Both my bids were accepted
The Maricopa County tax lien auction was held recently, and I was happy to see that I won both of the liens that I bid on. One of the liens is on a house that’s barely a block away; the other is on a house about 30 minutes away. I got one lien at 7% and the other at 6%. This brings my total number of liens to four: the two new liens, plus one that’s left over from a year ago, plus the subtaxed one. They average 6.75% interest.
I spent some time after the auction doing a little more research on the auction’s history. According to the Maricopa County Treasurer’s Office tax lien statistics page, over 21 million dollars worth of liens were sold in last year’s sale. I imagine the number will be even higher for this year’s sale, just based on the fallout from the sub prime mess.
You can earn anywhere from 0% to 16% interest on the liens. People who bid 16% probably don’t care that much about the property itself. They probably just take a scattershot approach to earn the highest interest rate possible. I assume that people who bid a very low percentage are hoping that they’ll end up with the property in 3 years, and that everyone else probably falls somewhere in between. (Me, for example.)
This made me wonder what percentage of the liens are not redeemed within 3 years (making them eligible for foreclosure), so figured it out for a few of the previous years. 10.4% were not yet redeemed for tax year 2003, 5.4% for 2002, and 3.7% for 2001. The three years are up this year for the 2003 liens. Even 10% is a long shot, but it’s an interesting investment, especially now that the stock market is down so much and interest rates on savings accounts are so low.
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February 6th, 2008 at 11:08 pm
Yay, glad you got your bids :)
February 8th, 2008 at 6:29 am
Congrats on getting the liens. I have to admit that I’m not entirely certain what these are but they definitely sound like solid investments (are they secure?). Have you posted about these in the past?
February 8th, 2008 at 6:59 am
Matt, they are a claim on the property because the property taxes were not paid. Basically the winner of the lien pays the owner’s property taxes for them and then earns interest from the county if the owner makes good within three years. If they don’t pay, the lienholder can start foreclosure proceedings. I consider it reasonably safe, but like all investments there is the risk of losing your entire investment. I have written about it before — I think if you search for lien in the box at the top it will come up. Or at least I hope so!