Tax liens - how possible is it to make money?
Apr 30, 2009 in
Questions And Answers
Can some please share their success stories with investing in tax liens. I want to hear bad as well as good, but I would like to some input only from the people that did tax lien investing for at least a year or more.
Thanks
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One comment
John Rosa on April 30, 2009 at 9:43 pm
I want to make it simple for you instead of a novel. The other post was rather unnecessary. So here's how you make money with tax liens:
GOOD
1. Tax lien states like FL offer 18% interest per year. The more you hold the lien, the more money it makes. If the owner pays it back, you get your principal plus the interest.
2. Tax lien states like CO offer market prices based on Treasury interest rates. Last year it was 15%, Like FL, your interest compounds but unlike FL, if the owner doesn't pay, you can foreclose on the property and own it. Do NOT believe people telling you "it must be worthless" because the owner didn't pay for it. Deaths occur, foreign nationals don't get notices, etc. I've personally bought several acres worth of tax liens turned into my own properties.
BAD
1. If you don't know what you're doing, you might be buying a tax lien on a ditch. No one will pay for a ditch. So your money is wasted. Due diligence is required (like any other investment).
2. Be careful of bankruptcies, your tax lien may not be paid. This is one of those due diligence issues again.
RECOMMENDATION
I have 40% stock market and 40% tax lien in my investment portfolio, the 20% is in market accounts. I spend about the same amount of time on both types of investments for due diligence. In other words, tax lien investing isn't as hard as others make you think. But you need to know how to do it properly and don't pay for $4,000 real estate programs. Just buy a book. The best one I've read on it can be found below.
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