let’s say you buy the first 3 years. Property burns down. The city purchase the next 6 years and now another investor buy 2 years.
Do the first 3 years investors loss his money? Can you buy the investors out?
Originally posted by
@Tom Yung:
@Lou Gonzales
I do not invest in IL.
Investing in tax lien, you really have to know your state statue & have a exit strategy in place.
Below I am using a property(make up story) for you to see what can be happening if you do not have a Exit strategy.
Let's say the property has an accessed value of $60K homestead in FL. You get a lien for 2013 tax, let's say $1200 for 18%. 2014 came you get a lien for the same amount & 18%. You told yourself. Great 18% return every year. Actually it may or may not happen.
The same property owner has not pay mortgage for the past year & the balance of mortgage is $29K. So 2015 you apply for deed foreclosure. Since it is homestead, the starting bid will be $30K+ charges & fees. Are you prepare to dish out additional $30K on top of $2400 that you bought the lien?
The mortgage company will not bid against you in this case, because they can apply for the overage of 29K. On top of that, lien certificate has a life span. So if you do not apply for deed foreclosure, your certificate will become null & void after certain years.
On top of $30K winning bid, be prepared to put away funds to rehab the property & the cost of clear title. Most tax sale property is in very sad & bad shape.
Give you another story. (NJ)
Some people go after small utility lien for almost no interest for the first year(2013).( Bidding is fierce in most counties now that I have talked to other investors). On the first year, I may get no return for my $. but if the property owner does not pay the 2014 after Nov, 2014 I am entitled to pay for it. Lets say the tax came up to $7000. I will be getting 18%. So I am going to do the same thing in Nov, 2015. The owner does not pay again. I will pay & secure my position to foreclose after 2 years.
As you can see, buying a lien is easy, but to think & plan for 2 years takes a lot of patience & hard work to pick out the good ones.
I am more of a deed investors, @Ned Carey & @Jerry K. K are more into lien investments.(BTW, more than 97% of good liens get redeemed.)
Read up their posts, if I am not wrong; I think@Jerry K.invest in IL lien as well.
