Purchase 2 liens from Tax Lien Vault?

[Steve Doherty]

Hello All, I am a newbie investor and I am trying to determine if I should purchase 2 liens (18% & 15.25%) in Florida (St Luce and Sarasota counties) through Tax Lien Vault by way of a company called REI Holdings Inc. Both liens appear to be to be between 6 and 7 years old. Meaning they are about a year or 2 away from expiring and therefore requiring either the property owner to redeem OR that someone initiates foreclosure to either force payment and/or sale of the land. These liens are land only. They appear to be in nice developments that the builder for various reasons has stopped work on. So my questions are: Is buying a lien through a 3rd party and having it transferred to me (via my bidder ID in the relevant counties) considered normal/wise/ok? The seller says the lien transfer will take about 30 days due to slow moving County transfer processes. The Tax Lien Vault has been pretty straightforward with answering all my questions. I am just a little nervous on pulling the trigger on my first Tax Lien investment and am looking for some guidance from wiser more experienced investors! Thanks!

[Wayne Brooks]

Generally, tax certificates (they're not referred to as liens here) that sell for those high interest rates are of little to no value.  Otherwise someone would have bid them down to less than 5% at the original certificate auction.  But the important thing to realize is how you would collect.  To collect you, or some other certificate holder, has to send them to auction.  To do that you'd have to redeem/pay off All the other certificate holders on that property, maybe 4 or 5 years worth, and pay some additional fees to send it to a Tax Deed auction.  Therein lies the rub....if the 5 other tax year certificates are owed $2000 each, you're putting up another $10k plus to send it to auction.  If no bidders bid the minimum amount covering your certificate and all the other redeems certificates, you get the property back.  Obviously if no one bids the required amount, the property isn't worth that much.  This is likely the reason these Certificates are for sale, the holder realizes they are "upside down" and is looking for someone to bail them out.

 If you understand that Florida Tax Certificates are "sold" by way of bidders bidding "down" the interest rate they are willing to accept, starting from a high limit of 18%, and that most certificates are "sold" at a rate below 5%, you'll understand that no one wanted the certificates, for some reason, therefore you can assume that any certificates going for the 15-18% rate are basically junk, and no one bidding wanted them.  This is not the pool of investments I'd want to be picking from.