I’m writing this article today because I recently had my first tax lien redeem since I started investing in liens. I was surprised to finally get my first check.
I made a healthy 11% return in only a 5 month time period. Try getting a return like that in a CD.
Out of the 9 liens I own, (remember, I am new to this type of market) only 1 of them has redeemed and 1 of them was paid off before the actual date of the auction, so that one is in process of being refunded to me.
My whole goal with these liens is to accumulate as many as I can, reinvesting the ones that redeem which compounds your interest payments over time, etc.. Just imagine if you had a $100,000 portfolio of tax liens and you simply averaged about 12% a year. That’s $12,000 a year in profits and you never know if you’ll end up with a title to one of these properties as well.
My simple criteria for choosing which tax liens to invest in starts by finding a property I can actually view on Zillow. Then I want to make sure that the property is at least worth $100,000 or more. Then I’ll make a list and drive by all the potential properties and bid on which ones I think are the best.
Of course there is always more due diligence you’ll have to go through as well like being aware of any other tax liens on the property and if there are any IRS liens as well.
If you are interested in getting started with investing in tax liens in the United States I would recommend starting in your local area. Not every state offers tax liens, some only do tax deeds and others do both, so do your research.
I look forward to investing in this asset class for the rest of my life now that I’ve received my first profit.
Best of luck to you out there.