This blog post is?in response to some very good questions from Mike about utility liens. Mike had submitted these questions in comments on the post “Are Sewer Liens Worth Buying?”
Here are his questions and the answers:
Question #1: It seems that water/sewer liens can be big losers if the recording fees are greater than the returns. The returns on subsequent payments of water/sewer liens for one year might only be $20-40 and I have seen recording fees for $30. I guess you’re really banking on being able to pay the subsequent delinquent property taxes.
Answer: Yes, when you purchase a water, sewer, or other small utility lien, you are counting on being able to pay the subsequent utility amounts in order to make good returns. However I have to point out that though you might not make a lot of money on these small liens, you will not lose money on them. Where I invest the recording fee is $40, but it is paid back to the investor, along with a $12.00 search fee, when the lien redeems. And although you are making small amounts of money, where else are you going to be able to invest those small amounts for 8-18% returns? Continue reading
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