ANyone Here Have Experience With NJ Tax Lien?
I live in Essex county and they are having a tax sale in my town on Dec 30 and was considering attending. Can anyone give me any good info or point me in th eright direction to research myself the pros and cons of tax liens?
Thanks in advance.
Prodx,
I cannot consider myself an expert in NJ tax liens though I have invested there. However i think I know enough about tax lien auctions there to help you with any questions you may have about them. NJ liens are offered at 18% interest rate, and the auctions start at that and then gets bid down on the interest rates at 1% increments. When the interest rate gets bid down to 0%, then you start to bid up the surplus. the bidder then with the lowest interest rate (usually 18% unless if there's something seriously wrong with it) and the highest surplus wins the bid. There is also a bonus penalty of anywhere from 2 to 6% depending on the cost of the face value of the lien, 2% for amounts below $5000 and 4% for amounts between $5-15,000, or is it $50,000, I don't remember, and 6% above that limit. Anyway, these auctions are extremely well attended by most of the large institutional buyers who have very very deep pockets, and if there is a decent parcel for auction, you can bet that it will go for large premiums. This is because both that there isthe bonus penalty that they know they can collect, plus that there is subtaxes that they can post quarterly and they earn 18% interest on the subtaxes, which can quickly average out their investment to beat their coste of funds, which these days are probably in the low single digit interest rate annualized. So even at 5% interest, they can make a very decent spread for profits! This is something that you and I can hardly compete against. So, good luck!! But it's sure fun and an educaation to attend these auctions and watch the action adn madness!
Enjoy!
RC
Thank you very much for the info. I think I will definately attend even if I have litle chance of picking anything up atleast for the experience.