Television and Tax Liens: Should You Believe the Hype

I was just watching an interesting infomercial on television which presented a pretty picture to those watching: Risk-Free Money!

The show, which was dedicated to a system involving the purchase of tax liens and tax deeds, made it sound very easy to get a guaranteed amount of interest on your money or house - RISK-FREE!

Well, beyond the obvious questionable nature of believing an infomercial, the fact is that this is something we have already discussed. There is no such thing as a risk-free investment.  At the very least, you run the risk that you won't have the money when you need it (it will be tied up in the lien, for example), but there is a gamut of other risks as well.  For example, today I was reading about a tax deed sale where the information was slightly incorrect - the physical address was for a beautiful house, but the actual property was literally a ditch.  Suffice to say, the unhappy bidder in that tax lien auction would not say that tax lien and tax deed investing is risk-free (luckily the mistake was caught and the bidder only lost $200 and his right to participate in auctions for a year).

Now, while I believe that tax liens and tax deeds are definitely worth educating yourself about, you should not expect them to be completely risk-free.  However, they can be a very reasonable and safe investment provided that you do your homework, research the property, and take other appropriate steps to protect both yourself and your money.