When it comes to tax lien investing, there are several tips you need to keep in mind. First of, it would be better to buy liens at smaller countries. The individuals who are bidding for large companies to invest their money in tax lien certificates are institutional bidders. Since there will be less liens to go around, it’s possible they won’t bother to attend tax lien sales at smaller countries. Besides, the liens may also be smaller.
If you buy smaller liens, then you may get higher interest rate because there will be less competition. It would also be advisable to stay during the off times of a sale. Prime examples of these are lunch breaks, end of the day, and last day of a sale. When you catch the people asleep, then you can get the good liens.
Also, try to go up to the clerk and ask if there are any more liens for sale. This is very important because there are investors who will purchase too many liens and at the end of the day, they’ll realize that they can’t afford to purchase all of them. These will not be re-auctioned by the county. For this reason, most will sell them to you over the counter at the maximum percentage interest.
Setting max bid amounts is another thing you should do. Don’t hesitate and wait until the bidding has settled and the bidders have dropped off. Afterwards, you can go for the decent sized increase but don’t forget your limits. It would also be a good idea to buy from company names that you recognize. Buying from commercial properties would mean that the liens will definitely redeem.
Remember that in tax lien investing, you put your money into tax liens that are created by county governments. Large sums can be provided but you may also face risks. A great tip would be to understand the risks before getting involved in this market.
Investing in tax liens is lucrative. That’s because you can get higher returns unlike in traditional forms of investment. If you foreclose on the property and sell the house, then the returns can be amplified. But as mentioned earlier, this isn’t a foolproof investment and it could be difficult to get your money back if the IRS has a lien on the property or if the homeowner files for bankruptcy.
- Tax Lien Investing – Smart Move for Investors (2010taxes.org)
- The Benefits of Being a Tax Lien Certificate Owner (2010tax.org)