Are OTC Liens Deals or Duds?
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I’ve gotten a few questions about over the counter liens lately. Apparently some of you are being told that tax lien sales are so competitive that you are better off buying left-over liens from the county. Some people would have you think that you can get good liens at the maximum interest rate by purchasing these liens directly from the county. Some of you are also under the impression that if you purchase one of liens from the county that is 2 or 3 years older, or older, you will be able to foreclose right away.
Part of this is true, if you purchase a older lien from the county, you will be able to start the foreclosure process sooner. However what you are not taking into consideration is that if tax sales are so competitive that you’re not likely to get a “good” tax rate at the tax sale, then what makes you think that there is anything left-over after the sale. Many counties will re-bid properties that don’t sell the first time, either right after the sale is over, or in another tax sale. Almost all of the left-over properties are junk properties. Yes you can get the maximum interest rate, yes you will probably be able to foreclose and get the property – in which case you do not get your money back. And then how are you going to sell an unbuildable piece of land, or otherwise junk property and get your money out of your investment?
Remember the old addage “if it sounds to good to be true, it probably is,” before you go off and and listen to what one of the “good old boys” tells you about tax lien investing. Listen to the TaxLienLady instead. Get your free tax lien investing kit with the new Tax Lien Investing Secrets videos at www.TaxLienInvestingKit.com
I’d love to know what you think about buying left-over liens. Leave your comments and questions below:
4 Comments
January 20th, 2012 at 12:39 pm
I would also like to add, don’t trust the images from Google’s, they’re outdated for a few years. Go and see the property and then and only then buy the tax lien OTC. I done it many times and enjoy getting the max on my money. Research,research,research is the key.
January 20th, 2012 at 3:16 pm
The only OTC I would consider if there more Liens then bidders. Unlikely. But you can carefully research these before you buy.
February 13th, 2012 at 10:51 am
What risk does a homeownor declaring bankrupcy pose to the process and investor’s return? Thanks in advance for your reply. Great video.
February 13th, 2012 at 1:27 pm
Hi Abhishek,
Very good question. If you have a lien on a property and the owner declares bankruptcy then you will have to file a claim with the bankruptcy court and you will need a lawyer to do so if you are not familiar with the process. Then 2 things can happen that are not desirable, but will not cause you to lose your investment either. The first is that you will not be able to foreclose the right to redeem the lien until the bankruptcy stay is lifted and the second is that you may have to accept a reduced rate of interest. Will you still get paid – yes, but you might not get as much as you thought you would and you may have to wait longer to get it. However, many bankruptcies are thrown out of court if the party declaring bankruptcy does not fulfill their responsibilities. It also can be thrown out if the lien holder has not been notified of the bankruptcy.