Just wondering if anyone has purchased Tax Lien Certificates through the new Zeus Auction software yet. (https://www.zeusauction.com)
I'm used to the COUNTY.realtaxlien.com software where you put in bids and don't know the results until the batch closes. With Zeus, it's more like eBay. You place your max bid and it automatically proxy bids up to your max and tells you who is currently winning.
I guess my question regards your experiences with the outcomes of these auctions. It seems that corporate money comes in and bids the interest rates down so low (or the premiums so high) that it's not worth the time. With the auction due to close on 16NOV (couple days) I'm hoping that I actually win some of the $20k in certs that I'm currently winning.
I'll keep you updated.
So actually a successful auction and I really enjoy the format more than the county.realtaxlien.com format.
At one point, I was winning over $40k worth of tax lien certificates with low/no premiums. As all liens earn 10%, your actual returns become much lower as you dish out premiums (that won't earn interest and aren't refunded back to the investor at any time). When the investors came to work to day they bid away all the low-hanging fruit and left me with a little more than $4k worth.
There was a lot more of the 'corporate money' that came in towards the end of the auction time and dropped the profitability of many of my bids, though. The last 15-20 minutes before each batch closed there was a lot of activity and a lot of 'sniping' where investors attempted to get the last bid in as time expired. The website also noticeably lagged the last few minutes prior to batch closings.
Of the 450 or so liens, I bought 24 with a face value of $4,114 for $4199 ($85 in premiums, about 2% to face value).
One thing that still confuses me is why some investors bid so much on the premium. For example a certificate would have a face value of $1000 and some are willing to spend $250 premium to get the certificate. The investor never sees that premium again and the cert will only earn 10% (or $100) per year. And if the homeowner pays off the back taxes the next month, you're out the premium and only earned one month of interest (roughly $8). Why would someone take that chance?
For anyone interested in Tax Lien Certificate investing in counties with Premium Bidding, I use this spreadsheet when evaluating how much premium to bid on a Tax Lien Certificate based on it's face value and what return I am seeking.
Higher premiums risk cannibalizing your returns and can even lose you money if you don't earn the interest back before it redeems!
Do you have any place where i can get more info on tax lien investing? i have read alot up on it but its seems like a crap shoot and you need to do alot of research on the property before bidding? This looks like you basically have X amount of time to research before you bid. Also i am a little confused on if you hold a lien and they re-auction it you pretty much lose your money when they repay. I am interested in doing this but alot of information seems to conflict with each other. Thanks!
@JR Haseloff People bid more because they want to have the chance to own the property. Something like going down the road to Cripple Creek and throwing it out on black.
@Bill S, that is crazy talk! Allow someone else to tie up there money in hopes of getting the property from a TLC!