First Time Attending a Tax Lien Sale

[Daniel Kern]

Hi All,

I have been reading about Municipal Tax Lien sales since my city held their sale last year. This year I decided to register and attend my first tax lien auction. I had identified a few properties on the list of interest with a non-redemption strategy in hopes to initiate foreclosure after the 2 year redemption period, here in New Jersey, thereby acquiring a property or two with future plans to fix and hold or flip, etc.  Well, I was definitely out of my league. I know tax lien investing is more of an advanced strategy so I went in only targeting a couple properties, but I wasnt even in the ballpark. Almost every property on the docket went to premium bids, some as high as 10,000 to 47,000 on a 7600 tax lien.  You could tell there were experienced "players" in the room with a seemingly endless supply of capital. My question though, is how do these investors "value" the lien and set a limit on how high they are willing to bid? Some properties, that I wasnt as familiar with, went for only a couple hundred to a couple thousand dollars. Where do you experienced Tax Sale investors find value and how can one determine a max bid on lien? Is there a formula  or rule of thumb Im not aware of?  I was glad I attended for the experience (didnt even make a bid though) and am hoping to be better prepared for next year (or another city).   Thanks in advance!

[Alex Deacon]

@Daniel Kern it is a humbling experience. We buy a lot of properties in my area at the sheriffs sales and when we first started it was an eye opener. I have since teamed up with a few very good partners. One does the research on the liens. I handle a lot of the evaluation and how much the property is worth and what is the max we can offer. My third partner handles all the back office stuff. Its not a place to start out but a good goal for you to have to maybe play in that market. There are so many other areas to start that I would not suggest this arena. Just not yet.