Thanks to the supper low government interest rates, hedge funds continue to swarm tax sale and fight over tax liens. This past year has seen some high premiums paid for tax liens. It’s been a tough year for tax lien investors at the tax sales, but there are still deals to be had. Where are they, and how can you have winning investment strategies this year to keep profiting from tax liens?
Bigger Liens – Bigger Profits
I used to be able to get small utility liens at a decent interest rate, so in the past I made my money buying lots of small liens. That strategy worked well for me in New Jersey a few years ago, but it doesn’t work in other states, and it doesn’t even work in New Jersey in today’s environment. Now many of the smaller funds are going after the smaller liens because they are having a hard time competiting for the larger ones. They’re paying premium for little liens that they are not making that much on. Paying hundreds of dollars in premium to get a small utiltiy lien just doesn’t make sence for the small investor, you’re actually better off buying larger tax liens even though you may have to pay more premium to get them. I’ll be giving some examples of these deals in future articles.
The other investment that makes sence in today’s market is buying tax liens on vacant land. Of course you have to make sure that the land is good. It’s got to be buildable land, not a drainage ditch by the side of the road, or a strip of land that is too narrow to build on, but buildable land is a good investment. Many of the hedge funds will be stearing clear of tax liens on land, so individual investors can still get liens at good interest rates on land. At the last sale that I went to in 2015 a brand new investor got a $4000 tax lien on 18 acres of land with barns on it. At one time it had been a qualified farm, but was no longer qualified for the farm exemption. These are the kind of deals that make sense, whether you pay the taxes for 2 years and foreclose on the property and get the land, or get the interest on your money, you make out extreemly well.
And this is just one of the strategies that I’ll be talking about this year to help you profit from tax lien investing in 2016! Get the replay of our January Q & A teleseminar at: https://attendee.gotowebinar.com/register/295308303602063362.
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