The Pitfalls of Tax Lien Investing

Liquidity

One of the potential problems with investing in tax lien certificates is that it is not liquid. With other types of securities like stocks or bonds, you can easily sell them to another investor if you decide that you no longer want to hold onto them. With tax lien certificates, this is not the case. There is not a secondary market for this type of investment. This could force you to hold onto the certificate for an extended period of time before you make any money.

Payment Requirements

Another issue that many people have with tax lien certificates is that they have to come up with the money for the purchase very quickly. Typically, you will put down a deposit on the tax lien as soon as you buy it at auction. Then, you will have only 24 hours to come up with the money in most jurisdictions. If you do not come up with the money, you will lose your deposit and you will no longer have access to the tax lien certificate. This can be an easy way to lose your initial investment.

Additional Costs

Sometimes, you will have to deal with additional costs in order to get involved with tax lien investing. These costs are often unexpected and they can eat into your returns as an investor. In order to invest in tax liens, you have to be present when the auction takes place. This means that you could have to travel around to other areas in order to participate. You will have to pay for gas, accommodations and food just to be able to have the opportunity to invest. Then, if you are unable to secure a tax lien that you like, the trip will be wasted.

Lack of Information References More Like This

Pitfalls of Signing an NDA

What Is Asserting a Lien?

You May Also Like

Tax lien investing is thought to be a profitable investment that carries with it little risk. Tax Lien Investing Secrets. Tax Lien.

Investing in tax liens and deeds can allow you to generate extra income. You',ll follow a similar process for both lien and.

Tax liens are a little known investment strategy backed by the U.S. Government. Investing in tax liens provides you with reliable returns.

The Pitfalls of Tax Lien Investing. The Pitfalls of Tax Lien Investing. Tax lien investing is thought to be a profitable investment.

Texas doesn',t sell tax liens in the same way most other states do, instead they',re a hybrid state. They sell tax deeds.

Investors in tax lien certificates are attracted to the high interest rate of return on their investment. One of the biggest risks.

Tax Lien Certificate Investing Pros and Cons. Around the country. Once you buy a tax lien, you must simply sit back.

Source