Friday, December 29, 2006

Step Two to Building Your Profitable Tax Lien Portfolio

This is the third article in an 8 part series. If you missed the first two articles in this series you can read them at http://www.taxlienconsulting.blogspot.com/.

Once you’ve completed the first step to building your profitable tax lien portfolio and you know what your purpose is for investing, you can move on to step two in this process, which is to determine where you will invest. You need to identify the area or areas that you will be investing in. If you want to invest in multiple areas or more than one state, I suggest that you start in one area and learn how to be successful with that one before moving on to another area. Each state and in some cases, each county may have different laws and procedures regarding tax sales. What worked in one area may not work very well in another.

The easiest thing for you to do would be to invest in the state that you live in. If you want to invest in tax liens and the state that you live in only sells deeds, then you might want to look at a nearby state, or perhaps a state that you like to vacation in. Maybe you could write off your next vacation if you attend a tax sale while you’re vacationing. I believe that it’s always best to invest in areas that you know, so I think that it’s better to invest in your own backyard. Some states, for various reasons, are just not good places to invest in tax sale properties. Either the laws in that state are not favorable to the investor, or there is not much available, or they may not have any tax sales at all. In that case you may have to go to a different state and an area that you know absolutely nothing about. I suggest that you find someone who is familiar with that area and partner with them. There are different ways that you could do this. You could form and LLC or Partnership with them and split the profits of your investments or you could just hire them to do the footwork for you.

I am frequently asked about investing online and through the mail. People want to know if they can invest in tax liens or tax deeds without actually going to the sale. There are some states where you can do this, but I don’t recommend it unless you can look at the tax sale properties or have someone that can look at them for you. Although you can do some of your due diligence online, I always recommend that you physically look at the property. I’ve been burnt, early in my tax lien investing endeavors, by not looking at the property before I bid on it. I still have a couple of worthless lots in my tax lien portfolio.

This is a summary of the second step in a 7 step process necessary to building a profitable tax lien or tax deed portfolio. In subsequent articles I will take each of the remaining steps and go over them in depth to give you an idea of what each step involves. For more information about how you can build your own profitable tax lien or tax deed portfolio, I invite you to sign up for the free preview teleseminar to my new 8 week coaching course, "Build Your Profitable Tax Lien Portfolio." To register, go to http://tinyurl.com/f2hy4.

Wednesday, December 20, 2006

Step One to Building Your Profitable Tax Lien Portfolio

The first step to building a profitable portfolio of tax liens or tax deeds is to decide on the purpose of your tax lien or tax deed investment portfolio. Why do you want to invest in tax liens or tax deeds in the first place? Your reason for investing will determine what type of investment will be best for you; tax lien certificates, tax deeds, or redeemable tax deeds. It will also be the determining factor in deciding where you will invest and in forming your bidding strategy and how you will profit from your investment later on. Basically everything that you do to develop a profitable portfolio of tax liens or tax deeds will be based on this decision.

Do you want to invest for your retirement? If so, you may want to invest with before tax money in a self-directed IRA. If current income is your goal for your investment portfolio than you will want to use after tax money to invest and you may want to invest through a corporation or LLC so that you can pay any expenses related to your investing out of that income before you’re taxed on it.

Keep in mind that income from tax liens and tax deeds may be treated differently. Interest income from tax lien certificates is reported as interest income on a 1099 form. Income that you receive from the sale of tax deed properties would be treated as capital gains if you hold the property for at least a year before you sell it.

Are you building a tax lien portfolio because you want to obtain properties for back taxes? If so, you are better of with tax deeds or redeemable tax deeds. The chances of actually foreclosing on a tax lien property and getting the property are pretty slim. In some states if your tax lien does not get redeemed within the redemption period, the property will have to go to a deed sale and the property will go to the highest bidder. Then you will be paid on your lien along with any interest and penalties. This is the second article in an 8 part series. If you missed the first article in this series, “7 Steps to Building Your Profitable Tax Lien Portfolio,” you can view it here. In subsequent articles I will take each one of these steps and go over them in depth to give you an idea of what each step involves. For more information about how you can build your own profitable tax lien or tax deed portfolio, I invite you to sign up for the free preview teleseminar to my new 8 week coaching course, "Build Your Profitable Tax Lien Portfolio." To register, go to http://tinyurl.com/f2hy4.

Report on the Women's Power Summit - Part 2

In part one of my report on the Women’s Power Summit, I summarized a presentation by Jeanette Cates, the Tech Tamer, on how to play to win with your expertise by creating cash flow from what you know. In this article I’ll introduce you to another one of my mentors, Loral Langmeier, The Millionaire Maker. Loral gave a presentation on how to play to win with your money.

Loral Langmeier grew up on a farm in Nebraska. At a very young age she decided that she was going to be a millionaire. She started her first business at the age of 17 and at the same time started working with mentors in the finance and wealth industry. She set a goal to be a millionaire by the time she was 35 and actually became a millionaire when she was 34. Among her mentors are well know personal success guru Bob Proctor and financial educator Robert Kiyosaki. She is the author of the best seller, The Millionaire Maker, and her new book, The Millionaire Maker’s Guide to Wealth Cycle Investing. Now a multi-millionaire, she is a master coach and financial strategist who has helped thousands of individuals take control of their finances and become millionaires. She is the founder of Live Out Loud, a coaching and seminar company that teaches her trade marked Wealth Cycle program.

Loral’s approach on “how to play to win with your money” is refreshing and different from what you may have heard from other wealth building gurus or financial planners. One mistake that she sees people making with their money is paying down their debt first. Many financial planners will tell you to get out of debt and they make that a priority over saving and investing. Loral says that once you pay down your debt, you have nothing. Now you have no debt, but you also have no savings and no assets. The thing to do is work on accumulating assets that will pay your debt. Then when your debt is paid off you have assets that are generating an income for you.

Another thing that a lot of people don’t do right is that they try to do everything themselves. Loral says that there really are no “self-made” millionaires. She say’s that millionaires make their fortunes by relying on a lot of advisors and support people. They do it with the help of a “team.” She claims that in order to get the best and highest use of your time you should strengthen your strengths and hire your weaknesses. In other words, hire out the things that you do not do well or do not like to do – don’t spend time and money learning how to do them yourself. Instead, work on strengthening the skills that you are good at and enjoy doing.

In order to make $100,000 per year, you need to make $400 per day. Ask yourself, “What am I going to do to make $400 a day?” In order to make $400 a day, you will need to say “no” to some things and “yes” to others. What are you willing to say no to and what are you willing to say yes to in order to meet your goal? For example, meeting your goal may mean saying yes to things like; spending time with successful people, getting your life supported by hiring a house cleaner or organizer, and building a team for success. It might mean saying no to; negative people, negative thinking, and using negative language.

You’ll need to have specific goals about what you want your net worth to be, what assets you want to have, and how much you want to make. Your goals might look something like this:

  • Have a net worth of 1.8 Million
  • Own 4 Million in real estate
  • Have a passive income of $120,000 per year
  • Have nationally diversified assets
  • Pay no taxes


Now ask yourself, “What are the non-negotiable activities that I need to do each day in order to reach my goals?” These activities should include journaling each day and spending time with like-minded people. Another question to ask yourself is, “Who do I need on my team right away in order to meet my goals?” Your team may include; a house cleaner, an organizer or assistant, a marketing or sales person, a bookkeeper, and a CPA.


Most of the things that we have been talking about so far have to do with what Loral refers to as your “Cash Machine.” Your cash machine is just on of the building blocks in Loral’s wealth building cycle. To find out more about Loral’s Wealth Cycles and to find out how you can become a millionaire, read Loral’s books The Millionaire Maker and The Millionaire Maker’s Guide to Wealth Cycle Investing.

Thursday, November 30, 2006

7 Steps to Building Your Profitable Tax Lien Portfolio

There are seven steps that you need to follow in order to build a profitable portfolio of tax lien certificates or tax deeds. Regardless of which state you are investing in and whether you are investing in liens or deeds, you need to take these same seven steps. The details of how you accomplish each step may change depending on which state you are investing in and whether you are investing in tax lien certificates, tax deeds, or redeemable tax deeds, but the seven steps remain the same. In this article I will outline these steps and give you a brief description of each one.

Step One: Decide on the purpose of your tax lien or tax deed investment portfolio

Are you investing for the future or for current income? This will determine what type of investment will be best for you; tax lien certificates, tax deeds, or redeemable tax deeds. It will be a big factor in deciding where you will invest and in determining your bidding strategy and how you will profit from your investment later on. In short everything that you do to develop a profitable portfolio will be based on this decision.

Step Two: Determine where you will invest

You need to identify the area or areas that you will be investing in. If you want to invest in multiple areas or more than one state, I suggest that you start in one area and learn how to be successful with that one before moving on to another area. Each state and in some cases, each county may have different laws and procedures regarding tax sales. What worked in one area may not work very well in another and you may have a different learning curve for each area.

Step Three: Get the tax sale information

Now that you know where you are going to invest, you need to find out when and where the tax sale is held and obtain a list of properties that are in the sale. For most areas this step will be easy, you just need to know where to go and who to contact to get this information. Sometimes you will have to pay for it and sometimes you will be able to get it free of charge.

Step Four: Do your due diligence on the tax sale properties

This is the most important step in the process and whether you do this properly or not could mean the difference between being extremely profitable and losing money. Once you have a list of properties that are in the sale, you need to do your due diligence on these properties before you bid. The exact procedures that you follow will vary depending on which state you are investing in and whether you are investing in tax lien certificates or tax deeds. You have to do a little more due diligence for tax deeds than you do for tax liens.

Step Five: Prepare to go to the tax sale

Preparing to go to the sale consists of registering to bid at the sale along with getting your paperwork and payment in order. In most states you need to register before the sale in order to bid. Depending on what state and county you are investing in, you may need to register as far as two weeks before the sale, or you may be able to register as soon as right before. Some municipalities do not require you to register ahead of time, only that you submit the proper paperwork if you are the successful bidder on a property. Some counties will require a deposit in order to register. The deposit amount could be anywhere from $100.00 to a few thousand dollars (as in the case of many online tax sales). Large deposits are usually returned to the investor if nothing is purchased at the sale. Smaller deposits are sometimes returned and sometimes not returned, depending on the county. You also need to make sure that you have the proper funds for payment before you go to the sale. For most tax sales, only certified funds are accepted.

Step Six: Decide on a bidding strategy

Before you bid at a tax sale you need to know what the bidding procedure is and what your strategy will be. You'll have to decide before hand just how much you are willing to pay for each property that you want to bid on, or how low (in interest) you will bid. I suggest that you attend at least one tax sale before you bid so that you are aware of what is actually being bid and what the competition is like.

Step Seven: Protect your investment

Once you purchase a tax lien certificate or tax deed, you need to take steps to protect your investment and maximize your profit. Depending on whether you are investing in liens or deeds and which state you are investing in, these steps may include:
a) Recording your lien or deed with the county clerk
b) Paying subsequent taxes
c) Clearing the title to the property
d) Foreclosing the right to redeem

This is a summary of the steps necessary to building a profitable tax lien or tax deed portfolio. In subsequent articles I will take each one of these steps and go over them in depth to give you an idea of what each step involves. For more information about how you can build your own profitable tax lien or tax deed portfolio, I invite you to sign up for the free preview teleseminar to my new 8 week coaching course, "Build Your Profitable Tax Lien Portfolio." To register, go to http://tinyurl.com/f2hy4.

Friday, November 03, 2006

Selling Your Tax Lien Certificates

I recently did my first tax lien assignment. I “assigned” or sold one of my tax lien certificates to another investor. This was a tax lien that I though I was going to lose money on. Why was I worried about losing money on this tax lien? Let’s just say that I purchased this tax lien certificate early in my tax lien investing career and did not do the proper due diligence. I had made three critical mistakes when I purchased this tax lien certificate. My first error was in purchasing a tax lien certificate on a property that I did not look at myself. I relied on the word of another tax lien investor, someone who was bidding for a large company and is actually my competition. My second mistake, since this was a vacant lot, was in not checking on the zoning. The lot turned out to be undersized thus un-buildable. My third mistake was in paying the subsequent taxes for almost 2 years before I checked the zoning.

By the time I had realized my errors, the redemption period was almost over and it was time to foreclose on the property. I did not want to start foreclosure because I didn’t think that there was anything I could do with the property, and I did not know if I would be able to sell it. I tried to sell this lien to other investors, packaged with a couple of good liens, but no one was interested. So how did I find a buyer for this tax lien and make over 40% on my investment?

When I attend tax sales I like to meet other investors and get to know them, especially the investors that see repeatedly at tax sales and have more experience than I do. I happened to find out that one of the investors who I often saw at these sales used to be a builder and he specialized in undersized lots. He knew how to apply and obtain variances on undersized building lots. I told him about the lien that I was looking to assign. I sent him all of the information about my tax lien certificate with a report of what I had paid in subsequent taxes and what the lien would redeem for. He took a look at the lot and determined that it was a good lot that he could do something with. He paid me the redemption amount of the lien and I assigned my tax lien certificate over to him. I gave him the certificate and signed an assignment contract. Since the tax lien certificate and subsequent taxes paid were at 18% per annum interest, and I had held the lien for more than two years, I received over 40% profit on my investment. I was happy to sell him the lien and get the interest and he was happy to have a tax lien certificate that was ready to foreclose on a property that he thought he would eventually be able to get a variance on and build on.

If you have tax lien certificates that are ready to foreclose, and you don’t want to go through the trouble of foreclosing on them, you may want to consider assigning them to another investor. Tax liens are hot right now; there is a lot of interest in them and it is usually easy to find a buyer for your lien. Not all states allow the assignment of a tax lien from one investor to another, however, so check with the laws in your state first. Assigning your tax lien certificates to another investor is one way that you can reap the rewards of tax lien investing without ever having to foreclose on a lien or own and manage the property. As always, make sure to do your due diligence and you’ll have no problem finding a buyer for your tax lien.

For more information on how to buy profitable tax lien certificates and tax deeds get my Tax Lien Investing Secrets II home study course at http://www.taxlieninvestingsecrets.com/.

Report on the Women’s Power Summit – Part 1

Last week I attended the Women’s Power Summit in Atlanta Georgia and what a great experience that was! The Women’s Power Summit is a one-day seminar held for women only. It coincided with the Big Seminar and is for businesswomen and woman entrepreneurs. The theme of this year’s seminar was how to “Play to Win” as opposed to playing not to lose.

I got to hear excellent presentations from five amazing women on topics from how to get organized to how to beating cancer and building a successful business at the same time. I’m a firm believer that the best way to learn something is to teach it to someone else, so I’m going to pass on to you what I’ve learned at the Women’s Power Summit. Since I took a lot of notes, and I learned quite a bit, I’m going to break it up for you into a series of 4 or 5 articles. Since one of the highlights of the seminar for me was meeting my long time mentor Jeanette Cates, I’ll start off this first article in the series telling you about Jeanette’s presentation.

Jeanette Cates has earned the reputation of being the Technology Tamer. Some of the things that I have learned from Jeanette over the past couple of years in her teleseminar courses include how to set up a web site and a blog, and how to do teleseminars. At the Women’s Power Summit, which Jeanette co-hosted with Alex Mandossian, she talked about how to make money from what you already know. She has a program called “Drain Your Brain” that teaches you to “Create Cash Flow From What You Know.” Jeanette’s formula for doing this is simple. First you must recognize your expertise, secondly you need to figure out a way to monetize your expertise, and lastly, you need to systematize your expertise.

According to Jeanette, we are all experts at something. The first step is to recognize what areas you have expertise in. You can do this by asking yourself the following questions. What is your hobby? What do others tell you that you’re good at? What do you really enjoy doing? What is your professional training? What do have a lot of experience in? From the answers to these questions you should be able to come with some areas in which you have expertise.

Once you discover an area of expertise, the next step to creating cash flow from what you know is to monetize it. Monetizing your expertise will create a revenue stream for you, reward the efforts that you are already putting forth in that area, and re-enforce your confidence and self-esteem in that area. One of the ways to do this is to create information products about your area of expertise. Along with this you will need a way to generate leads for your products and follow-up with customers. You can generate leads for your information products by giving something of value away in exchange for their contact information. One way to create an information product is to start writing tips on your topic of expertise. Once you have a collection of tips, they can be put together in numerous ways. If you have enough tips, you can turn them into a book or e-book.

Now that you know your area of expertise and you’ve created a product to sell, you need to systemize it. By systemizing your expertise you will expand your influence, save time, save money, and increase your rewards. You want a system that will let you start small – start where you are. For instance, you can take written content that you already have and develop it into audios. You can repurpose the content that you already have, add to it and make it more valuable. Your system needs to provide cutting edge ideas, methods to capture new ideas and should include the resources necessary to monetize your ideas.

If this sounds interesting to you and you would like to learn more about Jeanette’s Drain Your Brain Program and learn how to “Play to Win” with your expertise go to www.taxlienlady.com/drainyourbrain.html.

Happy and Prosperous Investing -

Joanne

Sunday, October 22, 2006

Tax Deed Investing: Are You Making These Costly Mistakes?

Recently someone asked me what would happen if they purchased a tax deed in an “upset” tax sale in Pennsylvania that had a mortgage on it; would they be liable for the mortgage? Pennsylvania actually has three different tax deed sales and while most liens do not survive the judicial sale and the repository sale, all liens do survive the upset sale. This means that if you purchase a tax deed at the upset sale you are liable for any other liens on the property. You would have to pay these liens or risk loosing the property. If you bought this deed in your own name, your credit would also be affected if you do not satisfy these liens.

A person is this situation has made three costly mistakes that many first time deed purchasers make. Their first mistake was not checking into the state laws for deed sales. Each state has different laws regarding tax foreclosure sales. In most states other liens are wiped out by a tax sale, but this is not true for every state and this is something that you need to know about before you bid on a property in a tax deed sale. Even in states where most liens are extinguished by a tax sale, some liens may survive the sale. You need to know what liens survive a tax deed or tax foreclosure sale in your state and you need to know how to check for these liens.

The second mistake made in this situation was not having done proper due diligence on the property and checking for other liens. While this step is not always necessary when you’re investing in tax liens, it is critical when you’re buying a tax deed. After you’ve purchased a tax lien certificate on a property, if you decide that you’ve made a mistake and the property is not worth it, you can always walk away and only loose your initial investment. You are not the owner; therefore, you have no liability. If however, you purchase a tax deed on a property, you become the owner of the property. You are now responsible for any liens on the property that survived the tax sale as well as for current taxes and assessments on the property.

The third costly mistake made in this situation was buying the property in the investor’s name instead of in the name of a business entity. Because the tax deed was purchased in the investor’s name, they became personally liable for the property and any other liens held against it. As the owner of record, they would also be liable if anyone got injured or hurt on the property, and as mentioned in the previous chapter, they are also responsible for current taxes and any other assessments or association fees if the property is in a community. If they decide that the property isn’t worth it, they cannot just walk away and only loose their original investment. Now there is more at stake. If they had purchased the deed in the name of a business entity that they had previously set up for this purpose, however, they would not be held personally liable for all of these things.

To learn more about asset protection and business entities for tax deed investing you can download this free recording of a teleseminar interview that I did with Texas attorney and tax deed expert Darius Barazandeh. To download the replay of this teleseminar, just right click on the following link and choose “save target as’ to save it to your computer and listen to it any time you like. Here is the link: http://tinyurl.com/yabhn2.

To learn more about how to do due diligence for tax lien and tax deed investing and how to avoid the risks involved, check out my step-by-step audio course at www.taxlieninvestingsecrets.com.

Tax Lien Investing: Are You Making This Critical Error?

Recently I got a question from someone who was looking into getting involved in tax lien investing in the state of Indiana. She was surprised at the amount of money being paid for tax lien certificates and was wondering if it was worth it. It seems like the people that she was getting involved in tax lien investing with were making some of the typical mistakes that new investors make. They were buying liens on “junk property” and she could not see the benefit to this. Also she witnessed institutional buyers bidding large premiums for tax liens and couldn’t understand how they are making a profit on their investment.

The reason for her confusion has to do with the type of bidding method used (premium or “over-bid”) in Indiana and the Indiana state laws that govern the tax lien investing process. What she witnessed in Indiana is extreme competition due to favorable state laws for tax lien investing. In Indiana there is a hefty penalty (10 – 15%) on the certificate amount and you do get interest on the premium or “over-bid” amount if the lien is redeemed. You also get interest (10% per annum) on any subsequent taxes paid as well. The redemption periods vary from county to county, but are short - from only four months to one year. And all you have to do to foreclose is petition the court for the deed to the property. Everything has to be done in a timely manner however, or you could loose your claim on the property.

When most new investors go to these sales and see the large over-bids paid for tax liens, they assume that the companies and investors that are paying these large amounts are doing so in hopes to foreclose on the property. While occasionally that might be true, whenever you see banks doing this there is usually another reason for it. Banks do not want to be in the property management business, they want to invest their money at higher returns than then they can get by lending it out, and they wish to diversify their investments. The reason why they are paying so much for these tax liens is because it is worth it – they are making good profits on their investment.

Because they have the ability to let large amounts of money sit in an investment, institutional buyers can bid large amounts on properties that they think will redeem. And because they have done their due diligence on these properties, they know that even if the property doesn’t redeem they will be able to sell it and make a hefty profit. The danger for new investors is that they see these institutional lien buyers and other seasoned investors paying large premiums for tax liens and they start paying large premiums for tax lien certificates on properties that they did not check out. Maybe they heard about tax lien investing from a real estate guru who touted tax lien investing as being totally risk free and “government guaranteed.” What they need to realize is that no one guarantees that you will get paid on a tax lien certificate and that the only thing guaranteeing the lien is the property. Therefore the property better be worth more than what you paid for the lien. And because you will have other expenses involved in your investment and you will have to pay subsequent taxes, the property should be worth a few times what you paid for the tax lien certificate.

If you are considering tax lien investing you might want to read all of the articles on the article page of taxlienlady.com at www.taxlienlady.com/articles.htm, and the rest of the articles on this blog. Here you will find a wealth of free information about how to due diligence for tax lien investing and how to determine if tax lien investing is right for you. If you want more detailed information about how to start investing in tax lien certificates and tax deeds you may want to take a look at my step-by-step audio course at www.taxlieninvestingsecrets.com.

For more information about tax lien investing you can also send an e-mail to MoreTips@taxlienconsulting.com.

Happy and Prosperous Investing,

Joanne Musa

Monday, October 09, 2006

More Book Reviews from the Tax Lien Lady

Here are my reviews of three of the books that I have read in the past couple of months. These books are not about tax lien investing but about building wealth, becoming successful at your business and successfully marketing your business. I found each of them to be very helpful to me and I thought that you would like to know about them. You can find all of my book reviews on Amazon.com. You can order any of these books, or find out more about them, by clicking on the title of each one.

Outrageous Business Growth by Debbie Bermont

A Must Read for Business Owners and Entrepreneurs
In Outrageous Business Growth, Debbie Bermont explains each of the three principals that make up her formula for business success. She starts with explaining how to develop an internal prosperity consciousness, so that your business will thrive no matter what is going on in the economy. She than shows you how to align yourself only with people who want to buy your products or services so that you don't waste time and money advertising to the wrong market. Finally she explains how to develop lifetime relationships with your customers to create customer loyalty and increased sales for your business. This version of the book comes with a free one year e-subscription to Outrageous Business Growth Weekly, a $97.00 value.


The Millionaire Maker by Loral Langemeier

Best Book About Money
Out of all of the books that I have read about how to make and manage money - this one is by far the best! Loral Langemeier actually shows you step-by-step how to develop your own plan for becoming a millionaire. In The Millionaire Maker, she explains her system for developing wealth, which is very different from what most financial professionals advise their clients. She explains each of the components of her "Wealth Cycle" in detail by using real life example from her clients. This book will show you how to get out of debt while building your net worth, how to create a business to give you more money, and how to get your assets working harder for you - creating passive income. This book comes with two free tickets to see Loral live at her Team Made Millionaire event. These tickets are worth at least ten times the price of the book.

Web Wonder Women by Lynne Klippel

A Must Read for Women in Business
Wow, this book is excellent! A must read for any women in business. Not only is Web Wonder Women an inspiration to all women, but it's a great place to find services from other woman owned businesses, and it's a great place to find Joint Venture partners. I purchased this book because it highlighted a couple of my mentors. After reading Web Wonder Women, I've found more mentors for other areas of my business and my life. This book is just chock full of ideas to help your business, tips on how to get started in different businesses, managing your time, balancing your life, and marketing your business. I am really enjoying the bonuses that come with this book. There are so many that I haven't taken advantage of all of them yet. The bonuses that you get when you purchase Web Wonder Women are worth many times the price of the book!

Tuesday, September 26, 2006

Five Things to Look for in a Tax Lien Investing Coach

No doubt you've heard the saying "buyer beware." You've probably heard me apply it in one of my teleseminars, articles, or e-books to buying tax liens or tax deeds. Well it also applies to buying information and coaching for tax lien investing. I just heard from one of my subscribers who was looking for information online on how to get started with tax lien and tax deed investing. She came across a company that was supposedly had a 12 week coaching program on how to buy tax deeds. They wouldn't give her any details about the program until she gave them a credit card number and paid the $4000.00 up front for the course.

Fortunately she didn't have her credit card with her and when she got off the phone with them she sent me an e-mail. After some e-mailing back and forth I asked for her phone number and gave her a call. On further investigation of this companies web site, it was evident to her that they really do not teach you how to buy properties at tax sales. Instead they coach you on how to approach owners of properties that are in the tax sale and try to get them to "sell" their property to you at a discount. In some states, this could be illegal! Though the tax sale list is published in the local paper and is public information, in many states it is published with a caveat that says that the list is not to be used for solicitation. Many states are trying to stop loan sharks from taking advantage of the delinquent tax payers.

I happened to get her e-mail right after doing a teleseminar/interview with Steve Waters, a well known tax lien investor and coach. He has a great coaching program for tax lien investing and tax deed investing. His program delivers results. I know because I am one of his former students. His program is also very affordable ($197.00). The value that his program delivers is worth more than 10 times the price!

Please don't pay thousands of dollars for information on how to invest in tax lien certificates and tax deeds unless the coach that your working with is actually going to take that money and invest it for you! This is money that you can use to invest. I've interviewed some of the best tax lien and tax deed coaches in the country. They have great home study programs that come with coaching and they're always available to help you and answer your questions. Here are five things that you should know before hiring a tax lien or tax deed investing coach.


5 Things You Should Know Before You Buy a Coaching Program
  • Identify who you will be working with and what their experience is

Every state is very different in the way that tax sales are held. some states sell tax liens and some sell deeds and some sell redeemable deeds. Each of these are completely different. Lien States have different bidding procedures. There are at least 5 different bidding procedures with variations on each. It is important that you have a coach or mentor that is familiar with the bidding procedures in your state. Deed states differ in how the deed is conveyed and in what liens survive a tax sale. This is important information that could be the difference between buying a profitable deed and loosing money on your investment. Make sure that your coach has experience in the state that you are investing in.

  • Know what you are paying for - Will you get ongoing support?

Just one coaching session is not likely to be enough to get you started purchasing tax lien and/or tax deeds. How many sessions will you get? Will you get any support materials such as access to a web site with resources that will help you with due diligence, or an e-book, or audios? You should. In my experience phone in teleseminars where anyone can call in and ask a question is not enough to give you the information that you need to get going and take some action. You either need some one-on-one consultation or some type of intruction (like a course or e-book) in addition to the opportunity to ask questions.

  • Will your coach or mentor be available to answer your questions?

Once you have enough information to get out there and start doing it, your going to come accross situations that bring up questions that you haven't thought of before. You want someone who will be available to answer your questions as they come up. Make sure that your coach or mentor will be available to you, either by phone or by e-mail, and that they will get back to you in a reasonable amount of time. I think that within 24 hours is reasonable.

  • Beware of guarantees that promise you will make a certain amount of money in a short time.

Nothing in life is guaranteed, especially high yeilding investments. There has to be some risk involved or the return wouldn't be as good. Completely safe investments do not deliver high returns, and they are not as safe as we think they are either. Your mentor might be able to guarantee that the information that they give you is good information, but they cannot guarantee that you will make a profit on your investment. So much of that is up to you, the one who is doing the investing! I to suspect high priced coaching programs with outrageous claims - for instance, that gaurantee that you will make $10,000 in a few months or they'll return your money. Make sure you get that in writing!

Tax liens and tax deeds are not a get rich quick type of investment. You may have to wait a few months before you see any return at all, and in some states you may have to wait two or three years to see a return on your investment.

  • Does your coaches reputation depend on your success?

If it does then you have a better chance of succeeding. Someone who works for a large organizatiton may not have their reputation at stake. When you work with someone who has a reputation to protect as a tax lien or tax deed investing coach that gets results, they will work harder to insure your success. But ultimately it's up to you. Are you really ready to put in the time and money necessary to succeed at tax lien investing. If not, don't hire a coach or mentor because that would just be a waist of both of your time. To find out if you're ready read my article Tax Lien Investing: Are You Ready to Get Started?

Wednesday, September 13, 2006

Tax Lien Investing Secrets Revealed!

You haven’t heard much from me lately. I’ve had my nose to the grindstone finishing a brand new product that is going to blow your socks off! You see, I’ve just finished revising my first ever all comprehensive home study course on investing in tax lien certificates and tax deeds.
Here are just a few of the things I’ve put into this course:
  • Four Audios – to take you through everything you need to know to go to your first tax sale, from the difference between tax liens and tax deeds to where to find out about tax sales, to how to do due diligence, how to prepare for the sale, various bidding procedures, and what you need to do after the sale to protect and maximize your investment.
  • A Manual to go along with the audios – with all the information that is given in the teleseminars plus resources, forms and articles to help you get ready for your first tax sale IN RECORD TIME.
  • Checklists - One for doing due diligence for tax liens and one for preparing for your first tax sale, step by step guides so that you know exactly what you have to do when.
  • A bonus teleseminar on the investing tax free through a self directed IRA. This is a recording of a teleseminar interview with Liz Koos, retirement plan specialist with Equity Trust Company. In this seminar Liz reviews the five steps that you need to take in order to invest in tax lien certificates or tax deeds using your IRA.
  • Even more resources in my State Guide – to make it easier for you to find the information that you need about tax sales in every state in the US.


And a lot of other additions that will explode your profits in tax lien investing!
Whether or not you’ve considered investing in tax lien certificates or tax deeds before, now is the time to take a look at this course. You won’t find a faster method for getting started! And with my new audios, manual, and other features you can be up and running, going to your first tax sale and purchasing profitable tax lien certificates or tax deeds IN ONE WEEK!
Get all the details at:
Tax Lien Investing Secrets II

Happy and Prosperous Investing,
Joanne

Tax Deed Investing: What is an “Upset” Sale?

In Pennsylvania, some counties have two different tax sales; the “upset” sale, and the “judicial” sale. If tax sale properties are not sold at either of these two sales, the property then goes on the “repository” list and can be sold by private bid. The upset sale is held every year in the fall. It’s called an “upset” sale because the minimum bid for the properties in this sale is known as the “upset” price; which includes any unpaid taxes from the county as well as any municipal liens. If a property is not sold in this sale, it is sold in the “judicial” tax sale in the spring. Not all Pennsylvania counties have judicial sales but they all have an upset sale.

What you may not know about the upset sale is that all properties are sold subject to any liens or judgments. That means that if you purchase a tax deed at this sale, you are responsible for any other unpaid liens or judgments on the property. Most people assume that when they buy a property at a tax sale, that they don’t have to worry about other liens such as a mortgage. This is not true at the upset sale. If you plan on bidding at any of these sales this fall, you’d better do your homework!

So how do you find out about other liens or judgments on tax sale properties? There are two ways that you could do this; one is going to cost you some money and the other is going to take some of your time. The first way is to hire a title search company to do a simple title search on all of the properties in the sale that you are interested in bidding on. This could turn out to be a little costly, so it’s not my method of choice. Another reason why I don’t hire a title search company to do title searches for me before the sale is that many of the properties will come off the sale list the day before or the morning of the sale. You may pay for a few title searches that you don’t even need because the properties that you wanted to bid on are not sold at the sale.

Last time I went to the Monroe County Upset Sale, I didn’t even bid on any properties. I researched about 10 of the properties in the sale that were in an area that I was interested in. Through my research I narrowed this down to only two properties that I wanted to bid on. I did all of my research the day before the sale and I had checked that morning to make sure that all of these properties were still in the sale. But by the next morning (the morning of the sale) the two properties that I was interested in had paid and were no longer included in the sale. I’m glad that I did my own research and did not pay a title company to do it!

That brings us to the second method for finding out about liens and judgments on tax lien properties, and that is to do it yourself. There is a little bit of education and some time involved, but it is well worth it. In most states, to do this type of research you would go to the County Hall of Records. In Pennsylvania the office that has the records that you need to search is the office of the Prothonotary. The people in this office are usually very helpful and will help you to look up what you need to know. You’ll have to look for liens and judgments by the name of the owner. If there are co-owners or joint owners, you will want to search under both names.

Keep in mind, however, that if new liens were not yet recorded they could slip through the cracks in the system and you won’t be able to find them. There is always some degree of risk when you buy a tax deed, even if you are careful and do your homework. This is why it is always recommended that you do not buy tax deeds in your own name, but in the name of a separate entity. It could be a corporation or an LLC. If you need help forming a corporation or LLC for the purpose of buying tax deeds, I know of two excellent programs to help you. They were both created by Darius Barazandeh, Texas attorney and tax deed expert. You can find out more about these programs, Incorporate for Wealth, and The Wealth Building LLC on the resources page of taxlienlady.com.



Happy and Prosperous Investing,
Joanne Musa

Wednesday, August 16, 2006

Tax Lien Investing: Investing Online and by Mail

One of the questions that I frequently get from visitors to my web site, www.taxlienlady.com, is “Can I invest in tax lien certificates online or through the mail?” Many people want to invest in tax lien certificates but do not have the time freedom to physically attend the tax sales, so they want to do it online or by mail. A couple of tax lien states do hold online tax sales, and a few will allow you to mail in your bid. I don’t, however, recommend investing in tax lien certificates by mail or online unless you can look at the properties or have someone else look at them for you.

First let’s talk about online tax sales. As tax lien investing has become more popular with the average person (it’s not just the secret of the wealthy anymore), it’s also become more competitive. Over the last three or four years, in states where the interest rate is bid down, the bidding has been going lower and lower – as low at .25% in some sates. And in states where the amount of the lien is bid up prices have been bid higher and higher. Online auctions increase the competition even more. Now instead of bidding against every interested party who can come to the sale, you’re competing with every interested party with a computer.

Three things happen at these online tax sales. First of all a lot more bidders show up because all they have to do is get to their computer to register for the sale. Secondly, more money – or lower interest rates are bid for tax lien certificates because there are an increased amount of bidders. And thirdly more properties are sold at these sales. You see, at most tax sales there are “left-over” liens that no one bids on that go to the county. A lot of these properties are junk properties. They are really not worth anything and that’s why the owner stopped paying the taxes. Any bidders that have done their due diligence will know this and will not bid on these properties. But when sales are held online these properties will typically be sold. Don’t you be one of those online bidders who buys a tax lien on a worthless piece of property!

Would you purchase real estate that you didn’t look at first? Even though you are not purchasing the property when you buy a tax lien (you are only paying the past due taxes and penalties and putting a lien on the property), you still need to make sure that the property is valuable. There is always the chance that the lien will not be redeemed and that you will wind up with the property. And if you do have to foreclose on the property, you want it to be worth much more than you have invested in it. Your investment isn’t only the amount that you paid at the sale, but all of the subsequent taxes that you will pay until the redemption period is over, any legal fees and foreclosure costs, and any costs that you incur to fix up the property before you sell it.

Here is something else to consider if you decide to go ahead and buy tax lien certificates online anyway. You will pay more money for tax lien certificates online than you would at a regular tax sale. First of all you will have to have a hefty deposit just to register for the sale. If you do not purchase any liens your deposit will be refunded. If you do make a purchase the money will be deducted from your deposit. Even if you make a purchase by mistake, the money will be deducted and it will not be returned. If you do not complete the transaction you could be banned from any future sales. In addition to that you will have to pay the online auction company a commission, which could be as high as 10% of the purchase price of the lien(s) that you buy.

What about purchasing tax lien certificates through the mail? Many states do allow for purchasing of tax lien certificates through the mail. Most states allow this for their “left-over” liens and a couple of states will even allow mailed in bids for their tax sales. Buying tax lien certificates through the mail does not have all the problems that I described for online tax sales, especially if you are able to do your due diligence on the properties before placing your bid. You are, however, at a disadvantage when you mail in your bid for a tax sale. I suggest that you find out what the procedure is at the sale. If your bid is read out loud at the sale and those present at the sale have the opportunity to out bid you, than you are at a disadvantage. It is the investors who are present at the sale that have the advantage over you.

There are opportunities in some states that sell leftover liens (sometimes these are referred to as “over-the-counter” liens or “assignment” liens) that are available for purchase through the mail. Be very careful though to do your due diligence on these properties before you placing a bid. Very often, as I mentioned earlier, there is a reason that these liens were not purchased by other investors. If no-body else wanted it maybe there is something wrong with it! Check the property out before you buy. With tax lien investing, there are no refunds!

Monday, July 31, 2006

Tax Lien Investing: Are You Ready to Get Started?

I noticed that many people that come to me to learn about tax lien investing don’t really have an understanding of what is involved. They under estimate two things – the amount of money needed to invest in tax lien certificates and the amount of time that is involved in finding profitable tax liens…

Let’s talk about the time involved in investing in tax lien certificates first. Tax lien sales in most states are usually held on weekdays at normal business hours, so you will need to have the time to go to the sale to bid on the properties that you are interested in. Even though in some states you may be able to mail in your bid, it’s to your advantage to be at the sale.

But this is less than half of the time that you will need to invest in purchasing profitable tax liens. Before you even get to this point you have to do some type of due diligence on the properties that are in the tax sale. The list of properties that you get before the sale from the tax office, in most cases, does not tell you anything about the property. Frequently this list will only consist of the tax ID, owner of record, and amount owed. It doesn’t even give you the location of the property!

So the first thing that you have to do is look up the assessment information on the property and find the address. You’ll want to physically look at the property to be sure that the assessment information is up to date. You want to make sure that the property is worth considerably more than the amount that’s owed for back taxes. Keep in mind that you may have to pay the taxes on this property throughout the redemption period (if it doesn’t redeem) before you can foreclose on it or apply for a deed.

This brings up the other factor that a newbie typically underestimates when they get started in tax lien investing, and that’s how much money is needed to invest in tax lien certificates. Frequently people tell me that they want to get started with less than $250.00. This is really not enough. Although you may not need as much to invest in tax liens as you do for tax deeds, you still need at least $2000.00 to get started. Even though you may be able to purchase a lien for under $200, you still need to pay the taxes on that property until the lien is redeemed. If you don’t, the property could wind up in next years tax sale and another investor could purchase that lien.

Tax lien investing is not like buying a savings bond or putting your money into a CD. You cannot take your money out if you wish to and you do not get paid any interest until the property owner decides to redeem the lien. If the property owner does not pay, than you have to wait out the redemption period and then go through a foreclosure process, or deed application process, before you get the property.

If investing in tax lien certificates is something that you want to do, then I recommend that you have at least $2000 that you know you will not need to meet any of your expenses to use for this purpose. I also think that you will need to have at least a few hours that you can invest in doing due diligence and bidding at tax sales. If you only have $2000, you may only be going to one or two sales each year and spending a few hours of your time every six months or so. If you really want to pursue tax lien investing aggressively, it is even better if you have $5000 - $10,000, and at least 10 hours per week that you can invest. This way you can attend more sales and purchase a few liens per year instead of just one or two. The more money and time that you can invest, the greater will be your return.

Tuesday, July 11, 2006

Don't Buy Tax Lien Certificates Until You Read This!

Some real estate gurus make tax lien investing sound like it’s
a sure thing. That you’re guaranteed to make huge interest rates
and that’s it’s “government guaranteed.” Unfortunately for You,
they leave out a few facts and are stretching the truth quite a bit.

First you have to understand that tax sales are auctions and
in most state those extremely high interest rates are bid down to
extremely low rates. Why would investors do that? It’s simple,
sometimes there are other penalties that they will get should the
lien redeem. In New Jersey for instance the penalty is between
2-6% depending on the amount of the lien. In Florida there is a
penalty of 4%. Also once you own the lien, you can pay the
subsequent taxes and get the maximum interest on that.

Secondly, you must understand that there is no guarantee that
you will get paid on your lien. Of course if you don’t get paid,
you can foreclose once the redemption period is over. But no
one guarantees that you will be paid! What these gurus mean
when they say that tax liens are “government guaranteed” is that
the laws are on your side. If you don’t get paid you can
eventually foreclose on the property. The only thing guaranteeing
your investment is the property! That’s why I don’t recommend
investing in tax liens through the mail or online. Would you buy
property that you didn’t see first!

When you buy a tax lien certificate, even though you are not
purchasing the property, there is always the chance that the lien
will not redeem and you will have to foreclose on the property.
What if the property is worthless? What if it is an unbuildable
piece of land? Then you are stuck with a worthless piece of
property that no one will want to buy from you and if you don’t
continue to pay the taxes on it, it will eventually revert back to
the county that sold it to you.

Yes, there are risks involved in tax lien investing and no, it is not
a sure thing. It is however an excellent way to invest your money
if you know what you are doing. If you are contemplating buying
a program to learn how to invest in tax lien certificates or tax
deeds, beware! Don’t buy an e-book, coaching program, or a
course from someone who candy coats the business of investing
in tax lien certificates and tax deeds and makes it sound like you
can’t fail and there are no risks. The truth is that you can fail and
there are risks to avoid. Instead buy one of these products from
someone who tells you what the risks are and how to avoid them.
This will give you a better chance for success in buying profitable
tax lien certificates and tax deeds.

Monday, July 10, 2006

3 Tools for the New Jersey Tax Lien Investor

  • For the new or seasoned NJ Tax Lien investor!

    Whether you are looking into investing in New Jersey tax liens for the first time, or have been investing for years, here are 3 tools that can help:

    *************************

    The Book on investing in NJ Tax Liens.

    TAX LIEN$, by Michael Pellegrino is the complete guide to investing in New Jersey Tax Sale Certificates. It is the only manual specifically on how to invest in New Jersey tax lien certificates!Learn how to make money by paying other people's taxes.In this book you will discover:
    How to buy tax liens
    How to choose the right liens
    How to 'grow' your lien by paying subsequent taxes
    How the foreclosure process works
    What pitfalls to avoid
    Copies of this new book ($19.95) can be ordered by visiting http://www.taxlienlawyer.com/ or contact the author, Michael Pellegrino, Esq at pell@caplaw.net or (973) 586-2300.

    *************************

    Who is having a tax sale and when? How do I get more info on each property?

    LienSource, the Tax Lien Sale Data Service is the central resource for information on the 200,000-plus tax lien sales that occur in the state of New Jersey each year. LienSource provides:
  • A calendar showing the date every tax sale in the state as they are set
  • Name, address, phone information and more for all 566 municipalities
  • Enhanced Tax Sale Lists in a standardized layout in Excel format
  • Property –specific data for each item listed on every tax sale

    LienSource is a vital tool in ensuring you make the best tax lien investing decisions possible.

    Just visit http://www.liensource.com/ or call Steve Davis at (866) NJ LIENS (655-4367) to find out more and to register today!

    We currently specialize in providing tax lien sale data to New Jersey, Nassau County, NY and Florida, but expansions are already underway for services in other Northeast states.

    *************************

    Are you ready to foreclose on one or more tax liens?

    Then you need an attorney experienced in handling New Jersey tax lien foreclosure actions!

    Contact Michael Pellegrino, Esq. at (973) 586-2300 or PELL@CAPLAW.NET or check out his web page at http://www.taxlienlawyer.com/

Saturday, July 01, 2006

Texas Houses for Pennies

Texas Houses for Pennies is the title of Tax Lien Lady's next teleseminar. For more information see my teleseminar blog at http://www.taxlienteleseminars.blogspot.com. Join us, It's Free!

Wednesday, June 28, 2006

Book Reviews

Here are my reviews of some of the more prominent tax lien investing print books that are on the market. These books can be found on my resource page at www.taxlienlady.com/resources.htm.

Tax Lien$: The Complete Guide to Investing in Tax Liens in New Jersey
by Michael Pellegrino

5 stars - Must Have for Anyone Investing in NJ Tax Liens
This is a book that I refer to often for my tax lien investing in New Jersey. New Jersey has very complicated tax lien laws and has become a very competitive state to buy liens in. I recommend to anyone who wants to get involved in investing in New Jersey tax lien certificates that they read this book first. I found the chapters on foreclosure and what can go wrong very helpful.

Profit by Investing in Real Estate Tax Liens : Earn Safe, Secured, and Fixed Returns Every Time by Larry B. Loftis

4 stars - Great Resource
This book is a very good resource for tax lien investing and covers some states very well. Because state laws are so different and always changing, it's not feasible to write a book that has current information for every state. This book accurately describes tax lien and tax deed investing procedures for most states. I found this book to be the most complete book in print about tax liens that I have found and it even has some information on deeds. I strongly suggest this book to anyone who want to get involved in investing in tax lien certificates or tax deeds.

The 16% Solution: How To Get High Interest Rates by Joel S. Moskowitz

3 stars - Good for Basic Information
This is one of the books that I keep in my library, probably because when I bought it five years ago, it was the only book available about tax liens. Even though it's a newer addition then when it was first written, it's still dated and now there are other books available that are more complete. It's a good book for basic information about tax liens in the most popular tax lien states. Don't buy it if your interested in tax deeds, it has no information about tax deed states. Because state laws constantly change some of the information is no longer relevant.

Happy and Prosperous Investing,
Joanne Musa

Monday, June 12, 2006

Tax Lien Teleseminars

Hi All,

I just created a new blog, just for information on my FREE tax lien teleseminars. My next teleseminar will be a one hour Q&A session with me. You can get the details at http://www.taxlienlady.com/teleseminar.htm, or check out my new blog at http://www.taxlienteleseminars.blogspot.com. I have a lot of great interviews with other tax lien and tax deed investing experts lined up for you this summer, so go to my Tax Lien Teleseminar blog and check it out.

Happy and Prosperous Investing,
Joanne Musa

Friday, June 09, 2006

How to Use Tax Lien Manager to Protect Your Investment in Tax Lien Certificates

By Joanne Musa

You probably know that Tax Lien Manager can help you to do your due diligence and help you prepare for the sale, but did you know that it can also help you take the necessary steps to ensure that your investment is profitable?

The first thing that you need to do to ensure that your tax lien is profitable is to record your tax lien certificate with the County. Your tax lien certificate must be recorded in the county records, or it is worthless. In some states this is done for you and you pay a recording fee when you purchase your lien. In most states, including New Jersey, this is something that you will be responsible for and I suggest that you do it right away, as soon as you receive the tax lien certificate. With Tax Lien Manager you can print out a letter to send to the county clerk with your tax lien certificate(s). In the Lien Menu, select Current Liens and click on the Payments tab and the County Filing Letter button. You can use the drop down menus to include all of your tax liens for that county. You can keep track of the filing fees that you pay and print out affidavits to the tax collectors. You even have two different affidavit letters to choose from. Tax Lien Manager will even print the envelopes for you.

The next thing that you want to do to maximize your profit in a tax lien certificate is to pay the subsequent taxes on time. Tax Lien Manager can help you do this by letting you know when you can pay quarterly taxes. You’ll see the reminders for quarterly taxes on the calendar. Tax Lien Manager also provides you with a letter to the tax collector requesting the amount of subsequent taxes due. You can print this letter and either mail it or fax it to the tax collector. When you mail in your payment for subsequent taxes, include an affidavit printed out from Tax Lien Manager with your payment. All of these tasks can be done from the Payments Tab in the lien property information screen of Tax Lien Manager. You can even print the envelop using the Tax Collector-Envelopes button on this screen.

The third step in maximizing your profit is keeping track of when the redemption period is over for your tax lien(s). Tax Lien Manager will tell you when the redemption period is over for each of your liens. You’ll see the reminders on the calendar. Then you can decide if you want to continue to pay subsequent taxes and hold the lien longer, start the foreclosure process, or sell your lien to another investor.

With Tax Lien Manager you can print a request for a title search and mail or fax it to your title company. Just put the contact information for your title company into Tax Lien Manager by clicking on the Title Search Company button in the Table Maintenance Menu. Your request for a title search will then be atomically populated with your information and your title company’s information. You can even choose between several title search companies. You can also print a pre-foreclosure letter with Tax Lien Manager. If you decide to assign your lien to another investor or if your lien redeems, Tax Lien Manager can tell you the redemption amount of your lien. You can use this to set a price for your lien or to compare with the redemption amount that the tax collector gives you.

All of these tasks are done from the Acquisition/Redemption/Foreclosure tab in the Lien Property Information Screen. To access this screen from the Main Menu click on Liens and from the Lien Menu choose which group of liens you want to look at. Then you can choose individual liens in that group. Put your cursor on the lien that you want to change or view and click on the Change or View button. Now you are in the Lien Property Information Screen. The Acquisition/Redemption/Foreclosure tab lets you track redemptions, title searches and the foreclosure process. You can track bankruptcies and DEP issues with the with the Bankruptcy/DEP Issue tab.



Joanne Musa works with investors who want to reap the rewards of tax lien and tax deed investing. She is the author of the Tax Lien Lady’s E-books, Tax Lien Investing Secrets and Tax Lien Lady’s State Guide to Tax Lien and Tax Deed Investing. For more about tax lien investing e-mail MoreTips@taxlienconsulting.com. For more information about Tax Lien Manager√§, go to http://www.njtaxliensoftware.com.

© 2005 Permission is granted to reprint this article in print or on your web site so long as the paragraph above is included and contact information is provided to the email provided.

Thursday, June 01, 2006

Calculating Premium for Tax Lien Sales in New Jersey

In order to calculate how much premium you can pay for a tax lien, you first have to know what your bottom line is. In other words, what is the lowest return that you are willing to accept on your investment? Then you can calculate just how much premium you can pay and still make the profit that you want. I use Tax Lien Manager, a software program for New Jersey tax lien investing created by DataVentures I LLC to do this for me. Tax Lien Manager computes premium for a 4%, 5% and 6% return based on the assumption that the lien will be held for a minimum of one year and that you will pay all subsequent taxes when they are due. Here’s how you can calculate how much premium you can pay if you don’t have software that does this for you like Tax Lien Manager.

Once you know the return that you want, you then have to know how many tax quarters are open at the time of the sale and what the annual taxes are. Let’s assume that you are going to a tax lien sale in August and that the municipality is on a calendar year. As of August 10th, you will be able to pay 3 quarters of open (subsequent) taxes on any tax liens that you buy.

When you pay premium for a tax lien certificate, your profit consists of the redemption penalty + the interest on your subsequent tax payments. Your total investment is the certificate amount + premium + subsequent taxes paid. Your total return on your money is total profit divided by your total investment:

Redemption Penalty + Interest on Subsequent Taxes
_______________________________________________

Certificate Amount + Premium + Subsequent Taxes Paid

For this example, let’s assume that the certificate amount is $2000.00 and the annual taxes are $4000.00. The redemption penalty is $2000.00 x 2% or $40.00. Since it’s after Aug 10th and you can pay 3 quarters of open (subsequent) taxes, interest on the subsequent taxes is 18% x $3000.00 or $540.00. Your total profit is $40.00 + $540.00 or $580.00. Your total investment without the premium is the Certificate Amount + Subsequent Taxes Paid or $2000.00 + $3000.00 = $5000.00. Calculate premium with a 5% return on your money as follows:

$40 + $540 / ($2000 + $3000 + X) = 5%, where X=premium.

$580 / ($5000 + X) = .05

Multiplying both side of the equation by (5000 + X), you get:

580 = .05 (5000 + X)

580 = 250 + .05X

Subtracting both sides of the equation, you get:

330 = .05X

Dividing both sides of the equation by .05, you get:

X = 6600, or premium = $6600.00.

This is a simplified equation and does not take into account interest on future subsequent payments. If the lien is held for one year and you keep paying the subs, your actual return will be higher. If you are using Tax Lien Manager, you will get a more accurate result based on paying one year of subsequent taxes.

=============================================
Joanne Musa works with investors who want to reap the rewards of tax lien and tax deed investing. She is the author of the Tax Lien Lady’s E-books, Tax Lien Investing Secrets and Tax Lien Lady’s State Guide to Tax Lien and Tax Deed Investing. For more about tax lien investing e-mail MoreTips@taxlienconsulting.com. To find out more about Tax Lien Manager, go to http://www.njtaxliensoftware.com/.

Tuesday, May 23, 2006

How Profitable is Your Tax Lien Investing?

Do you know how profitable your tax lien investing is? In this article you’ll learn how to track your tax lien portfolio so that you know just how profitable you are at any time. Begin by entering all of your tax liens into a spreadsheet or software program. The best way to index them is by county/municipality, and tax ID (in New Jersey this would be block and lot). You’ll need a column or field for the certificate amount and a column or field to input the interest rate that you are getting on the certificate amount. You’ll also need to input any premium that was paid. You’ll need to have a formula to calculate the penalty amount and a formula to calculate the interest due. These formulas must also take into account how many days have lapsed since you purchased the tax lien certificate. You’ll also need to be able to track any subsequent taxes and the interest paid on them. And you will need a way to keep track of all of your expenses, both the expenses that are reimbursed upon redemption of the tax lien certificate and those that are not.

To calculate how profitable you are, take all the interest and penalties that are due both on the certificate amount and on any subsequent taxes paid. Add to this your original investment (the certificate amount) plus any subsequent taxes paid plus any expenses that are reimbursed upon redemption of the tax lien certificate. This is the total amount that you would be paid if your tax lien certificate redeemed. Subtract your total investment from this number. Your total investment is what you paid for your tax lien certificate plus any subsequent taxes that you paid plus any reimbursable expenses and non-reimbursable expenses related to your lien. This is your profit. Once you have your profit you can calculate the yield, or percent yield for each of your tax lien certificates. To do this, divide the profit by your total investment. If you want to convert this to an annual yield, you need to know how many days the lien was held for. Multiply the yield by 365 (the number of days in a year) and divide by the number of days that you held the certificate.

For instance if your profit was $360 on a tax lien that you held for 90 days and your total investment was $3600, your yield would be 10% and your annualized yield would be .10* 365 / 90 = .4055 or 40.5 %. You’ll need to do this for each tax lien in your portfolio. Then if you want to, you can get an average yield or annual yield for your entire portfolio.

Since every state is different the calculations for penalties and interest will differ for each state and you will need a different spreadsheet or software for each state that you invest in. If you invest in the state of New Jersey there is software available that has all of this built in. It’s called Tax Lien Manager, and it does much more that calculate the profitability of your tax lien portfolio. Tax Lien Manager will also calculate how much premium you can pay for tax liens and still be profitable and with Tax Lien Manager you can import detailed tax sale lists from LienSource. Tax Lien Manager also provides you with all contact data for New Jersey (tax collectors and county clerks) and pre-printed forms and letters to use in your tax lien investing.


Joanne Musa works with investors who want to reap the rewards of tax lien and tax deed investing. She is the author of the Tax Lien Lady’s E-books, Tax Lien Investing Secrets and Tax Lien Lady’s State Guide to Tax Lien and Tax Deed Investing. For more about tax lien investing, e-mail MoreTips@taxlienconsulting.com. To find out more about Tax Lien Manager, go to http://www.njtaxliensoftware.com/.

Monday, May 15, 2006

Streamline Your Tax Lien Investing Business

If you invest in tax lien certificates, there are certain things that you need to do in order to keep your investment profitable. By automating your business, you won’t miss any deadlines that might reduce your profit on your tax lien portfolio. You must keep track of when you bought your tax lien certificate, when subsequent tax payments are due, and when the redemption period ends. You will also need a system for recording liens with the county, sending out 30 day notices at the end of the redemption period, sending out requests to tax collectors for taxes due and tracking the profitability of your liens.

Let’s start from the beginning. Before you even purchase a tax lien certificate, you need to contact the tax collector and get a list of the sale properties. Some tax collectors will give you a list with all the information that you need to do your due diligence, but most will not. You need a system for finding the information that you need, doing due diligence on the properties and deciding on which properties you want to bid on and just how much you can pay and still make a decent profit.

I use a software program to help me with all of this and data from LienSource, a provider of tax sale lists for some of the east coast states, including the two most popular tax lien states, New Jersey and Florida. In my software program I have all of the contact information that I need including the phone numbers and addresses of all of the tax collectors in the state. Also with my subscription to LienSource, I get updates on what sale lists are available and I have a calendar of sales for the state so that I know what sales are coming up. If I buy a list from LienSource, I can import all the data directly into the software program. The software program has it’s own calendar that will show all the sales that I import as well as relevant dates for any of the liens I own, such as when quarterly taxes are due and when redemptions periods are over.

My software program allows me to print due diligence sheets listing the sale properties. I can take this with me to do due diligence on the properties. The program calculates how much premium, if any, I can pay for the properties on the list. It also allows me to print out a bid sheet listing all the properties, the way that they will be read out loud at the sale, with the maximum that I can pay for each property so that I know when to stop bidding. This way the emotion of the auction does not carry me away and I make sure that I am profitable. This is very important in New Jersey, where interest is frequently bid down to 0% and then premium is bid. You can easily lose any profit buy paying to much premium for a tax lien.

After I have purchased a tax lien certificate I use the software to track my lien. I keep track of all of my expenses, like recording the lien, and any subsequent tax payments made. I can also print out an affidavit with one click of my mouse to send to the tax collector whenever I make a payment. This is very important, because without that affidavit, you could lose any additional payments and the interest accrued on them. I can also use the software to track my current profit to date on any individual lien or my entire portfolio and it will let me know when I need to pay subsequent taxes and when a lien is ready to foreclose. I can even track the progress of the foreclosure.

I hope by now that you realize that investing in tax lien certificates is not just going to tax sales and buying tax liens. You need to do due diligence on the properties, keep up with the tax liens that you have by paying the subsequent taxes when they are due, and start foreclosure procedures when the redemption period is over. All these things take some time and effort on your part, but if you put in the time now, you will reap the benefits later. Find your own system for doing these tasks to help you streamline your tax lien investing business.
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Joanne Musa works with investors who want to reap the rewards of tax lien and tax deed investing. She is the author of the Tax Lien Lady’s E-books, Tax Lien Investing Secrets and Tax Lien Lady’s State Guide to Tax Lien and Tax Deed Investing. For more information on Tax Lien Manager ™, the complete system for tax lien investing in New Jersey, go to http://www.njtaxliensoftware.com/.

Monday, April 17, 2006

Foreclosing on Your Tax Lien

By Joanne Musa

Foreclosure procedures for tax liens are different in every state. Some states make it easy for you and you only need to petition the county court, or go through an application process to get the deed to the property. In other states you will have to go through a foreclosure process with an attorney and this may take a lot of time and money. If the property has to go through a foreclosure sale, you may not receive the property, as it will go to the highest bidder at the foreclosure sale, but you will get paid on your lien.

One question that I get a lot about investing in tax liens is what percentage of tax lien properties can you actually foreclose on. I can only answer this question for the state that I invest in which is New Jersey. I have gotten e-mails from my subscribers who have heard that in New Jersey only 10% of tax liens actually foreclose, but the reality is that it’s more like 1%. And this is only the percentage of tax liens that you will be able to start foreclosure on. Most properties that you start the process on will redeem at some point during the foreclosure process. What I have experienced and heard from other investors in New Jersey is that it is a very small percentage of tax lien properties that are actually foreclosed on, in some area of New Jersey it is as low as .01%, since 99% of the 1% of properties that go to foreclosure will redeem at some point in the foreclosure process. There are some areas of the state that have a higher percentage rate of tax lien properties that foreclose, and these are the in the larger cities that have a larger percentage of distressed low value properties. If you are going to tax sales in the hopes of obtaining properties for back taxes, you may want to invest in deeds rather than tax lien certificates. What has happen in the North East and many other area of the country is that property has become so valuable that it is not likely that a homeowner will not be able to pay off a tax lien on their property.

Another thing to consider about investing in tax liens in hopes that you will be able to foreclose on the property is that in order to foreclose, you will need to pay all of the subsequent taxes on the property. A tax lien is not an investment that you buy once and forget about like a bond or a CD. It is something that you will have to continually invest in if you want to ensure the profitability of your lien. You must continue to pay the taxes during the redemption period to keep the taxes up to date on the property, so that when it comes time for you to foreclose on the property the taxes will be current. And when the redemption period is over there are more expenses that you will need to pay, like title search fees and lawyer fees.

The first thing that we do when it comes time to foreclose on a tax lien is a title search. Once you find out if there are any other liens on the property, you can send out a pre-foreclosure letter informing the owner and all other lien holders that you intend to foreclose on the property if you are not paid the amount that is due to you. Many liens will redeem after this step, saving you the time and money of hiring an attorney to start foreclosure proceedings for you. You can furnish any title searches that you have ordered to your attorney and your attorney will order updates when they are necessary. They will also send out a legal 30day foreclosure letter that will inform the property owner and all lien holders that the property will be foreclosed if a reply is not received within 30. Thirty days after this letter of notification is sent your attorney can start formal foreclosure procedures.

Joanne Musa works with investors who want to reap the rewards of tax lien and tax deed investing. She is the author of the Tax Lien Lady’s E-books, Tax Lien Investing Secrets and Tax Lien Lady’s State Guide to Tax Lien and Tax Deed Investing. For more about tax lien investing e-mail MoreTips@taxlienconsulting.com.
This article is for informational purposes only and my not be applicable in every state, since each state has different laws regarding tax lien and foreclosure. This article is not intended as legal advice. You are advised to seek out a qualified attorney for legal advise in this matter.

Tuesday, April 11, 2006

Report From the Field

I just came back from the Monroe County Tax Sale. Last year I was able to buy a building lot at this sale for the opening bid which was under $300. By the time I paid the recording fee, realty transfer fee and sale fee, I was up to over $600, but that still wasn’t bad for a building lot that can sell for as much as $25,000 if it can pass a perk test. This year was a different story. I came away empty handed; I only bid on a couple of properties and both of them went up to $5000 or more. Since I would have had to come up with all of the money for any properties that I bid on within an hour after the end of the sale and most of my cash was tied up in another deed and liens, I didn’t have much cash to play with. There were fewer properties in this year’s sale then last year and more bidders. I believe that there were even more first time bidders at this year’s sale than at last year’s sale. More of the properties were sold, and at higher prices than last year. Even the trailers and timeshares were bid up.

What surprised me the most was a 7acre lot that was mostly under water that sold for $15,000! On the tax map it only showed one stream that cut across the property and it looked like there was plenty of room to build. But if you actually did your due diligence and looked at the property you would have seen that there were two streams that took up most of the property with a small strip of land in between them. The lot was also irregularly shaped and there were two easements on the property. You wouldn’t have known about the easements unless you did some checking into the title.

Then there was a pond in a development that sold for $1,000. I came to the conclusion that these newbie tax deed investors liked to fish. I also really can’t explain the 0.02acre lots that actually sold. In past sales, stuff like this would have not gotten any bids and been put on the repository list. It looks like it’s becoming more difficult to buy tax sale properties for “pennies on the dollar” like some real estate gurus claim.

If you plan on going to a tax sale, don’t get carried away by the auction and don’t bid without doing your due diligence first. At the very least you need to look at the property, forget about what you’ve been told about buying through the mail or online unless you have someone who can look at the property for you. For deed sales, you really need to do some type of title search and if you are buying vacant land you must check the zoning on the property. For more information on how to do due diligence for tax deeds and tax liens go to www.taxlienlady.com.

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Joanne Musa works with investors who want to reap the rewards of tax lien and tax deed investing. She is the author of the Tax Lien Lady’s E-books, Tax Lien Investing Secrets and Tax Lien Lady’s State Guide to Tax Lien and Tax Deed Investing. For more about tax lien investing e-mail MoreTips@taxlienconsulting.com.

Thursday, March 23, 2006

Three Ways to Profit From Investing in Tax Lien Certificates

When you purchase a tax deed there is really only one way that you can make a profit on your investment and that is to sell or rent the property. But when you purchase a tax lien certificate, there are three ways that you can profit from your investment. The three ways that you can profit from a tax lien are summarized in this article. Read on to find out more about them.

The first and most obvious way that you make a profit on your tax lien certificate is by redemption of the lien. The property owner redeems the lien and you as the lien holder will be paid the certificate amount of your lien plus any interest and penalties. Because in most states the rate of interest is an annual rate, the longer the lien is held the more money you will make when it is redeemed.

If the lien is not redeemed, once the redemption period is over, you may start foreclosure proceedings on the property in order to be paid what you are owed on the lien. This process can be complicated or easy depending on what state your tax lien certificate is issued in. In some states you only need to petition the county court, or go through an application process, to get the deed to the property. In other states you will have to go through a foreclosure process with an attorney, and this may take a lot of time and money. If the property has to go through a foreclosure sale, you may not receive the property, as it will go to the highest bidder at the foreclosure sale, but you will get paid on your lien.

In some states there is a third way that you can profit from your tax lien investment without foreclosing or redemption, and that is assignment of your lien to another investor. Some states allow for the “assignment” or sale of a tax lien certificate from one investor to another. This is a way that you can realize profit on your lien without waiting to go through the foreclosure process. Of course you are giving up the opportunity of possibly coming away with the property, but you are collecting your profit sooner rather than later.

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Joanne Musa works with investors who want to reap the rewards of tax lien and tax deed investing. She is the author of the Tax Lien Lady’s E-books, Tax Lien Investing Secrets and Tax Lien Lady’s State Guide to Tax Lien and Tax Deed Investing. For more about tax lien investing e-mail MoreTips@taxlienconsulting.com.

Wednesday, March 22, 2006

Protecting Your Investment in Tax Deeds and Tax Lien Certificates

by Joanne Musa, The Tax Lien Lady

So you learned about how to buy a tax lien certificate or tax deed. You did your due diligence, prepared yourself to bid at the sale and you bought a tax lien certificate or tax deed. Now what do you do? Read on for information about the first step you need to take to ensure that your investment is profitable.

First of all, your lien or deed must be recorded in the county records, or it is worthless. In some states this is done for you and you pay a recording fee when you purchase your lien or deed at the sale. In most states, though, this is something that you will be responsible for and I suggest that you do it right away. You’ll have to wait until you have the deed or tax lien certificate, then you will have to send the original document, along with the recording fee, in to the proper office to be recorded with the county records. The required fee will vary depending on the state and county. You will need to call the recording office (usually the county clerk, or county recorder) and find out what the fee is so that you can send the exact amount in with the document. If you do not send the right payment your lien or deed may be returned to you without being recorded.

I suggest that you make a copy of the tax lien certificate or deed before you send it in to be recorded and that you send it via certified mail, with a return receipt. This way if your document is lost, you have proof that you sent it in to be recorded and you may be able to get it replaced. Also, the recording process can take some time, and if anything happens with the property in the meantime, you’ll have a copy of your document.

Once your document is recorded with the county, it will be sent back to you. Put it in a safe place. You will not be able to receive redemption of your tax lien certificate without providing the signed document to the tax collector. Do not sign it and turn it over to the tax collector until you are sure that the redemption amount is the amount that is due to you. To ensure that your tax payments, recording fees and other reimbursable expenses are accounted for, you will have to provide the tax collector with and affidavit for any payments that you make on your tax lien.

Joanne Musa works with investors who want to reap the rewards of tax lien and tax deed investing. She is the author of the Tax Lien Lady’s E-books, Tax Lien Investing Secrets and Tax Lien Lady’s State Guide to Tax Lien and Tax Deed Investing. For more about tax lien investing e-mail MoreTips@taxlienconsulting.com.

Sunday, February 19, 2006

Is Tax Lien Investing For You?

Tax lien investing used to be something that only the wealthy knew about and took advantage of. For decades it was a little known, high yielding investment vehicle. All of this has changed in the past few years as more and more people become aware of the high yields and minimal risk of investing in tax lien certificates. A lot of people have heard about investing in tax lien certificates but they’re not sure if it’s really something that they can do. Read on to find out if this is an investment vehicle for you.

Tax lien certificates are an attractive investment for the small investor because you don’t need thousands of dollars to start and you don’t have to pay any brokerage fees. There are drawbacks, however. You almost have to become an expert in tax lien investing to invest profitably. This is an investment that you have to be able to devote some time to. It’s not like you can call your broker and tell him to buy some tax liens for your portfolio. Tax lien certificates are sold at tax sales conducted by a county or municipal official. These sales are usually auctions that are held at least once a year. Counties with very large populations may hold tax sales quarterly or even once a month. You have to find out when and where these tax sales are held, do due diligence on the properties in the sale and attend the tax sale to bid on properties. When you are the successful bidder, you are issued a tax lien certificate and must record this certificate with the county clerk. You are then responsible for maintaining accurate records and submitting the proper documents to safeguard your investment.

If you have the time to spend investigating properties and you enjoy the challenge of learning something new, then perhaps investing in tax lien certificates could be a good way for you to increase your bottom line. If, however, you don’t have the time to spend researching properties and finding out about tax sales, then this is probably not the right investment vehicle for you. Another thing you want to consider is where do you live. Some states do not sell tax liens, and if you do not live in a state that has tax lien sales, you may have to spend a considerable amount of money traveling to tax sales in order to buy tax lien certificates. Although some counties have online auctions or sell tax lien through the mail, you would still have to do due diligence on properties before you place a bid. If you don’t, you may wind up loosing money by buying a tax lien certificate on a worthless piece of property.

Wednesday, February 08, 2006

Teleseminar Outline

How to Invest in PROFITABLE Tax Lien Certificates and Tax Deeds

TELE-SEMINAR

Starting Saturday February 25, 2006

Lesson One – February 25
Introduction to Tax Lien and Tax Deed Investing
You will learn:

  • The difference between tax liens and tax deeds and redeemable tax deeds
  • What you need to be aware of when buying tax lien certificates
  • What you need to be aware of when buying tax deeds and redeemable tax deeds
  • What is the difference from the investors stand point between tax liens and tax deeds
  • Which are best for you to invest in, tax liens, tax deeds, or redeemable tax deeds

    Lesson Two – March 4
    Finding Tax Sales and Doing Due Diligence
    You will learn:
  • How to find out about tax sales
  • Resources for finding out about tax sales and getting sale property lists
  • How to do due diligence for tax deeds and redeemable tax deeds
  • How to do due diligence for tax liens

Lesson Three – March 18
Preparing for Your First Tax Sale
You will learn:

  • Bidding procedures
  • How to register for the sale
  • What you need to bring with you to the sale
  • How much you should pay for a lien or deed

Lesson Four – March 25
How to Profit from Your Investment
You will learn:

  • What you need to do immediately after you buy a tax lien certificate
  • What you need to do immediately after you buy a tax deed or redeemable tax deed
  • Ways to profit from tax lien certificates; redemption, foreclosure and assignment
  • What paperwork and tracking is necessary to keep your lien profitable

All classes will take place 11:00 am to 12:00 pm. This seminar is provided free from taxlienlady.com. To register go to www.taxlienlady.com/teleseminar.htm and click on the link to join.