How do tax liens really work? Whats the catch? Nothing seems as easy as they do?

[Chase Waxman]

What are the hidden costs or pit falls of buying a tax lien? Do you really get the house if the person doesn’t pay the lien in the grace period?

[Ned Carey]

@Chase Waxman You are wise to question them. On paper they sound great. What those promoting them ignore is there is competition. Tax liens for qality properties virtually never go for just the taxes. They are bid up to prices that often don't make economic sense. 

Yes you can get the property if the property owner does not eventually redeem the tax bill. However based on the bidding, you may wind up paying to much for a property that is in disrepair. Tax lien investing can be profitable but it is nowhere as easy or risk free as the promotors would have you think. 

Yes as mentioned the laws vary greatly from state to state and sometimes county to county. An example of a "Gotcha" is in Baltimore city the tax lien does not include the water bill. If you foreclose in order to record your deed you need to catch up any past due water bills. Normally that wouldn't be  big deal but in baltimore city they don’t turn off the water no matter how far behind someone is on their bill. You could be in for a $10-20,000 water bill surprise.

There is a LOT of good information here on BP about tax liens.