April 8, 2017
Why I Don’t Like Purchasing At Tax Lien Sales
I purchase very few liens at Tax Lien Sales. I much prefer to buy after the actual auction.
Every year I will attend property tax lien sales and purchase certificates. But it’s not ideal for me and I typically buy most of mine after the big guys are done.
Why? Because I perform an extreme amount of due diligence. Let’s assume there are two thousand property tax lien certificates for sale. I arrive and tell all the other two dozen purchasers good morning and take my seat.
The drawing is held to see what order we are going to proceed and I draw number eight.
The first seven purchasers call out their tax bill numbers and it then gets to me. I have been keeping track and out of my twenty “target” delinquent certificates half of them are gone. So the due diligence I did on those ten certificates is now time wasted.
It’s my turn and we all are able to purchase five in each round. I buy my five and then it’s another 19 purchasers before its’ my turn again. My turn rolls around and I no longer have any tax lien certificates left in the sale that I had performed due diligence on.
My day is done.
Since I only invest in fairly inexpensive certificates I have driven a hundred miles and killed half a day for five certificates. Is it worth it? Probably. Yeah. I would have just been sitting at the house that morning anyway. So it’s not a lost cause. But I have a fairly good idea of my expected profit. When I put a calculator to it I probably made around $60 bucks an hour as opposed to sitting on the couch.
I much prefer obtaining the entire list of a county’s delinquent property tax certificates that have been unsold.
I know that I can look at thousands and thousands of liens. Understand that these have been ignored by everybody else. So you have to be careful.
But it gives me time to perform my due diligence. I can pick and choose what I want.
Two years ago I ended up owning a delinquent property tax certificate on a piece of vacant ground where a new pharmacy was being built. It’s a whopping hundred dollar tax lien. I bring it to the attention of the new owner and have a check for my initial hundred, a hundred dollar administrative fee and 2% in total interest.
Doesn’t sound like a lot huh? It’s actually over a 500% annual return. Therefore, I’ll take it all day long.