NJ Tax liens - Buying

[Martin Brady]

Could I pick anyone’s brains on here that is experienced in purchasing tax liens in New Jersey?

- Where do I start?

Thank you,

Martin

[James Lloyd]

From my complete novice perspective (I thought I was interested in it and went to a few, and I didn't bid on anything... just observed):

1) There are some decent databases for NJ tax liens... they list when each municipality has their auction and which properties have a lien for sale.  The properties actually at auction will be less because people pay off their taxes last minute.  I used taxsaleresources because it offered a month to month subscription option that was pretty cheap at the time.

http://www.njtaxlieninvestor.com/taxlien101.asp

http://www.taxsaleresources.com/

2) At least in Morris County and Union County (where I went/looked at), there are definitely "professionals" that are bidding on the liens.  They had their numbers down cold with spreadsheets or computers in front of them.  I wouldn't be surprised if they were bidding on behalf of big money investors (hedge funds, brokerage houses, etc.).  

3) You better have some serious money in the bank.  Not only do you have to have the money to pay the tax bill the day of, but more often then not, you will have to pay a premium for the lien too (as opposed to you getting an interest rate), which you also have to pay the day of.

4) Making this number up, but from what I saw, 90% of the properties will get bid up to a premium (or 0% interest) and the 10% that get an interest rate, probably 5% of those properties are duds (properties you would never want to own if you actually foreclosed on it).  The game is to hope that the taxpayer does not pay off the next quarter tax bill, and you get priority to pay it off and receive 18% interest on the next one... but again, you have to have the money in the bank to pay off each property tax bill thereafter or lose priority.

My advice is that if you are interested in tax liens is to visit a couple of tax lien sales (if you don't want to pay for a database access, then you can always go to each municipalities webpage and see if they list the info there), and see how they operate.  Maybe you'll get excited and decide to keep with it.  After going a few times, I decided it wasn't for me.  

If you're looking for reading material, Michael Pelligrino, Esq. wrote a book on NJ Tax sales.  Its a bit dated, but not much has changed since it was published.  I've seen Michael speak and he definitely knows his stuff on the topic.