I like to buy secondary tax liens as a strategy to profit from tax liens without having to bid at the tax sale and without waiting long redemption periods. I find that this is a better strategy than buying leftover liens from the county, because it’s less time intensive. Why not let someone else do all the heavy lifting for you? But it’s really important to know how to invest in secondary tax liens and/or redeemable deeds so that you avoid the common mistakes that many investors make so that you profit every time.

What’s a secondary tax lien?

A secondary tax lien is a lien that was purchased by another investor at the tax sale. It’s different from an OTC (over the counter) or left-over lien, in that you are not getting it from the county, but from an investor who purchased the lien at the tax sale. You can watch the short quick tip video above to get a better understanding of why an investor would want to sell you their liens. Most counties allow the assignment or sale of a tax lien or redeemable deed from one party to another. Some counties make the process very easy.

The benefits of buying secondary tax liens?

Some investors don’t want to foreclose on the property. They might keep their liens until just before the redemption period is over, hoping that the lien will redeem and they can collect their profit. But they don’t want to come up with the extra money they would have to in order to foreclose on the property. So they are willing to sell their liens that are ready to foreclose. The benefit to the buyer at this point is that they can purchase the lien and start foreclosure right away. The trick to profiting from secondary tax liens, is to buy them right. You want to make money on the liens that you purchase whether you get the property or they redeem sometime during the foreclosure process.

Avoiding Common Mistakes

Most investors will want the full redemption value of the lien or redeemable deed when they sell it. But if you pay the full redemptive value, you will not make any profit if the lien redeems soon afterwards. You will only make a profit if you are able to foreclose on the property. But just because the redemption period is over does not mean that you will be able to foreclose the right of redemption. Redemption can happen any time during the foreclosure process. Sometimes there are foreclosure costs that you do not get back if the lien redeems during the process of foreclosure. So you can actually lose some money if you don’t buy right, or if you buy the wrong liens or redeemable deeds.

I help my students and members of the Tax Lien Profits Accelerator™ to buy secondary tax liens profitably. the important thing is to buy these liens or deeds from someone you trust and to do your due diligence on the property. I provide my members with list of secondary liens for sale from an agent that I trust and I help them to pick the right ones. I’ve made close to 40% in 18 months on one of these liens and one of my students has profited 30% in only 9 months. If you would like some expert help building your profitable tax lien or tax deed portfolio, then you may want to join the Tax Lien Profits Accelerator™.