Investing in tax liens

[Salil Prasad]

I just learned about tax liens investments in a real estate investment seminar. I heard only good things obviously. Are there any cons of investing in tax liens other than the difficulty in finding one?

[Ned Carey]

Actually they are easy to find. 

Yes you can lose money on a tax lien. I have lost tens of thousands of dollars investing in tax liens. I have also made hundreds of thousands by doing so.

Obviously if you lose tens before you make hundreds you are in deep do do.

The number one risk is bidding too much. This is easy to do if you do not account for the hidden costs. You need to know what the property is worth in it's as is condition because that is the security for your lien. Many people bid based on the assessed value of a property. I can tell you that in Baltimore some properties are only worth 20% of the assessed value. that makes it easy to over bid.