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 or contact the author, Michael Pellegrino, Esq at 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 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

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 Join us, It's Free!