After Winning Tax Lien Certificates Online

[Emma Chen]

Hi all,

As I said in the other post, http://www.biggerpockets.com/forums/70/topics/116927-results-for-first-time-tax-lien-investment-in-az , I won 8 tax liens in Coconino county. I wonder what I should do to follow up on this investment.

I am thinking to:

1. build a spreadsheet to track timelines for each lien; Timelines for subsequent taxes, redemption period and expiration date.

2. create a financial model to track investment return for each lien and/or this investment;

3. tour the properties I won liens on some time this year in order to decide next step for holding/dumping strategy.

Please suggest anything else I need to pay attention to.

Thanks,

Emma

[Jerry K.]

@Emma Chen Good ideas for your first lien investments. My comments:

1. build a spreadsheet to track timelines for each lien; Timelines for subsequent taxes, redemption period and expiration date. Make sure you include which county you bought the lien in if you buy in several counties. The county will send you a letter in December to pay any sub taxes of the owner has not paid. Many counties allow you to pay sub taxes earlier in the year if you want. Have columns for sub taxes.

2. create a financial model to track investment return for each lien and/or this investment. @Ankit Duggal has a spreadsheet for calculating returns on liens in "FilePace" under "Resources" - but you may need to be a Plus or Pro account holder to have access to it. You would need to tweak it just a little because he has it automatically calculate 18% on sub taxes and in AZ you earn the same as your original lien on the sub taxes.

3. tour the properties I won liens on some time this year in order to decide next step for holding/dumping strategy. This is a great idea and you may be able to deduct part of your expenses for taking the trip on your taxes. You are researching investment holdings, but since liens give you no ownership interest, I'm not sure what you would be able to deduct - if anything. Maybe @Steven Hamilton II could give an opinion on tax deduction of expenses related to looking over the properties you own tax liens on.

The other thing you may want to do if these are the only liens you are buying this year - Get as much information on the owners as you can. Google them looking for obituaries, lawsuits they are named in, even jobs or social media accounts. You want to know why they are not paying the taxes to determine if/when they will pay. This is not something I normally do anymore, but it helped me understand all the different reasons a person may not be paying taxes.