Expenses

• Before you can invest in tax liens certificates, you have to travel to a tax lien auction. Typically, this is not something that you can buy without going to a county government auction in person. This means that you will have to deal with travel expenses and lost wages if you have to miss work. You might have to sit in a tax auction all day just to get the lien that you want. This adds even more pressure to the investment to perform, so that you can make back your expenses.
  
  

Lack of Liquidity

• Another problem that you have to deal with when investing in tax liens is a lack of liquidity. Once you buy the tax lien, you really can't sell it to anyone else. After you have your money into the tax lien, you can't get back out unless the homeowner pays his taxes. You could eventually foreclose on the property if they don't pay, but this will definitely take some time to complete. This is a form of long-term investment and you have to invest money that you do not need for while.
  
  

No Value

• When you buy a tax lien, you may not know much about the property that you are investing in. If the property that you buy a tax lien for has no value, the homeowner may not feel inclined to pay the taxes on it. If they are simply abandoning a worthless property, you might be inheriting a big problem. You might have to invest a large amount of money to get the property back in shape before you can sell it.
  
  

Cash Requirement

• With this form of investment, you will have to pay for the entire tax lien at once. The purpose of selling tax liens is so the county government can come up with a large amount of cash quickly. If you do not have the cash to pay for the tax lien, they will sell it to someone else who does. This means you have to keep cash with you or be able to write a check when you go to a tax lien auction.