How to Win Tax Liens at the Auctions?

When those auction hammers drop, the person who walks away with the property is known as the lien holder. 

And as the lien holder, you’ve got the right to go after the property owner for those unpaid taxes, plus interest on top. 

This is a major milestone for you as an investor. 

Understanding exactly what being a lien holder entails will give you better odds of winning more of those liens down the road. 

So let’s take a look at what it all means:

Your Rights as a Lien Holder

Legal rights and responsibilities

Okay, so when you become the lien holder, you’re taking on specific legal rights and responsibilities. 

We’re talking rights like collecting interest on those unpaid taxes, but also obligations to follow all the local regulations and legal requirements that come with owning that tax lien. 

Complying with every legal detail is just as important as getting those taxes paid.

Interest earned

The interest rate on property liens is set by the local authorities, so it varies from place to place.

But that interest you earn is all yours as the investor. 

Plus, any interest accrued during that redemption period gets tacked onto your overall return on investment for that lien.

Claiming unpaid taxes

Simple as this – those unpaid taxes on the property now belong to you as the lien holder. 

You’ve got the right to go directly to the property owner to collect what they owe, taxes and interest included.

Obligation of the property owner

Speaking of the owner, they’re obligated to pay you those due taxes and whatever interest has racked up. 

But the redemption period gives them a window of opportunity to get that debt paid off and regain ownership.

Tracking redemption period

Winning that lien is just the start for you as an investor. 

You need to closely track that redemption period timeline. 

Helps you know what to expect and plan your next moves accordingly. That redemption period is the window the owner has to settle up and keep their property.

Communication with the property owner

Communicating with the owner is key when you hold that lien. 

You should be engaging during the redemption period – giving updates on outstanding taxes, interest, the redemption process. Sending reminders when that period is coming to a close can’t hurt either.  

What Happens After You Win the Lien?

Earning returns

Winning the lien puts you in a position to potentially earn returns on your investment.

When the owner pays off those overdue taxes with interest, you’re earning that return on what you initially invested. 

But the actual return amount depends on factors like the redemption rate and the interest rate set locally.

Position in the investment lifecycle

After nabbing that lien, your investment moves from the bidding/acquisition phase into more of a waiting game. 

This period determines whether the owner redeems those liens or potentially faces foreclosure down the line. It’s a major turning point in the investment lifecycle.

Post-win decision 

Once you’ve won, you’ve got a decision to make on your next step. 

You can wait it out until the redemption period ends, explore foreclosure if redemption doesn’t happen, or look into other post-acquisition strategies aligned with your goals. 

This decision impacts how quickly you see returns and just how successful that investment ends up being.

Scoring that tax lien is a major win in this game. 

It transitions you into the next investment phase involving a mix of strategic bidding, due diligence, and fully understanding the legal/financial realities of owning that lien. 

It’s a significant milestone, no doubt about it.

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    1. Hi! Tax Lien Wealth Builders teaches people how to take advantage of one of America’s safest and most rewarding investment strategies; tax lien investing. If you are interested in attending an event, let me know what area you are in and I will find one near you.

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