Tax Lien, good idea??

Question

I have been doing some research as I am new to REI and have come across many articles and recommendations about purchasing tax liens, deeds, etc..is this a good way to get started in REI? What are the downfalls, if any? Does anybody have extensive knowledge in this field?

Tom Yung · Answer

@Josh Kellum

Tax lien can be very difficult if you do not know what @Wayne Brooks mentioned above.

Interest rate of most tax lien had been bid down so low or with such a high premium in recent years. If you do not have a Exit strategy. You will be in the likelihood of losing $.

3-5% of the liens does not get redeemed. In some states like IL. if your lien amount is too small. When you go & foreclose on them; then they redeemed. There is a good chance that you will lose money even when they  paid you interest, due to the cost of foreclosure.

Some states requires you to pay subsequent years tax. If you do not have money put away for this. You may lose your lien & get wipe out.

Most tax lien properties that do not get redeemed are usually in bad shapes or conditions. Be prepare to come up with $ after foreclosure, & have a exit strategy before buying any liens. Also watch out for HOA liens in some states, it will show up after your foreclose.

Hope this helps.

Wayne Brooks · Answer

Probabaly the easier way to lose most, or all, of your money if you don't know the laws and what you're doing.

Josh Kellum · Answer

thank you everybody for the advice! I haven't really made a decision to what avenue I want to go down as my first venture. I'm thinking about wholesaling! Thanks again guys!

@Wayne Brooks@Tom

@Tom Yung

@William Strong

@Greg Johnson

Red Brown · Answer

I agree with@Wayne Brooks  if you don't know what your doing it will bite you sooner or later.

I have watched many new to the game jump head first into a snake pit thinking it was a gold mine .

William Strong · Answer

Josh,

Tax liens can a good investment if meets your goals. I am only learning them myself but there is tons of information here on BP. Below is a link to the tax lien investing forums, great information is added all the time. Also set a key word alert for tax liens. I get several hits a week from that alone.

http://www.biggerpockets.com/forums/70-tax-liens-n...

Hope this helps.

Greg Johnson · Answer

In Connecticut,  Bankruptcy can happen. If it does happen you get your interest rate,however it ties up your money.

Tax Lien, good idea??

Most Popular Reply