Tax Lien Investing

Last year a good friend of my wife had watched a late night infomercial where they were selling a program that taught you how you could buy homes for next to nothing.  Buying Tax Liens.  After watching the hour long program she thought it was "all good".  She ordered the $500 package and was eager to start on becoming independently wealthy - just like the program touted.

Somewhere along the line she started to think.  If she was buying a home for pennies on the dollar, she was certainly coming out a winner.  So who was the loser?

She called me for my insight.  I told her that someone has to lose.  Chances are the home was not vacant and abandoned as the commercials always seem to show.  Instead, if she bought a tax lien home she might be displacing an elderly person or maybe a homeowner that was down on their luck.  Maybe the original homeowner passed away - the current heirs to the estate (think sons, daughters, and grandchildren) didn't know about the delinquent tax bills.  I posed the question to her that would she feel right to take the equity away from that grandchild, maybe preventing her from going to college?

In the end she returned the 38 CD set and fought for months to get her money back. 

I read a news story today about an 89 year old Widow.  She is losing her 35 acre farm due to her failure to pay a $38 tax bill.  That's no typo - that was Thirty Eight Dollars!  The tax bill was from 2003 and was purchased in 2005 by a Tax Lien speculator.

Oh, did I mention she was blind?

Prairie State Properties LLC, the owner of the Tax Lien is set to make out pretty good.  They have  "Billie Bob's Tax Lien Sale System" down.  Win - Win just isn't in their vocabulary. 

NOTE:  What Prairie State is doing is perfectly legal.  It's a loop hole in the system.    I'm all for capitalism.  I'm not for "Pirate-ism".  Stealing equity, stealing capital, stealing anything is just not ok.  It's really not ok when you put a face to it.

 

  

Technorati Tags: Tax Lien Sales, Fraud, Theft