New Jersey Tax Sale Update

I haven’t been to any tax sales in a while, but I did go one tax sale in New Jersey last month and two this week. Besides experiencing these tax sales, I also had the opportunity to talk to other investors that I know and find out what’s been going on in New Jersey and I’d like to share that information with you. New Jersey tax lien investing has changed in the past couple of years.

There have always been a few institutional investors that have made it difficult for the individual investors to get the larger (and more profitable) tax liens. And investors like me have developed strategies to profit from bidding on the liens that the institutional buyers have stayed away from in the past. But this is changing, or should I say, it has already changed.

Some of the old companies have dropped out of the game, but new ones have come in to fill the void. So while the last 5 years have been good for the individual investors, this has changed in the last year and a half. These new companies are now bidding on anything that is profitable, leaving nothing for the individual investor. Some of them will bid not only the larger liens, but even on the small utility liens, and others will bid on vacant land, bidding premium to get the lien.

Out of the two tax sales that I went to this week, I was only able to get two utility liens, and that was because the bidder for one of these companies arrived late and missed the tax sale. That was a lucky break for me and the other two individual bidders at the sale. We each got a couple of tax liens at 18% or close to it. But at the other tax sale that I went to, I was not able to get a thing and the bidders that did get small utility liens got them at 0% or at premium.

I want you to be aware of what the trend is in New Jersey because this will have an effect on the profitability of your tax lien investing. Regardless of what you see other investors do, it does not make sense to bid premium on utility liens unless there are unpaid taxes that you can add to your lien. You’ll also find that the more affluent and popular an area is, and the more liens that are available, the tougher the competition will be. The larger liens will draw all the institutional investors to the tax sale. That’s why I stick with the smaller tax sales in rural areas that are not too far from my home. It’s one thing to drive 30 minutes or an hour to a tax sale and not be able to buy any liens then it is to drive two hours to the tax sale and kill most of your day and come away empty.