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Looking for info about Tax Liens
Old 10-21-2010, 10:36 AM   #1
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Looking for info about Tax Liens

Does anyone here invest in Tax Liens?
Does anyone here know of an index fund for Tax Liens?
Does anyone here know of an online group similar to Bogleheads, for discussion of real estate investments generally and/or tax liens specifically?

I searched, but only found a couple of old threads with not many comments so I'm starting a new one. I also asked at Bogleheads.
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Old 10-21-2010, 10:39 AM   #2
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I don't know that any "fund" exists for tax liens. If there was some investment vehicle for them, it would probably be some sort of limited partnership or such.

Frankly I couldn't ever invest in one of these, knowing that I could be kicking someone out of their home of 30 years because they got laid off and couldn't pay the taxes. If you're serious about this, make sure the "sleep well at night" factor isn't overlooked as there are very tragic human consequences to succeeding in this area.
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Old 10-21-2010, 12:02 PM   #3
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The tax lien thing is mostly a heavily promoted seminar selling scam. It is not a passive activity, and it requires quite a bit of legal and real estate knowledge. For someone who wants to turn it into a business with some definite risks, it may be OK. There are no tax liens available to the public in WA.

Ha
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Old 10-22-2010, 02:02 AM   #4
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Originally Posted by ziggy29 View Post
(snip) Frankly I couldn't ever invest in one of these, knowing that I could be kicking someone out of their home of 30 years because they got laid off and couldn't pay the taxes. If you're serious about this, make sure the "sleep well at night" factor isn't overlooked as there are very tragic human consequences to succeeding in this area.
It's probably impossible to say in advance, but I don't think I'd have trouble sleeping. I wouldn't if I bought a house from the bank after it had been foreclosed, and what's the difference if it has been foreclosed for loan delinquency or for unpaid taxes? The owner has lost it in either case, whether I buy it or not. And I don't know if it applies to every county, but the ones I have any knowledge of have tax deferral for low-income seniors, and if someone has been in the house thirty years and is too poor to pay the taxes, I think they would probably qualify for one. I suppose there are specific situations in which I wouldn't be comfortable acquiring the property by tax foreclosure, but if so, I'd just cross that one off my list and buy one that didn't bother me.

Probably some of you will think this is weird, but the real estate investment I think would give me trouble sleeping is investing in residential rental properties, because back when I was a tenant, I always felt like it was a ripoff that even if I stayed there for thirty years and every penny of every mortgage payment had come out of my pocket, the landlord would be the one who ended up owning the house, so I've never been comfortable with the idea of being the landlord, and having someone else pay for a house that I get to keep.
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Old 10-22-2010, 08:05 AM   #5
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Originally Posted by haha View Post
The tax lien thing is mostly a heavily promoted seminar selling scam. It is not a passive activity, and it requires quite a bit of legal and real estate knowledge. For someone who wants to turn it into a business with some definite risks, it may be OK. There are no tax liens available to the public in WA.

Ha
I agree.

It is not an option in Minnesota or Wisconsin either. But my BIL did buy a lien on a vacation cabin in northern Michigan. Most often people end up paying the tax lien. For example, if a lender has a mortgage the lender will not want the property to forfeit. The lien my BIL purchased was not paid. After a period of time he got the property. He still is fussing to get marketable title so he can sell it. If you looked at dollars and cents, it was a good investment. If you look at how much time he spent fussing with this, maybe not so much.
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Old 10-22-2010, 09:51 AM   #6
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Originally Posted by kyounge1956 View Post
Probably some of you will think this is weird, but the real estate investment I think would give me trouble sleeping is investing in residential rental properties, because back when I was a tenant, I always felt like it was a ripoff that even if I stayed there for thirty years and every penny of every mortgage payment had come out of my pocket, the landlord would be the one who ended up owning the house, so I've never been comfortable with the idea of being the landlord, and having someone else pay for a house that I get to keep.
If you did a lot of this renting around Seattle, this will not often be true. Much of the early years the landlord is feeding the property from her day job, even ignoring taxes and other non-mortgage expenses. When it works out it is because rent escalations and inflation bailed her out. This is not always true, like during real estate crashes (though it was true during the last one), but it has been most of the time for a long time,

Don't believe it? Go out and try to buy a house in Seattle and let it at or above breakeven. it won't often work, even in today's supposed "buyers' market" and record low interest rates.

Ha
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Old 10-23-2010, 01:45 AM   #7
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If you did a lot of this renting around Seattle, this will not often be true. Much of the early years the landlord is feeding the property from her day job, even ignoring taxes and other non-mortgage expenses. When it works out it is because rent escalations and inflation bailed her out. This is not always true, like during real estate crashes (though it was true during the last one), but it has been most of the time for a long time,

Don't believe it? Go out and try to buy a house in Seattle and let it at or above breakeven. it won't often work, even in today's supposed "buyers' market" and record low interest rates.

Ha
Some of it was in Seattle, and some of it was in San Jose before I moved here. I didn't know at the time that people invested in rentals with negative cash flow, but even if I had, I would still have felt it was unfair that I, who could not afford to buy a house at all, was subsidizing the purchase of a house by someone who, I assumed, could afford more than one (their residence and the one that they were renting to me).

I'm sure the townhouse I live in now would rent for much more than my mortgage payments, including taxes and insurance, but I think you are right that this wouldn't be the case for someone buying now, who would be paying a higher sales price than I did back in 1997, and probably wouldn't be able to put 50% down as I could because my previous house had appreciated so much. But even though it would be feasible, I still so vividly recall those feelings that I was being taken advantage of, that I don't think I could do it. That isn't necessarily logical, but I think it is much more often feelings than a logical sequence of thoughts that keep us lying awake at night.
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Old 10-23-2010, 04:00 AM   #8
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I agree.

(snip) Most often people end up paying the tax lien. For example, if a lender has a mortgage the lender will not want the property to forfeit.(snip)
that's what I've heard too, that the majority of the time, the buyer of the lien does not end up owning the property.
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