Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Tax Liens : Investment
Old 10-04-2009, 06:23 PM   #1
Recycles dryer sheets
 
Join Date: Sep 2004
Posts: 330
Tax Liens : Investment

Has anyone utilized tax lien certificates as an investment? What are some of the pro and cons. Any bad experiences? What are the best sources of education on these investments ?
__________________

__________________
ferco is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 10-06-2009, 11:22 AM   #2
Recycles dryer sheets
Red_y's Avatar
 
Join Date: Aug 2004
Posts: 77
Tax lien investing is an area ripe for come-ons, rip-offs, and scams. One legitimate source of information is this book:

Amazon.com: Profit by Investing in Real Estate Tax Liens: Earn Safe, Secured, and Fixed Returns Every Time (9780793195176): Larry B. Loftis: Books

I did some dabbling in this via the Internet...Coconino County AZ (where I would actually like to have some real estate for a "snowbird" lifestyle) conducts their annual Tax Lien Sale online. I picked up liens on 4 properties in early 2008...they were all redeemed within a year. I earned 6-8%, but for a couple of the properties, the interest was earned for only a few weeks.

Pros would be the higher rate of return compared with other investments and the possibility (however remote) of gaining title to the property for simply paying the taxes. Cons are the uncertainty of the length of time your money will be earning the certificate's rate, the amount of time needed to investigate each property, and the expense of traveling to county seats to bid in the auctions if they don't hold them online.

For me, it's more of a hobby and way to satisfy an urge to gamble than a true investing strategy.
__________________

__________________
Red_y is offline   Reply With Quote
Old 10-06-2009, 11:44 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
calmloki's Avatar
 
Join Date: Jan 2007
Location: Independence
Posts: 5,460
Forgot about this - a few years ago we were looking at AZ tax liens, but decided we would want to see the property before bidding on the lien. Too complicated. Later on an airport shuttle bus from an off terminal car rental site in PHX we talked with a couple who were doing the AZ tax liens - their wrinkle was writing off the travel expense as a business expense on their taxes. Hmm. A nice way to have Unca Sam and the IRS give one a ~25% discount on a trip to sunny AZ during the winter?
__________________
calmloki is online now   Reply With Quote
Old 10-06-2009, 11:16 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Ed_The_Gypsy's Avatar
 
Join Date: Dec 2004
Location: the City of Subdued Excitement
Posts: 5,293
I can imagine that one might have to wait a long time to get paid. The deduction sounds like the best use of these.
__________________
my bumpersticker:
"I am not in a hurry.
I am retired.
And I don't care how big your truck is."
Ed_The_Gypsy is offline   Reply With Quote
Old 10-07-2009, 06:09 AM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Quote:
Originally Posted by Ed_The_Gypsy View Post
I can imagine that one might have to wait a long time to get paid. The deduction sounds like the best use of these.
Depends on the location, but usually not that long. Here in NJ, it is 2 years max. After that, the property ges auctioned off on the courthouse steps.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 10-07-2009, 09:28 AM   #6
Recycles dryer sheets
Red_y's Avatar
 
Join Date: Aug 2004
Posts: 77
Quote:
Originally Posted by brewer12345 View Post
Depends on the location, but usually not that long. Here in NJ, it is 2 years max. After that, the property ges auctioned off on the courthouse steps.
Which points out another "con"...every state has different rules. In AZ, if the taxes remain unpaid after 3 years, the tax lien holder can initiate a judicial foreclosure to gain title to the property. From my research, the cost would be at minimum $1000 to cover filing fees, serving notices, etc. So there are costs in addition to paying all the back taxes to gain ownership of the property.

And the time to get paid is completely unknown and unknowable. You get paid when the property owner pays up on all the back taxes, penalties and interest. That could be a week after you purchase the tax lien certificate, a month, a year, or never.
__________________
Red_y is offline   Reply With Quote
Old 10-10-2009, 01:24 AM   #7
Recycles dryer sheets
 
Join Date: Nov 2005
Posts: 355
Coconino County Arizona is huge, including remote, but subdivided, sage brush flats where the only water is a thousand feet below the surface, or hauled from 40 miles away. It is not in the middle of Nowhere, but you can see it from there. Some friends bought a couple of those acre lots in Valle for the $500 owed in back taxes. How many of those liens would you need to carry to have a reasonably sized investment? Who would want the land if you did get possession?

Look on ebay for Arizona land sorted from the cheapest on up to see what those places look like.

Best deal I've heard of is a mobile on a lot that didn't sell at the foreclosure auction (no bids), so the mortgage holder was ready to bargain when contacted a couple of weeks afterwards.
__________________
heyyou is offline   Reply With Quote
Old 10-10-2009, 01:46 PM   #8
Moderator Emeritus
 
Join Date: Oct 2007
Posts: 4,929
Quote:
Originally Posted by heyyou View Post
CLook on ebay for Arizona land sorted from the cheapest on up to see what those places look like.
Yow! Too bad these are 'Pickup only'. If only they would be willing to ship to my location...

Some of the 'bids' are misleading, though. "You are bidding on the down payment..." , or are bids on a monthly payment (shades of used car sales!). The actual price of the lots are fixed in the cases I peeked at. Ah, eBay...
__________________

__________________
M Paquette is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
My Experience with TAX ACT tax prep software samclem Other topics 23 04-19-2009 08:34 PM
When are post-tax savings better than pre-tax? RockMiner FIRE and Money 30 03-21-2009 01:56 PM
Tax Questions: 1. Cap Gains 2. Tax Rate TromboneAl FIRE and Money 2 12-12-2007 09:49 AM
Vanguard tax-exempt MM at 2.6% pre-tax soupcxan FIRE and Money 17 12-28-2005 10:13 AM
Investment tax cuts in the new tax bill Telly FIRE and Money 1 05-23-2003 02:42 PM

 

 
All times are GMT -6. The time now is 01:07 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.