So many investors, when they decide to start investing in tax liens, want to know which states pay the highest interest rate or penalty and have the shortest redemption periods. They assume that those are the best to invest in, and that’s where the real money in tax lien investing is.
But so does everybody else, including banks and hedge funds. That makes these sales very competitive. Either the amount of the lien or deed is bid up so high, or the interest rate is bid down so low, that any profit is minimized. Investors and hedge funds are now fighting for the opportunity to buy liens and redeemable deeds for very low return on investment!
Hence some tax lien investing “experts” have recommended that investors don’t bid at the tax sales among all this competition, but instead purchase the left-over liens. But in doing so they fail to mention 2 very big drawbacks to this strategy. First not all counties sell the left-over liens or deeds that are not sold at the tax sale. Some will just rebid them year after year. Secondly, there is a reason why liens don’t sell at very competitive tax sales, and that reason is they are liens on junk properties. Although every once in a while you can find a decent property among the left-overs, it is a very time consuming process that has to be accomplished in a specific time frame. It is not something that I recommend for new investors.
Can you still make good money with tax liens?
So how does a person make good money or get double digit returns from tax lien investing? Rest assured that it is possible, and can be done. The way to do it depends on how much money you have to invest. For individual investors with smaller amounts of money to invest, I recommend these 5 things… Continue reading
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