Zero Risk Real Estate: Creating Wealth Through Tax Liens and Tax Deeds

Chapter 6

Avoiding and Eliminating Risk

Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.

—Franklin D. Roosevelt

There are risks in just about every financial decision you make in life. Heck, there’s risk in just getting out of bed each day. But the best advice is to find ways to minimize, reduce, or eliminate practical risks in any way that you can. This is known as creating Zero Risk.

In tax lien and tax deed investing, possible risks you could encounter include market risk, liquidity risk, property risk, mortgages, IRS liens, bankruptcy, mechanic’s liens, environmental risks, and unforeseen events faced when foreclosing or perfecting your title. Of course, proper research and investigation prior to making a real estate investment allows you to weed out the good investments from the bad and therefore helps to make your investment less risky.

Keeping track of your investments, and in particular the redemption periods involving your tax lien certificates, allows you to easily keep on top of deadlines and dates so that you can make intelligent and informed decisions about acquiring property and later selling and disposing of it. Educating yourself about certain myths associated with mortgages, lien priority, and environmental risks also plays a big role in how you deal with and avoid these risks. Many people will shy away or even run from ...