The drawbacks of tax lien investing can be summarized as follows:
Liquidity: Tax liens are not liquid investments. In some cases you may have your money tied up for several years before you get the principal plus interest back. You cannot choose when a property owner will redeem a certificate.
Complexity: Tax lien laws vary from state to state. Very few products are available to help teach you in a step by step manner how to invest.
Time: Tax liens require a time commitment to learn the rules of a state and its counties, research properties and attend auctions.
Auctions: Many states and counties still use the public oral auction system and to some that can be intimidating at first; however, with a few pointers it is much easier to understand.
There are a few other things to consider so doing your homework is always important.
