bluntmoney.com

(Here in Arizona, at least.)

Tax liens are a way to try and make money that I began investing in last year. Basically you register at BidMaricopa.com, bid down the interest rate on your chosen lien(s), and win if you are the person who bids the lowest amount. Bids start at 16% interest. The auction will be held on February 1st.

The idea is that you either make money by earning interest when the lien is repaid, or by starting foreclosure proceedings that are hopefully successful. (You must have held the lien for 3 years before you can attempt foreclosure.) Risks are that you buy an uninhabitable property or one that needs EPA cleanup, that you lose your entire investment if the person goes bankrupt and you’re not awarded anything, that someone else has a lien on the property that takes precedence over yours, and that your money is not liquid. (At least I think these are the only risks.)

I purchased 3 tax liens at last year’s auction at between 5%-7%. 2 of them have been redeemed so far. One is still out there, and I just sent in my check to subtax that one since that parcel is also showing as delinquent for 2006.

Here are some of the sites that I use to research my liens before bidding:

• Maricopa Country Recorder to research recorded documents (liens, deeds, etc.)
• Maricopa County Assessor for parcel information and past tax history
• PACER for bankruptcy information

I also drive out and look at the properties themselves before bidding. Since this is a huge county (9226 square miles according to Google) I limit my potential liens to parcels within 15-30 minutes of driving.

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