Friday, December 29, 2006
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
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.
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.