Tax Lien Certificates

[schundler]

Has anyone here ever bought tax lien certificates?

From what I know, it seems like an easy way to make money, so what's the catch?

Delinquent property owner. After x amount of time, municipality issues a tax lien certificate on the property to collect the revenue for it. You buy the certificate lifting the lien, but the property owner is entitled to pay you back + a large penalty, usually around 20%. If he doesn't pay you, you can get the property.

The only catch that I can think of is that sometimes, if the property owner is in a lot of debt, other creditors can preempt you and your rights to the property. But how great is this risk, is it enough to avoid this altogether?

Or are there other issues?


ty for insight in advance

[Baulucky]

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other creditors can preempt you and your rights to the property.

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But they have to pay you, including interest. You either get your usual return OR the property. The only issue is that they are not liquid investments.

[1huskerfan]

Pretty sure the tax debt is in first position.

[Some Pig]

Isn't this what Dan Harrington underwrites and brokers in his business? Does anybody here know if this is true?

[ghgrand]

How do you go about buying tax lien certificates?

[ckboddic]

Yea, anybody have real knowledge/experience with these? I always hear about them from the money making book seller types (robert allen, hicks) so something makes me think they're fishy.

[Nicholasp27]

from what i've researched, they aren't fishy or scams...they are backed by govt, etc

but they also aren't 'easy money'...u have to do some legwork and learn some stuff about how to properly do it

a friend of my friend does this for a living (and his parents do it) and they are loaded from it


but nothing is as easy as the gurus would make u believe in their marketing materials

[CardMinger]

I did a pretty limited amount of research on these after hearing some investment guru talk about them.

Basically they are a good investment but you have to do some research and know what you are doing or you can get screwed big time. There a lot of legal intricacies involved.

From what I read it isn't too easy to claim the property if the owner defaults because there are a lot of legal loopholes that benefit the owner of the house and if they want they can tie it up in court and cost you a lot in legal fees without incurring any legal costs themselves.

On that note I would love to have someone do some more research on these and write a little report about their findings here...

CM

[ckboddic]

Anybody know of any good books/reading material...not written by Carleton Sheets and the like...about tax liens?

[wmspringer]

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How do you go about buying tax lien certificates?

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Most states have an auction once a year where they sell them off. The interest rate varies by state and can be as high as 50%.