Many people suggest you never buy tax lien certificates or tax deed properties at the auction. In fact, even some of our investors and associates suggest you don't touch them. Although investing at the auction can be an excellent opportunity, let me tell you a couple reasons why these people ban it.
The main reason has to do with emotions. If you haven't attended a tax auction, we encourage you to do so. Not necessarily to buy, but to just check it out. For new investors it's hard not to get caught emotionally in the tax lien auctions and bid away their returns. This happens because you spend a lot of time researching and find what you believe to be a great investment and you don't want to lose out on it. Then someone else wants it, too. They may only want it because you want it... Either way they bid it up and in the heat of the competition you've lost your return. We talk about wise bidding in our course.
Another reason they suggest you avoid auctions is even when you're in control you're bidding down your return in some way whether it's the actual rate of return, percentage of ownership, or bidding up premium.
When there are ways to buy outside the auction to avoid the errors made by emotional bidding or diminishing your return then it seems like a no brainer; avoid the tax lien auctions.
I don't believe you should be that absolute, though. There is still incredible opportunity at the auction. For example, when buying after the auction you may not have access to all properties since many are sold. It may be worth it to lose a bit of interest to get the right property. Also, bidding at auction is often necessary when buying deeds rather than tax lien certificates. Many states sell only deeds instead of tax lien certificates. In most of those states you have to buy at the auction. Don't let that scare you off though; the opportunity is awesome if done correctly.
No Risk Investor is the ultimate resource and tool for investing in tax liens, tax deeds, and real estate strategies for investors all over the world. No Risk Investor takes incredible pride in its ability to help students take action, get into properties, and begin the journey to financial freedom. No Risk Investor provides county lists, property lists, online auction lists, comprehensive training and education, an auction calendar, and online auction center, an investor community and much more for its members.
