Eleven certificates at an average 1.75%, nine of them redeemed in seven weeks

This is the loss I didn't see coming because everything about it went according to plan.

Bid-down state, online sale, I did the work. Pulled 11 improved parcels with owner-occupied history and current insurance on the property, which is the profile I wanted because those redeem. Total placed: $19,340 face across the 11. The auction was competitive, which I knew going in, and my average winning rate came out to 1.75%. Two of them I won at 0.25%.

Nine redeemed between day 19 and day 52. Total interest received across those nine: $61. Fees I paid: $10 per certificate at issuance, $180 in platform and registration charges, one $30 wire. So $320 of hard cost against $61 of interest on the nine, plus two certificates still outstanding at a rate that will earn me roughly $70 a year if they run a full year.

I checked afterwards whether my state has a minimum return on early redemption. It doesn't. Some states set a flat penalty that applies whether the redemption comes in month one or month eleven, and in those places a 19-day redemption is your best outcome. In mine, the statutory rate simply accrues, so I bought myself a negative return by being right about which parcels would pay.

The error was upstream of the auction. I built the parcel screen around redemption probability, and redemption probability was exactly what made those certificates worthless at 1.75%. The screen and the pricing were pulling against each other and I never wrote the two next to each other on the same page.

What I'd do differently: set a floor rate before the sale and hold it, computed so the fixed per-certificate cost is covered by a 90-day redemption rather than a 12-month one. On my numbers that floor is somewhere north of 5%, which would have meant winning two certificates instead of eleven, or none. Both of those are better than what I did. And I'd read the redemption interest statute in the state I'm bidding in before I build the screen, not after, because whether it's a rate or a flat penalty changes which parcels are even worth bidding on.