Can anyone give me some first hand information on tax lien certificate purchases?
This was selected as Best Answer They’re not as exciting as they’re cracked up to be. The problem is when you go to auction to buy them you’re dealing with hordes of people that are expecting to take ownership of the property so they bid them to ridiculous levels. I went to an auction and bid on one (and won) just to go through the motions to understand them first hand. The attraction is getting to collect the ‘high’ interest that the debtor will owe you. So, you may get a 12-18% return. HOWEVER, that’s just the base amount because when they go to auction you’re bidding them up which adds a premium. Therefore if the base rate is 12% and the premium doubles the tax lien your rate has dropped to 6% (for simple math). The auction I went to was ridiculous because this one guy was bidding up these empty partials of land to a 2% rate of return. He was under the impression that he was actually going to take ownership of the properties. So, they may work in some areas of the country and you ma
