Tax Liens - Losing All of Your Principal

[Tom Scott]

Based on what I know so far, the only way to lose all of your principal in a tax lien investment is by having your certificate expire because the taxes were not brought current and you did not begin the redemption process.  Also assume that if you begin the redemption, your attorney correctly runs the process.  Is this correct? 

[Greg Scott]

Incorrect.   I'll tell you a more common way to lose your principal.

I invested in Illinois Tax Liens through a company called Platinum Investment Properties (Charles Sells).   Part of the reason I did that was the tax lien processes can be very complicated and if you mess up, you can lose your rights.  Platinum seemed like a good company.  Their claim was that they researched properties and only bought tax lines where the value of the property was much higher than the lien.  The logic was that these liens would be very likely to be redeemed or the properties could be foreclosed on for profits.

Reality was their marketing materials were far better than their execution.  In a few years they turned my $40K into less than $10K.  Now on paper, I still own those tax liens and theoretically they are worth something.   Theoretically, someone might want to buy these parcels of non-farmable land in the middle of nowhere and pay on my lien.  In reality, nobody has paid off any of my 50 or so liens over 7 years.  I consider them worthless.

Lesson learned.  I now stick to owning real assets that I control myself.