First time tax lien purchaser from WV

[Mike Bell]

Hello, I'm new to the forum and new too any type of real estate investing. I've spent a few years buying items from auctions and selling online but I'm looking to get into something bigger. I've done a lot of research on the tax lien process which is coming up in two weeks in my county. I've also done research and visited approx 50 properties in interested in. I have about 5k cash to throw into this adventure. Just looking for any tips to become successful. My game plan for my first time is too not get into an overbid scenario. Only buy property with no homes with em the the exemption of 4 I've looked at. In wv there is an 18 mo redemption period with a 1% return per month I hold the lien. Thanks for everyone help.

[Matt Shields]

Mike, I don't know anything about West Virgina tax liens, but 12% interest with an 18-month redemption sounds pretty good. Here in Arizona, it's a reverse auction that starts at 16% and can be bid down to 0% with a 3 year period before foreclosure. 

Keep in mind that my experience is with AZ. My strategy is I buy for the return of interest not expecting to get a property. It is unlikely to foreclose on a property through a tax lien, I just look at it as a rare bonus. Many amateurs bid a lien down to 0% thinking they are going to pick up that multi-million dollar home for $10,000. Unfortunately, they don't realize that many people purposely let properties go to the tax lien auction because they get the equivalent of a low or interest-free loan and will pay it off before the foreclosure period ends.

Many people also make the mistake of buying worthless junk at tax lien sales, especially land. Often times the owners let the taxes go because it can't be built on and they don't care if someone forecloses on it. Some examples: Floodway or no legal access properties, toxic dump sites, and HOA common areas. There is a recent funny situation in California where someone purchased a private driveway to over thirty multi-million dollar homes and is going to charge them for parking. I think I would install a toll gate! :) http://www.latimes.com/local/lanow/la-me-ln-presidio-terrace-purchase-sf-20170808-story.html

I would start small and not throw your whole five grand in at once. Learn how the process works, and as you get experience then start investing more. 

Good luck.