Monday, December 19, 2005

Choosing a County to Invest in Tax Lien Certificates or Tax Deeds

This is a common question that I get. People come to me and say. “Brad, I’m ready to get started investing but there are just so many options for places to invest. How do I choose the best county to start in?”

Maybe you’ve asked yourself or others the same question. To be quite honest, without a way of narrowing down the choices, it can be a daunting task. Luckily, if you’ve done your homework and you’ve learned everything you can about the business through our home study course – you can have success in any county you settle on.

Step #1 – Do you want to invest in tax liens or tax deeds?

By now you should know the difference between tax liens and tax deeds. You may have already made up your mind as to which you prefer. If you like the idea of owning real property and being creative with your sales then tax deeds are probably for you. If you would prefer to sit back and just wait for your guaranteed returns then tax liens are for you. You make the choice. Here is a tool that gives you a quick picture of all the states:

Step #2 – Start with the states closest to you

It’s usually a good idea to start your investing close to home where you are most familiar. Pick 3 states closest to you and research the state rules for the auctions. When I say research, I mean that I want you to become the expert! Find out all the ins and outs of the state regulations and then pick the state that is most appealing to you.

Step #3 – Now call every county!

This is the fun part. You need to call every single county in the state and find out all the details of the auctions, when they hold their auctions, how many properties on the auction, how many people attended the auction etc...

Finally – Plan your trip and go!!

Tuesday, November 29, 2005

3 Truths About Tax Lien Certificate Investing

Truth #1 – It is going to take some work on your part to succeed. If you have done some research into tax lien certificates and tax deeds you may have heard some so called “gurus” bragging about how easy it is to make a fortune. While it is easier and safer than many investments, it doesn’t come without some work on your part. You need to learn about the business and you need to invest some of your time to succeed. The good news is that with less work than most traditional investments you can get substantially higher returns while exposing yourself to less risk.

Truth #2 – There are hidden treasures for those that are persistent. You’ve heard the stories I’m sure. An investor buys a tax lien certificate at auction, the owner doesn’t redeem, and the investor ends up with 25 acres of land for the low price of 68 dollars.

First let me say that these sorts of things do happen and more often than you think. I personally know the gentlemen who bought the previous piece of land for 68 dollars. But you can be sure that it did not happen the first time at the auction. With some persistence and a little bit of experience you can get better at finding the jackpots.

Truth #3 – Most properties at auction do have real value. There are a lot of reasons that a property can end up at auction. The common misconception is that most of the properties do not have any real value. True – there are properties on the auction that seem worthless, and to many, they are – but to the creative investor they are literal gold mines.

Think outside the box. Put your mind to work and you’ll discover that there are a lot of things you can do with the property that no one else wants. By being creative you give yourself an advantage over 99% of the people at the auction. Now cash in on it!

Invest some time and money into the business and you will discover that there are huge returns waiting.

Thursday, November 24, 2005

What is a Tax Lien Certificate?

Let’s begin with the basics.

How would you like to walk into your local county office and write them a check, and in exchange, earn 14%, 24%, and even 50% on that money, guaranteed by the government?

Property owners nationwide, pay property taxes. You pay them, I pay them, but have you ever wondered what happens when someone doesn’t pay them? The county doesn’t get the money, but they still have bills. They have to raise this money somehow because unlike the federal government they are not permitted to carry a deficit. Like anyone they want their money now. To avoid chasing the property owners, they turn to us for help.

Counties nationwide have said for years, “if you’ll pay these property taxes on behalf of these lazy property owners, we’ll give you a Tax Lien Certificate; which gives you a first lien on the property.

“Now if the taxpayer doesn’t pay you your money back plus interest (8-50% per year), then we’ll give you that piece of property. But that’s not all! We’ll also extinguish all other liens on that property, even the mortgage!”

The first position lien holder gets priority over everyone else. As the primary lien holder you dictate what happens with that property, simply put the first lien holder is God.

TLC’s have proven to be the most efficient method by which the county can collect delinquent taxes. Everyone wins! The taxpayer gets to keep his home and gets more time to pay. The county gets paid. You the investor, earn ultra high returns on your money. Best of all, if done correctly there’s no risk on your behalf. You pay the taxes and wait out the redemption period until you win. If the taxes do get paid you earn the interest penalty of 8-50%. If the taxpayer does not pay you the back taxes plus the penalty interest - you get the property. The mortgage and all other liens are wiped clean off of the property. Can you say “JACKPOT!” That’s right, people like you and I are getting free and clear properties across the U.S. for pennies on the dollar. Go ahead say it - “JACKPOT”.

Tax Lien | Tax Lien Certificate Investing

A Brief Look at Tax Deed Investing

Currently around half of the states offer tax lien certificates and the rest offer something called tax deeds or a combination of both tax liens and tax deeds.

In a tax deed state, you do not buy the lien, you are bidding on the actual property. If you are the winning bidder you will own the property outright. It’s yours, and you can do whatever you want with it; renovate it, rent it, tear it down, live in it – it’s yours. These properties will almost always come with a title that is free and clear of all liens and encumbrances and you probably paid somewhere in the neighborhood of 50 – 70% of market value. Which means, you could sell it tomorrow for 80% of market value.

How does a property in a tax deed state end up at auction?

If you’ve ever been late paying a bill you know that you get numerous notices of delinquency by mail or by telephone. Normally you have quite a bit of time before anything really bad happens. It is the same case when people go delinquent on their property taxes. When they miss a payment the county will to inform them and will “kindly” ask them to pay up. This continues for a while until the county finally says enough is enough, “if you don’t pay up by this day you will lose your property.” Coincidentally that day is usually the day before the auction is scheduled.

I want to point out that by investing in tax deeds you are in no way stealing anyone’s home. These property owners have had every opportunity to repay the debt. The county will do everything in their power to avoid sending a property to auction and in many cases they wait 4 years or more before the property actually gets there.

Typically you will end up paying more for a tax deed then you would for a tax lien certificate but it is a different type of investing. In tax lien certificate investing you are looking for the guaranteed 8% - 50% return on your money with a chance at higher if you get to foreclose but you have no right to the property until the redemption period expires. In tax deed investing you are buying the property outright and you can do anything you want with it and there is potential for a huge return on your investment in a short amount of time but it does require more work on your behalf. It depends on your own personality and investment needs as to which type you choose.

Tax Lien | Tax Lien Certificate Investing