Here’s a question that I got a couple of weeks ago?and I thought it might be helpful for everyone to post the answer to here. This questions was from someone that had limited money and is somewhat disabled, and they asked a question that I think is on a the mind of a lot of people. I often get this question from individuals who have been recently laid off, or who have been without a job for a while.

The question is: “Is it worth it to start investing in tax liens with just a little bit of money, and build up from there?”

My answer to this questions is a whole hearted “YES it is, that’s how I got started.”

Recently I had a lien redeem. It was actually 2 separate liens on one property. I purchased the first lien back in December of 2002. That was the year that I started investing in tax liens. The amount of the lien was $444.62, and I paid $30 to record the lien. The following year I purchased another lien on the same property for $457.48, I paid another $412.88, a $40 recoding fee. Then I continued to pay the subsequent taxes of around $500 per year through 2008.

By December of 2008, six years after my original investment, I had invested a total of $3919.56. Then I stopped paying the subsequent taxes and going to the that particular tax sale. I was just too busy in December of 2009, and a little short of money, so in 2011, before the 2 year redemption period was over from the 2009 tax sale, I started foreclosure procedure on those 2 liens. Upon receiving the foreclosure notices the bank that had a mortgage on the property promptly redeemed the liens. I didn’t have to continue with the foreclosure, so I saved some money there. My total investment to the lawyer to foreclose on the liens was?around $300 for the title search and mailing of certified letters.

When the liens redeemed, I got a check for over $7807.74. Without counting the legal expenses, which were not reimbursed, I still?practically doubled my investment. Even with the legal expenses I still made out pretty good, wouldn’t you say. At least it was a lot better than I could have done in a CD or in the bank. Yes, maybe I could have made more in the stock market, but then all my profit would have disappeared in the last crash.

I used a large part of the?redemption money to pay the property taxes on a?couple of investment properties. The one thing that I learned from being involved in tax lien and tax deed investing is that you have to pay your property taxes! And I took some of the profit and bought 2 more liens and paid the subsequent taxes on another lien. Don’t you think that buying that small lien and paying the subsequent taxes each year was worth it? I do!