Due Diligence

[Sante R.]

When Investing in Tax Liens I know that doing your "Research" is key. Checking out the actual property is also vital. Once you know the property is worth moving forward on how are you able to find out if there is an IRS lien or if the owner has filed bankruptcy ? Where can this information be found?

[Ned Carey]

Originally posted by @Sante R.:

Obviously you've invested in Tax Liens before, has this area of investing been profitable for you and what pit falls should I look out for ?

Yes tax lien investing has been very profitable for me.

Pitfalls

1) You need to know the rules. The laws vary by state and can be dramatically different form one to the other. The strategies and how you go about bidding will change depending on the rules.

2) You need to know the costs. Like all areas of real estate there are hidden costs. In most states you will have legal fees. In MD for example, when you foreclose you have to catch up all taxes and municipal bills in order to record your deed. That could be thousands of dollars you didn't count on.

3) Know the value of what you are bidding on. Not just the assessed value but what is it really worth if it needs substantial repairs inside? Trust me, people who can't afford to pay their taxes generally don't maintain their house in tip top shape.

There are others but those are key.