I understand some state are better than others. I'm looking for best interest, short term redemption period. And any advise on states that have penalty vs interest? I hear these are a good investment.

Texas. short redemption period (6 mo.); phenomenal returns (25 to 50%).

Lynda, A good basic book on tax liens that list the process and return by state as well as the risk is "Make money in real estate tax liens" by Chantal Howell Carey and Bill Carey Understand with tax liens that most people will redeem at the 11th hour at the end. So you have to be okay with getting the interest and not the property. There are many landmines as well.Some cities and counties have been known to auction off drainage ditches that are worthless or you foreclose on a contaminated building where EPA cleanup will be more than the value of the land to get into a useable or sellable state. In bid down states where the interest rate starts at 18 percent for example but goes down you can get bid down to horrible rates.The reason is there are not only investors there but institutional buyers along with groups represented by attorneys that are just looking for a slightly higher interest rates than what they can get at a bank. You will also answer the whether you can foreclose question when buying the senior note position with note sales.You have to be okay knowing you will have that money tied up for the long haul. Example you buy 100k worth of liens at 12% with a 1 year redemption period.You have every intention of foreclosing but almost all redeem.For having your 100k tied up for a year you make 12k. Conversely in a years time you could have doubled that 100k with other real estate investment. So it's just about expectations and returns. Investors that have alot of money will invest in buying properties,buying notes,and buying tax liens.They will diversify their money to achieve different returns based on the level of risk. Hope it helps some,,,,,,,,, [LINK REMOVED]

That is tough to answer. I have been increasing my lien purchases over the years. Many of the years which I purchased a large number of liens the foreclosures aren't final yet. I would estimate 5-10% It is not quite that simple. I bought that lien in 2007 so it is 25% over three years - or is it? I put up $950 the day of the sale. Most of the other costs were paid at settlement. In fact I just paid the foreclosure attorney a couple of months after the settlement. What we want to know is the internal rate of return. I haven't calculated it but I know it is pretty darn high. My attorney and I want to find some money partners so I do need to calculate some real stats. I write a lot about tax liens on my website below.

I invest in Baltimore, it is nominally 18% but becuase it is an auction the effective rate is bid down. I suggest you start where you live. I can't imagine bidding on properties I haven't seen but many people do. That is hard to do if you are bidding out of your area. I write a lot about tax on my site.

Last year I tried to assign a tax foreclosure for a profit and was hauled into court by the tax lien investor. I lost. And taxes are so high here that no one in their right mind would allow their earnest money deposit to be applied towards delinquent taxes with no guarantee of getting the property. Furthermore, it wouldn't past the "inteference smell test", imo.

If you win big the first time you gamble you are likely to be hooked. That happened to me with tax liens, I got the first two properties I bought liens on. They were both home runs. My goal is to get the property and I have gotten about a property or two a year. Those first two liens I bought were on vacant properties. The liens were about $3,500 a piece, so you can start this business with a modest amount of money. But I don't think my experience is typical.

The best one I know: http://www.taxsalelists.com/ NJ is a good state for tax liens due to the laws here which state that investors (rehabbers and wholesalers) can't buy a property once it's under tax foreclosure unless the homeowner (not the investor) redeems the taxes first. Great for the tax lien holder. Plus 18% interest and a 2 year redemption makes this state EXTREMELY competetative.

Not only is that on the purchase amount as mentioned but it includes any maintenance you do like keeping the yard mowed or fixing a leaky roof.

Could the seller require an earnest money deposit large enough to cover the taxes, and use it to pay off the tax sale holder?

A long time ago, I read a book called the 16% Solution. http://www.amazon.com/16-Solution-Interest-Rates-Certificates/dp/0836280849 The book is only $5.00 on Amazon now, but it may be a little outdated. Anyways, I remember because Arizona was one of the best states to invest in for tax liens. I think the auction though is in February, so you just missed it.

What are the best states for buying tax liens?What are the best states for buying tax liens?

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What are the best states for buying tax liens?

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