Tax Lien Investing Strategies: Knowledge is Success

There is unquestionably an art to winning bids at an auction. The accomplished bidder has the right timing and the right knowledge. In the world of tax lien investing, there are veteran investors and then there are quite a few naive rookies. You don't need years and years of experience to bid well and win-you just need to educate yourself. The following outline of tax lien strategies will enable you to outsmart even the most seasoned of investors.

Slow and Steady Doesn't Win in This Race

Auctioneers are very stingy of their time-a good tax lien property will be history within a few seconds of the opening bid. There is a time limit on these auction and at the slightest hesitation, the auctioneer will grant the lien to the last bidder and proceed blithely on to the next one. Do your research before you arrive at the auction so you'll be able to make quick, confident decisions. A savvy investor can recognize a good deal in a split second. The tempo of an auction can vary, especially between smaller and larger events, so be prepared to observe and pick up on the cadence before you join in.

Stand Up and Be Heard

Leave any shyness at home when you leave for an auction. Many first-time investors call out bids so timidly that they go unheard. Remember, you are competing for a chance to make serious money. Speak up in a strong and authoritative tone.

Appetite for Success

Depending on the time constraints placed upon the auction, the auctioneer may not take a lunch break. The majority of the other hungry bidders will, though, so if you stick around you'll have your pick of the prime properties with half the competition. An investor familiar with bid up premium and bid down interest techniques will be able to manipulate these scenarios into some very good tax lien deals.

Another secret: stay until the very end of the auction. Sometimes ,if there are quite a few properties left after the posted end time has passed, the auctioneer will grant a time extension. The government would much rather have these properties off their hands. There may be a 10 minute interim between the scheduled end time and the moment the auctioneer announces his decision to continue-and by this time, many of your competitors will have already headed home. In fact, if you are the only investor left standing, the auctioneer will still allow you to name your bid. Auctions don't get much better than that.

Avoid Institutional Investors

Homes are the preferred target for institutional investors. You're wasting your time trying to compete with these guys-they have millions of dollars at their disposal and will accept extremely low interest rates. They can also pay off the bank and skip the whole foreclosure process. If you have to face this kind of competition in your area, pursue the non-residential or non-homestead tax lien properties. To avoid institutional bidders altogether, attend smaller auctions with more modest inventories.

You Get What You Pay For

Disclaimer: Not all minimally priced liens are worthless. However, if you aren't able to conduct visual and background investigations a property prior to the auction, whether due to time constraints, location, or other reasons, it's wise to bid on homes priced over $500.00 or $600.00. this is considered the safety line between homes that are worthy of investment and homes that are in bad condition. Homes above this range also have a lower foreclosure rate, which means you're more likely to get some easy money back rather than have t take on the risks of selling the home yourself.

Armed with these professional tax lien investing strategies, you'll become a formidable foe to even the most experienced competitors.

Tax Lien Properties
Excellent information on tax lien property investing.