12 Apr Why would anyone bid the interest in a Tax Lien Down or bid a premium for a Tax lien?
The main reason that some investors are willing to bid and accept a lower than maximum interest rate (in many cases even 0%), or that they are wiling to pay a premium above and beyond the actual Lien amount, is because they expect this property to have a high chance of NOT being Redeemed and actually going to Tax Foreclosure after the redemption period is over. Therefore, they are willing to get as little as 0% interest for on that invested amount, or increase the invested amount for a lower interest payment, in exchange for the chance to get the actual property. If they do get the property they then get a HIGH multiple on their investment. The other reason is that the winning bidder at a Tax Lien Sale, in most states has the first right to pay subsequent taxes and get the highest interest rates on these subsequent taxes. How EXACTLY to identify properties that have a LOW likelihood of being redeemed, is covered in my Step by Step manual called TaxLienManuals (soon accessible here and through www.TaxLienManuals.com).
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