Investing in Tax Liens

Remember, tax liens are a passive investment and not a substitute to short-term liquid reserves. When buying the tax liens, you might be locking your money for a long time. While the owner may redeem the lien the following month, there is also a possibility that the owner will redeem after you start the legal process of taking over the title. And sometimes legal process requires additional funds. Bottom line - don't use your liquid cash reserves to invest in tax liens and be prepared to spend more on legal actions to force the owner either to redeem or forego the property.