Tax Lien Certificates - The truth?

Ok, I've heard a lot about how you can get 16% - 18% returns on Tax Lien Certificates. I live in AZ, where it pays 16%.

BUT, I hear you gotta go to an auction, where people bid up the prices and before you know it you might get a certificate that pays a face value of 16% but in reality pays only 12% when you consider the extra amount you paid to outbid others. In that case, I'd rather just stick my money in a trust deed investment that pays 12% upfront with no other hassles.

So has anyone tried this Tax Lien thing, and what is the REAL rate of return you can expect from one?

In arizona you bid down the interest rate, some states do it as you suggested though.

So if you only will accept a rate of 14% or greater you just stop bidding. Institutional investors will send people to these things with rules about what they are to buy. You should be able to get some for 18% because nobody wants them. Of course you will want to do your homework and find out if you don't as well.

The higher interest rate comes from doing the homework, if you are not interested in doing the homework then you probably shouldn't bother going.


Some counties in arizona will sell them over the counter. If you can find ones available that you want you will get the full 18%, the trick is to wade throguh them and figure out which ones you want if there are any. Remember you may wind up with the property so make sure it isn't a toxic wasted dump or other unwanted piece of property.

Another bummer about the process is that you can get paid back before you wanted, and have to then go and reinvest it. Thats the price you pay to get good rates.

log onto your county website and start there to see the rules, along with any other counties you are willing to travel to.

I can guarantee you one thing, if you don't try you won't get 18%.

good luck