make successful tax lien investments

Risks are in every decision that we make in our lives.

Once you get out of bed in the morning your life filled with risk-adjusted choices. Driving your car, crossing the street or sky diving out of a plane. Life is filled with risk adjusted decision making.

Investing is no different!

Tax lien investing has great returns but can come with great risks as well. The premise behind tax lien investment is to have a near riskless high yield investment. So how can that be achieved?

As an investor you must accept that you cannot remove all risk, but you can substantially mitigate risks! How? Research!

Research and Tax Liens

Proper research and investigation prior to making a tax lien investment allows you to weed out the good investments from the bad and help make your investment less risky.

I created the following cheat sheet to help me understand and locate the risks associated with investing in tax lien investments:

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Market Risk Market risk refers to the possibility that an investment portfolio will lose value due to changes in unsystematic variables, such as interest rates and GDP growth.Unlike investments such as stock or bonds, tax lien returns remain because the interest rates on tax liens are legally mandated and not susceptible to the fluctuations of the market. Market risk is inherent in any investment so the only way to reduce the risk is to not invest at all.
Property Risk Property risk refers to asset specific risk i.e. market value, liens, government risk. Researching assets backing the lien carefully is a critical step to help you avoid the pitfalls of most or virtually all property risk.
Liquidity Risk