in deep do do.

The number one risk is bidding too much. This is easy to do if you do not account for the hidden costs. You need to know what the property is worth in it's as is condition because that is the security for your lien. Many people bid based on the assessed value of a property. I can tell you that in Baltimore some properties are only worth 20% of the assessed value. that makes it easy to over bid.

Do a search on BP on this matter a lot of good info.

As a side note, someone is selling tax liens on eBay as "Pre-foreclosure Properties". They imply that ownership of the lien is virtual ownership of the property. This is not true. If you own a lien, you may, in proper time, have rights to call for foreclosure, but that simply opens it up to public sale. At public sale, you can buy it, but others can, too. In my opinion, this is misrepresentation.