Tax Lien Certificates

[Chris Garzino]

Hi BP Community,

I have been watching a 7 module course about buying Tax Lien Certificates.  The buying of certificates seems like a great investment opportunity, almost too good to be true.  I would appreciate hearing from folks who have experience buying certificates and what are some of the negatives involved.

I thank you in advance for your comments.

Chris

[John Underwood]

Chris,

It is one of the best kept secrets.

Do your research put your eyes on everything you intend to bid on. You get interest on properties you don't get. The others if not redeemed you get the property. An investment backed by real property. I make money on interest every year and I average getting at least 2 houses every year. I've been doing this for over 10 years and have acquired a decent portfolio of rental properties.

Do your homework on how things work in hour state. Plenty of free info here on biggerpockets.

Then know what you are bidding on. It is hard to loose once you learn the ins and outs.

Also if your doing it right you will have hundreds of hours of research prior to attending a sale.

There can be fierce competition at these auctions so you have to let many of them go to someone else and wait till you can get some bargains unless it is something that is likely to not redeem and is a good property that is worth the higher price. I still don't like to bid more than 25% of FMV on a nice house.

I have a few houses that needed very little work already had a tenant in place that I only paid $1200 for. These seem impossible to find these days.

Also get a ROTH IRA if you don't have one and convert it to self directed to buy tax liens. Get a house cheap that doesn't need much work and rent it forever. You will never have to pay tax on these profits or the capital gains if you ever sold it.