Are There Dangers in Investing in a Tax Lien Certificate?
Even though Tax Liens provide an exciting and great investment return up to 50% return rates there are a number of hidden dangers associated with investing in Tax Liens!
First you need to understand that your investment is secured by real estate. This asset determines the value of the note that you own.
Tax Liens are secured by real estate. That means if the property has a high value then it is possible that the certificates that you own could likewise have a high value too. If the property has problems so will you! Just imagine owning a piece of real estate that is land locked, polluted, out in the middle of nowhere or worse yet around spring time your new property becomes a 5 foot lake. Talk about useless! What you see may not be what you get!
Worse yet environmental problems like
A buried gas tank
Sludge pit
Do you know the costs related to clean this up, just ask the EPA?
You could loose everything you got.
Let me give you an example of a trailer park I got through a tax lien sale, 5 acres, 27 trailers and extra 32 lots all for around $18,000. What a deal for me. You think. I get a little letter from that state 8 months after taking ownership advising me that the Logon was not properly installed and approved by a county engineer. I came from California, "What the hell is a logon" I just thought it was a small lake, Folks you laugh, but it had fish in it and I never say a floating turd. Well add another 27k for a proper sewage system, 5k for clean up and boom my investment has turned to $50,000 well darn or should I say! #@%%. I did come out ok by selling it on a lease option for $79,900 with 5k down for 3 years. Yes I came out of the game ahead, but it took 3 years to make a profit of $29,900 and much wiser.
I say this not to scare you, but to get one to do their homework, know what you are investing in, research the subject property and above all I would suggest that you find a mentor to help you stay away from the hidden dangers that are associated with tax liens.
By John Michael
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