A longtime lawyer and real estate investor in the state of Illinois, David R. Gray, Jr. is uniquely familiar with the process behind county tax sales and property lien investments. While each state has different rules and regulations regarding sales such as these, there are enough similarities that Gray’s advice is worth heeding both inside and outside of Illinois, particularly as it relates to evaluating the risks and rewards associated with these kinds of investments.
As Gray has pointed out, a county tax sale often represents a tremendous investment opportunity for those who perform an exceptional degree of due diligence and understand the inherent risks and rewards. Gray has, unfortunately, seen many unprepared investors learn the hard way after losing money on a property that doesn’t have any value above its taxes. Through proper research and a thorough analysis of each individual property, this does not have to be the case for investors, nor should it be.
Each state’s laws are different regarding the properties in which tax delinquency has led to a county tax sale, but most laws attempt to strike a fair balance between the need to collect tax revenue and the need to protect the rights of the property owner. Investors must recognize that, in fairness to the original property owner, a property lien investment may take some time to truly yield a significant return and certainly does not represent a liquid asset.