Tax Lien Sale Results – What’s Changing?
Competition has escalated at tax lien sales since 2008, especially for the online tax lien auctions. It’s gotten so competitive that it has been difficult to get tax liens at decent rates for the last few years. And even the junk properties have been getting sold at the online tax lien auctions. All that is changing this year for 2 reasons. The first reason is something that I’ve been waiting to happen for the last few years.
The Federal Reserve has kept interest rates extremely low for years in an attempt to stimulate the economy. This is one of the things that contributed to banks and hedge funds jumping into the tax lien market. It also was the reason these funds were able to bid down the interest rate so low or bid up the price of liens and redeemable deeds so high that they were making extremely low single digit returns on their money. But all that is changing now.
So What Changed This Year?
Many of these large tax lien investing funds relied on leverage to spend millions of dollars on tax liens. They made the arbitrage – the difference between the interest they made on the liens they purchased and interest paid for the money they borrowed. Since they had millions or even billions invested, an arbitrage of as little as 1 or 2% would net a huge return.
But the money they borrowed adjusted with the Federal Reserve rate. So, when these rates increased so did the interest they had to pay on the money they borrowed. But what they were making on their tax liens, some with a redemption period of 2 – 3 years, didn’t change. The arbitrage shrank and then disappeared until they weren’t making any money at all. Some of them became over-leveraged are now out of the market!
And you can see this in the results of the recent Florida online tax lien sales! Just go to RealAuction.com and look at the results of the 2024 tax lien auctions and compare that to the tax lien sale results of prior years. You’ll see that starting last year the average interest rate of tax liens won has increased as well as the number of liens won at 18%. These numbers have started to trend upward in 2023 and the trend is continuing this year. This might not be so noticeable in the tax lien auctions that happened earlier in May. But check the counties that had their tax sales in late May and the first couple of days in June.
But what if you missed the Florida tax lien auctions?
Don’t worry if you missed the Florida online tax lien sales this year. There are plenty more online tax lien auctions coming up this year. Right now (I’m writing this in the beginning of June) there are online tax lien auctions coming up in New Jersey, Maryland, Louisiana, and Iowa this month. And there are more online tax lien auctions coming up later in the summer in Missouri and Mississippi. There are also online redeemable deed auctions in Texas, Georgia, and Philadelphia PA every month.
Need help getting started?
Bottom line: now is a great time to start investing in tax liens! But you do have to know what you’re doing. Tax lien investing can be a profitable investment option for those who are looking for high returns with relatively lower risk. But here’s the catch, you’ve got to do it right or you can lose your money by not following the correct rules and state specific procedures. You can also lose money on your investment if you fail to conduct proper due diligence before making any investment decision.
How to invest profitably in tax liens and tax deeds is the topic of our next Free Tax Sale Success Masterclass on Thursday, June 6, 2024, at 5:00 pm Eastern time. This is a live virtual training conducted via Zoom.
On this live Masterclass, You’ll discover…
- A proven process for investing in profitable tax liens
- How much money you need to participate in these tax sales
- Where to find all the tax sale information you need
- How to avoid the mistakes that new tax lien investors make!
Save your seat in the live virtual training at www.TaxSaleSuccessMasterclass.com and discover how you can invest your money for double digit returns without the risk of the stock market or other speculative investment vehicles.
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