How Much Money do You Need for Tax Lien Investing?

I am frequently asked, “How much money do I need to start investing in tax liens.” Well, that all depends on what your goal for investing is. If you’re using tax lien investing as a way to invest for the future, then you can get started with a couple of thousand dollars. But if you want to create an income from tax lien investing than you need to invest much more.

One thing that you have to remember is that tax lien investing is not a get rich quick scheme. It’s not like other types of real estate investing like buying and flipping properties, or owning rental properties. With foreclosure properties, you have an idea of when your going to cash out of your deal, and with rental properties you have a steady income. With tax liens, you don’t get paid until the delinquent taxpayer decides to redeem the lien or redeemable deed. This may not be until the redemption period is over and foreclosure notices are delivered.

How much money you will need to invest in order to meet your goals also depends on what state your investing in. In redeemable deed states, like Georgia and Texas, the price of the deed is bid up, so you will need more money to purchase a redeemable deed than you would to purchase a tax lien certificate in a state where the interest rate is bid down. But it can also be more lucrative and give you a faster payout than lien states.

In Georgia for example, the penalty is 20% and the redemption period is one year. You would have to invest $100,000 over the next year to make $20,000 the following year. And if you needed to foreclose on any properties you would need to pay a lawyer, which would cut into your profits. In Texas, where the penalty is 25% and the redemption period on non-homesteaded properties in only six months, you would need to invest only $80,000 dollars in the first six months of next year to make $20,000 in the following six months, and you don’t have to foreclose on the property. In Texas when the property doesn’t redeem by the end of the redemption period, it automatically reverts to the tax deed purchaser.

You need the least amount of money to get started in tax lien investing in tax lien states where premium is not paid for tax lien certificates. In these states either the interest rate, or the percent ownership (should the property not redeem and you foreclose) is bid down, or they use a random selection or round robin procedure for awarding bids. You need the least amount of money in these states because the price of the tax lien is not bid up. In these states it is possible to buy a tax lien with very little money, but in states where the interest rate is bid down, you might not be getting as much of a return on your money as you would in one of the redeemable deed states. I advise that you attend one or two tax sales before you actually start bidding on properties. This way, you’ll know just how much money you’ll need to start investing in tax liens or redeemable tax deeds in your state.

Tax Lien and Tax Deed Investing: How do You Begin?

The most asked question that I get about investing in tax lien certificates and/or tax deeds is “How do I get started?” So many people have heard about the benefits of investing in tax liens and tax deeds and want to learn how to do it, but they don’t know where to begin. Here is some practical advice for you if you want to learn how to get started investing in tax lien certificates, tax deeds, or redeemable tax deeds.

The first thing that I suggest that you do to get started building your own profitable portfolio of tax lien certificates or tax deeds is to find out what happens in your state. Does your state sell tax liens, tax deeds, or redeemable tax deeds? Next you need to find out who is responsible for the tax sale. Is it the municipal tax collector, the county tax collector, the county treasurer, or a special department just for handling delinquent taxes? Then you need to contact the office that is responsible for the tax sale and ask the following questions:

Ø How often do you hold your tax sale?
Ø Where and when are the tax sales held?
Ø Do I need to register ahead of time to bid at the sale?
Ø Do I need to be present at the sale in order to bid?
Ø What happens to properties that are not sold in the tax sale?
Ø How can I get a list of tax sale properties?
Ø How do I register to bid at the tax sale?
Ø Do I need to have a deposit in order to register?
Ø What is the bidding procedure at the sale?
Ø What are acceptable forms of payment?

Once you get the list of properties that are in the tax sale, you can do your due diligence on these properties and determine just how much you will bid. Remember, you want to invest in PROFITABLE tax lien certificates or tax deeds, not just anything that you can get. In order to make sure that your investment will make you money, and not cost you money, you must do your due diligence before you bid at the sale.

Before you go to a tax sale and purchase a tax lien certificate or tax deed, you may want to attend a tax sale just to see what it’s like. In this way you can become familiar with the bidding process in your state and know what to expect. You’ll have a better idea of what the competition is like and how much money you will need to invest. Bidding procedures differ considerable from state to state and sometimes even from county to county within a state. By attending a tax sale before you actually bid on anything you will be more prepared and have a better chance of winning a bid on a desirable property.

If you want specific information on how to get started in your state, you can try my Jet Start personal consultation. My Jet Start program can help you Jet Start your tax lien or tax deed investing. It is a 30-minute personal consultation with me, but that's not all. You also get my e-books, "Tax Lien Investing Secrets: How to Buy Tax Lien Certificates in New Jersey and Other States," and "Tax Lien Lady's State Guide." You get to download the e-books immediately and then schedule a consult with me after you have the chance to read them. This way you know the right questions to ask. You can find out more about my Jet Start program at www.taxlienconsulting.com.

Tax Lien Investing: How to Profit from 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 thought 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 lien and afterward. 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 not checking the zoning. The lot turned out to be undersized thus unbuildable. 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 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 www.taxlieninvestingsecrets.com.

What Happens at a Tax Sale?

What happens at the tax sale depends on what state you attend a sale in, and on whether it is a tax lien sale or a tax deed sale. Tax lien sales can be very different from state to state or even from county to county within a state. Tax deed sales are pretty much the same around the country.

At most tax deed sales the properties are read off by the auctioneer in the order that they are listed and the price of the property is bid up. The exception to this is in counties that have online deed sales, like some counties in California and Florida. In order to bid at an online auction, you have to register online and put up a deposit. The properties are usually listed in batches and a time frame is given for each batch. You put bids in on the properties that you want to bid on, but you don’t know who else is bidding and what the other bids are. You may not even know if you are the successful bidder on a property until after the sale.

Tax lien sales can differ greatly from state to state. In some states the interest rate is bid down. This happens in Florida, Arizona, (two of the most popular tax lien states) Illinois, and in Nassau County, NY. In other states the interest rate is kept constant and the price of the lien is bid up. The amount bid up from the amount due is referred to as “over-bid” or “premium,” and each state handles it a little differently. In some states you receive interest on the premium paid for tax liens (Alabama and Indiana are two state that give you interest on your premium), and in other states you do not (West Virginia is one of these states). Some states do not pay interest on the premium amount and do not return the premium to the investor should the lien redeem (Colorado and Vermont are two of these states). New Jersey is the only state where the interest rate can be bid down to zero and then premium is bid. You don’t receive any interest on the premium paid, but you do receive your premium back if the lien is redeemed within five years.

In some states, something entirely different than the interest rate or the premium is bid. In these states, what is bid down is the percent ownership interest in the property should the lien be foreclosed. The tax lien certificate is awarded to the bidder willing to accept the lowest percent ownership interest in the property. As you can imagine, this makes for some sticky situations should you have to foreclose on a lien and is not the ideal situation for the investor. Tax sales are conducted in this way in Rhode Island, Nebraska, Louisiana, and Iowa.

Some states will use a random selection or round robin process to award tax lien certificates at the tax sale. With the random selection process, the tax collector or auctioneer randomly selects bidders, usually by bidder number for each parcel as it is read out at the sale. With the round robin procedure, the tax collector will go around the room, offering the next parcel on the list to the next bidder in line. The downfall to both of these procedures is that you cannot pick which properties you want to bid on and only do your due diligence on those properties. Here you do not know which properties will be offered to you and you can only accept or decline the ones that are offered to you. The random selection process is used in Wyoming and in Oklahoma. The round robin procedure is used in some counties in Colorado for liens under a certain amount (the amount differs by county).

One tax lien state does something entirely different than any other, and that is the Commonwealth of Kentucky. In Kentucky, nothing is bid, or randomly selected. There is no auction. They accept bids for the amount due plus costs by mail, e-mail, fax, and in person, and the first bid to be received is awarded the tax lien. Although you can mail or fax your bid in, you have to be present at the “sale” to be awarded the tax lien certificate.

If you need help deciding what state to invest in or with getting ready to invest in tax lien certificates or tax deeds, you may want to take advantage of my JetStart Coaching Call. My JetStart call is a one-on-one coaching call with me for only $99.00. I’ll spend one hour with you answering your specific questions about what you need to do to get started. You can find out more about this call and see if it’s something that you’re ready for by filling out the form athttp://www.yourtaxlieninvestingcoach.com/.

Happy and Prosperous Investing,

Joanne

Creating Cash Flow From What You Know

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 coincides 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 systematize it. By systematizing 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 re-purpose 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.

How To Get Tax Sale Lists for Free

Once you know when the tax sale is coming up in your area, you need to get the list of properties that are in the sale. I use naco.org to find tax sale property lists online for tax lien and tax deed sales. This only works for counties that have this information online. For counties or states that do not have this information online, you can either call the tax collector and ask how to get the tax sale list or you can buy the tax sale list from a tax sale list provider. To find out which counties have tax sale information and tax sale lists online, you can consult my State Guide.

To go to the county’s web site, first go to naco.org and click on the link to find a county. This will bring you to a page with a map of the United States. Click on the state that you are interested in and you’ll be taken to that state’s web page with a list of all of the counties in the state. Find the county that you are interested in and click on that link. You will be taken to the NACO page for that county. Click on the link to the county on the top of the page and you will go to the county’s web site. Note that this will only work if the county has a web site.

Once you’re on the county’s web site, look for a link to the department or county office that is responsible for conducting the tax sale. For most states, this will be the county treasurer or county tax collector. If you’re not sure who is responsible for the tax sale in your state, then consult my State Guide. Once you get to the web site of the person or department that conducts the tax sale, look for a link to a list of tax sale properties. For larger counties, you can usually find this online. The exception to this is the counties in the Northeastern states. A lot of the Northeastern states do not have county tax sales. Instead the tax sales are conducted by the municipality, so instead of looking for the county web site, in Vermont, New Hampshire, Maine, Rode Island, Connecticut, Massachusetts, and New Jersey, look for the municipal tax collectors web site – not county web site. New York has both county and municipal sales in some counties.

If you can’t find the tax sale list that you want online, you can always buy a list from a tax sale list provider. Even if you can find the tax sale list online for free, you still may want to purchase the list from a tax sale list provider. That’s because the list that you get from the tax collector does not always have the information that you need. Frequently it will only have a parcel ID number, owner name, and amount due. What you want to know is what is the address of the property, what is the assessment and value of the property, what type or class property is it, and how big is the property. All of this (and sometimes even more information) is included in the detailed list that you can get from tax sale list providers. I talked about some different tax sale list providers in the last podcast episode, “How to Find Out About Tax Sales.” You can listen to that episode to get the names and urls of tax list providers for different areas of the country. Purchasing a detailed tax sale list from one of these companies will save you a lot of work in doing your due diligence.

How do You Find Out About Tax Sales?

How do you find out about tax sales that are coming up in your state? There are three ways that I know of to find out about tax sales for free or almost for free.You can look in the newspaper, call the tax collector, or go to a web site that sells tax sale lists.

The first way to find out about tax sales coming up in your area is to read the legal notices in the local newspaper. Most counties have to post an announcement about the tax sale, as well as the list of properties that are being offered for sale, in the local paper anywhere from two to four weeks before the sale. This method is not entirely free because you have to buy the paper. You also have to know when the sale is held so that you know when to start looking for it.

A better way to find out when and where the tax sale is held is to call the tax collector, or whoever is responsible for the sale in your state, and ask. Most of the time, this will be the county Treasurer or tax collector, but sometimes tax sales are conducted by the sheriff’s office (particularly in some deed states). One to find out who is responsible for the tax sale is to consult my State Guide. My State Guide is available as an e-book along with another e-book on how to invest in tax liens. Both books are available for $39.95. My state guide is different from the other resources that you can get online, because I don’t just give you the type of investment, interest rate and redemption period for each state. I tell you who is responsible for the tax sales in each state, so that you know who you have to contact, and I tell you whether or not you can get information online and give you a link to that State’s website with links to the counties.

The third way to find out about tax sales is to go to a web site that sells tax sale lists. Sometimes they will provide information about what tax sales are coming up for free. TaxSaleLists.com is a web site that you can register with for free and find out about tax sales throughout the US. For New Jersey and some of the eastern states I use LienSource.com to find out about tax sales. LienSource is the best provider of tax sale information for New Jersey. It’s $49.00 per year for a membership to LienSource but you can get a six month free membership if you mention that you were referred by The Tax Lien Lady. Just call the phone number on the home page of www.liensource.com to find out how to get your 6 months free membership. Bid4Assets.com is a web site that you can go to, to find out about online tax sales. You can check this site periodically to see what online tax sales are coming up. Not all online tax sales are conducted by Bid4Assets. For all Arizona tax sales, I use www.ArizonaTaxLiens.com. Here you can get information on all tax sales for Arizona and order any tax sale lists for counties in Arizona, including lists of leftover liens.

To recap here are the three ways that you can find out about tax sales in your state
Read the legal notices in the local newspaper
Call the tax collector or whoever is responsible for the sale
Go to one of the following web sites to find out about upcoming tax sales:
www.taxsalelists.com
www.liensource.com
www.bid4assets.com
www.ArizonaTaxLiens.com

If you need step-by-step information on how to get started, I have a $7.00 Special Report on the 7 Steps to Building Your Profitable Tax Lien Portfolio that is available at http://yourprofitabletaxlienportfolio.com.

Where is the Best Place to Invest?

Where is the best place to invest in tax lien certificates or tax deeds? Most people are concerned about which lien states have the highest interest rates and which deed states start bidding at back taxes. I believe that the best place to start investing is in your own backyard. I think that it’s best to invest in an area that you know, because you’ll know what the property values are and you’ll know what to look out for. Each state has different problems that you have to be aware of, especially if you’re purchasing raw land.

In Pennsylvania where I invest in tax deeds, for example, I have to worry about whether a property will perk or not. If I buy a lot in a deed sale that doesn’t perk I won’t be able to get a septic design approved and won’t be able to build on the property. Its resale value will be a fraction of the price that I could get for it if it had an approved septic design. In another state you might have other concerns. In dry states, like Arizona for example, you may have to be concerned about water rights.

Don’t be too concerned about which state has the highest interest rate. In states with high interest rates, the interest is typically bid down extremely low. What you should be concerned about is will you have the opportunity to pay the subsequent taxes, and will you get the maximum interest rate on your subs, and are there other penalties that you are entitled to.

In New Jersey, for example the interest rate is typically bid down to 0% and then premium can be bid as well. The reason that investors do this is because they know that once they have the lien, they can pay the subsequent taxes and get the maximum interest rate on their “subs,” which is 18%, and they will also receive a penalty on the certificate amount of the lien.

In Florida where the maximum interest rate is also 18%, the interest is typically bid down to as low as ¼ %. In Florida you are not allowed to pay the subsequent taxes, actually you can pay them, but you do not receive any interest on subsequent taxes, nor will you get any subsequent tax payments back should the lien redeem. However, in Florida there is a minimum penalty of 5%, so if you bid less than 5%, you get the penalty instead of the interest rate that you bid.

Don’t be too concerned about which deed states start bidding at back taxes. The more important thing to be concerned about for deed states is, “what will the competition typically bid the price up to.” In some states, real estate is so valuable and the demand outweighs the supply of affordable homes. In these states (California, Florida, and the Northeast States) any property with a home or business on it will be bid up close to market value. Remember, tax sales are auctions and sometimes people get carried away at actions and pay too much money. Online auctions can be especially competitive, and may California and Florida counties have tax sales online.

To find out about tax sales in your county or municipality go to a sale and see what it’s like. Talk to the tax collector, or whoever is responsible for conducting the tax sale in your area to find out more about how to register for the sale and what the procedures and requirements are for bidding. If you need help determining whom you need to contact, you can consult my State Guide.

My State Guide is available as an e-book along with another e-book on how to invest in tax liens. Both books are available for $39.95. My state guide is different from the other resources that you can get online, because I don’t just give you the type of investment, interest rate and redemption period for each state. I tell you who is responsible for the tax sales in each state, so that you know who you have to contact, and I tell you whether or not you can get information online and give you a link to that State’s website with links to the counties.

What if you live in a deed state and you want to invest in tax liens? I’m in Pennsylvania, which is a deed state, but I’m close to New Jersey, which is a lien state, so I do my tax lien investing there. If you’re not close enough to travel to a state that sell tax liens, is there a state that you vacation in or do business in that sell tax liens? If there is maybe you can right off your next vacation if you go to a tax sale? If not, then you may have no other alternative than to invest online. There are only 2 tax lien states that I’m aware of that have online sales – Arizona and Florida. Arizona sales take place in February and March each year, and Florida lien sales (Florida has both lien and deed sales) are in May and June. Be very careful to do your due diligence on these properties. I don’t advise investing online unless you can go look at the properties or you have someone that can look at them for you.

Here are four action steps that you can take right now to find the best place for you to invest.

Call the tax collector and find out what happens in your state. Do they sell tax
liens, tax deeds, or redeemable tax deeds?
Go to a sale and see what it’s like.
If you are in a deed state and you want to invest in tax liens, then find out what
states sell tax liens, if you need help with this get my State Guide.
Find out about online tax sales at http://www.bid4assets.com.

Bid4Assets has mostly deed auctions, In order to find tax lien auctions online; you will have to go to the county’s web site. For this I recommend going through the links on my State Guide.

If you take the action steps above, then you’ll have a good idea of what state is the best for you to invest in. And if you read my State Guide, you’ll have a good idea of what happens at tax sales in each state. If you need step-by-step information on how to get started, I have a $7.00 Special Report on the 7 Steps to Building Your Profitable Tax Lien Portfolio that is available at http://yourprofitabletaxlienportfolio.com.

Tax Deed Investing: Don’t Wait for the Leftovers

I recently went to the Monroe County Judicial tax sale in Pennsylvania. I didn’t actually go to the sale. I came in after the sale to see what was left over. When the sale is over the county gives everyone an hour or so to go to the bank and get the funds to pay for the properties that they bid on. All payment has to be in certified funds or money order, no cash and no personal checks are accepted.

When the time limit is up, the county will re-bid any properties that weren’t paid for along with any properties that didn’t sell in the morning auction. I went to this sale to see if there were any decent properties left over at the end of this final auction. What ever does not sell at this auction goes onto the “repository” list and is sold by private bid. When you buy a property from the repository list, you do not need to clear the title, since the county has taken the property. This can save you some money, since to do a quiet title process with an attorney would cost about $750.00.

There were not many properties in this sale, only 9 properties that were bid, but hadn’t been paid for and 16 that were not sold in the morning auction. Half of these properties were sold in the second auction. The only properties that didn’t sell were either undesirable lots or trailers. Trailers are not worth purchasing at a tax sale because you are only given the deed to the trailer, not to the property that the trailer is on. You will either have to pay rent to whoever owns the land or move the trailer. Undesirable land is also not worth purchasing because you can’t build on it, but you would still have to pay the taxes and any homeowner association fees if it’s in a community.

Basically there was nothing left of any value after the tax sale, so next year I will go to the sale and plan on spending an extra $750 to clear the title on anything that I might purchase. I often get inquiries from people who want to invest in tax liens or tax deeds, but they don’t want to attend the tax sale. They either want to invest long distance, where traveling to the sale is not practical, or they just don’t have the time to go to the sale. They want to know if they can buy liens or deeds through the mail from the leftover tax sale list. This may work in some states where counties have thousands of liens available, but it doesn’t work very well for deeds here in Pennsylvania.

Tax Lien Investing: Know What You’re Bidding!

I attended a tax lien sale in New Jersey yesterday. This particular sale is in the township that I used to live in, and I know it well, so I attend this sale every year. Last year I was able to pick up a couple of small sewer liens there for 18%. This year I came away with nothing. Almost everything went at premium, even small sewer liens.

Investors were bidding hundreds of dollars in premium on small sewer liens with no open taxes. They are sure to make very little profit if anything at all on this type of lien when they pay that much premium. So why do they do it? Some of the investors there I knew were bidding for large funds or tax lien investing companies, they paid quite a bit of premium for tax liens that had amounts due of over $1000.00. The largest lien in the sale was for $22,000.00 and went for $205,000.00 to one of these institutional buyers.

But this I understood, I know that these companies figure out just how much they can pay on these larger liens and still make a profit. Once they have the lien, they can pay the current taxes and make 18% on all of the subsequent taxes that they pay, and when the lien is redeemed they will also receive a hefty penalty on the certificate amount (6%). And as another bonus, in certain municipalities, if they more than $10,000.00 in subsequent taxes for the year, at the end of the year another 6% penalty will be added to the subsequent taxes that they paid. So for instance in the case of this particular lien, the annual taxes were around $68,000.00, (this was commercial property assessed at over 2 million). If they held the lien for a year and it redeemed, they would be able to pay in another $68,000.00 and make 24% (the 18% plus the 6% year end penalty) on that. Although they got 0% interest on the certificate amount, they still get a 6% penalty on it, so their total profit would be $17,640.00 on a total investment of $295,000.00, for a yield of 5.98%.

What I didn’t understand is why would someone pay a few hundred dollars for a small sewer lien with no open taxes. Some people see all the money that is bid for larger liens and think that they can apply the same percentages to smaller ones, but it just doesn’t work. A newbie investor paid $1000.00 for a small sewer lien that was a little more than $200. In this case it doesn’t really matter what the annual taxes are, since you will not get a chance to pay them. You may be able to pay the subsequent sewer amounts, but that is probably no more than $500.00 per year. And because the delinquent tax amount is so low (under $1500.00) the penalty that you receive on the certificate amount is only 2% and the interest received on the subsequent sewer payments will only be 8% until the delinquent amount reaches $1500.00. It would take you almost three years to pay enough subs to reach that amount and most sewer liens will pay off within the year. But in this case let’s assume that the lien will be held for one year and then redeem like we did in the example above and see how the investor does.

If the lien redeems in a year the investor will get back their $1000.00 premium – with no interest or penalties along with the redemption amount. Lets say that sewer tax is $500.00 per year and they paid the subsequent taxes for one year. They would receive back the certificate amount with no interest and a 2% penalty, which is only $4.00 and the subsequent sewer amounts that they paid with 8% interest, which is $40.00. So their total profit would be $44.00 and their total investment was $1700.00, giving them a yield of 2.3%. Right now they could get more than that in the bank without doing any work. But most sewer liens redeem in a few months, so it is not likely that an investor will even to that well.

These examples are a little simplified and it doesn’t work out exactly this way. In New Jersey taxes are paid quarterly, so instead of paying the taxes all at once, you pay them 4 times a year. So the actual returns are a little lower than the examples here, simple because you usually don’t get to pay a whole year of subsequent taxes at one time. But the moral of this story is “know what you’re bidding” when you go to a tax sale.

In this case the newbie investor did not know that she wasn’t going to receive any interest on the premium that she was bidding, or on the certificate amount. She really did not know what she was doing, but she kept bidding because other investors were also bidding. Sometimes seasoned investors continue bidding because they want to bid new investors up to the point where it is not profitable for them. Their reasoning is that they think they are getting rid of the new competition. And some investors that are bidding with fund money, or appropriated funds, must use a certain amount of money per year, so sometimes they pay more than they should for liens. Don’t let them bid you up to numbers that don’t make any sense.

Know what your bidding before you bid at a tax sale. It you’ve never been to a tax sale before, you might want to go and observe what happens before you actually bid. After the sale, if there’s something that you don’t understand, ask someone in the tax office. Different states have different bidding procedures. In some states the interest is bid down, and in other states premium is bid for liens. New Jersey is the only state where interest is bid down and premium is bid. So a lien can go quickly from 18% to $1800.00 in premium with no interest.

What’s Holding You Back?

What’s holding you back from building your profitable portfolio of tax lien certificates or tax deeds? Could it be any of the following reasons?

• I don’t know how to start
• I’m afraid that I’ll loose my money
• I don’t know if I have enough money
• I don’t know enough
• I don’t know about the risks

I had these same concerns when I got started, but being the risk taker that I am, I just jumped right in and learned as I invested. Did I loose any money and make some bad decisions at first? Yes I did, but because I invested very little money to start, my learning curve was minimal and I made up any money that I lost very quickly.

A few years ago, when I got started, there was not much out there, either online or in print, to help me. You have the benefit of learning from my mistakes. Since I began investing in tax lien certificates there have been a handful of books published on the subject. When I started there was only one book in print, which was about 20 years old. There have also been a bunch of e-books published about investing in tax liens and tax deeds, including my own, and numerous courses and online products.

You don’t have to know everything about there is to know about tax lien investing to begin building your own profitable tax lien portfolio. You just need to know how to begin. Find out about tax sales in your county or municipality and go to a sale and see what it’s like. Talk to the tax collector, or whoever is responsible for conducting the tax sale in your area to find out more about how to register for the sale and what the procedures and requirements are for bidding. If you need help determining whom you need to contact, you can consult my State Guide.

If you wait until you know everything there is to know about investing in tax lien certificates or tax deeds, you’ll never get started. You’ll miss out on the profits that you could have made if had started right now. So what are you waiting for? Nothing will happen until you take action. So here are some action steps that you can take right now:

• Find out who conducts tax sales in your area and contact them
• Get a list of properties that are in the next tax sale
• Do due diligence on the properties in the tax sale
• Go to the sale and see what happens, write down what each of the properties on the sale goes for
  
  If you take the action steps above, then you will know just how profitable tax lien or tax deed investing will be for you, and how much money you’ll need to get started. If you’re not sure how to do due diligence on tax sale properties, you have many options of finding that out. I have many articles about how to do due diligence for tax sale properties on my blog at and on my web site. If you want step-by-step information I have a $7.00 Special Report on the 7 Steps to Building Your Profitable Tax Lien Portfolio that is available at http://yourprofitabletaxlienportfolio.com.

What You Need to Know About Tax Sale Lists

One of the first things that you have to do in order to buy profitable tax liens or tax deeds is to get the tax sale list. Usually you can get the tax sale list for free from the county or municipality. Sometimes you can even find the tax sale list online on the county treasurer’s or tax collector’s web site along with information about the sale and information on how to register for the sale.

Unfortunately this list does not always have the information that you need to do your due diligence on the properties. Most of the time this list does not even include the property address. It usually does include the property tax ID number, the amount owed, and the owner of record; some lists may include the annual taxes. Some pertinent information that is usually not on this list will help you to do your due diligence on the properties is: The address of the property; the property classification – is it a farm, residential, commercial, or raw land; the type property – how it is zoned; the property assessment and annual taxes; the last sale price of the property; and mortgage information.

You can get all of this information if you buy a detailed list from a tax sale list provider. I find that tax sale list providers that specialize in one state or area of the country do the best job of providing timely and meaningful lists. They are sometimes more thorough, since they are covering a smaller area, and they are more knowledgeable about the information that they provide. I’ve seen national providers frequently leave out one or two counties in a state or only list it when it’s to late to do proper due diligence for the sale. Two of the smaller list providers that I recommend are LienSource.com – for New Jersey, Nassau County NY, Washington DC, and Florida; and ArizonaTaxLiens.com for Arizona. For most other states you may be able to get the list online in excel format and then cross reference the parcel or tax ID number with the assessment data that you may also be able to find online. When you can’t find this information online – on the county tax collector’s or county treasurer’s web site, you may have no choice but to buy your list from a national tax sale list provider. In this case you can try taxsalelists.com.

On February 15, 2007 I interviewed Steve Davis of LienSource on “What You Need to Know About Tax Sale Lists.” In this interview Steve covered everything you have to do to be successful at buying tax liens and also how to decipher the tax sale lists for both tax liens and tax deeds, and what to do with the list once you’ve got it. For information on how you get the recording of this teleseminar go to www.taxlienlady.com.

Purchasing Left Over Tax Lien Certificates and Tax Deeds

I get a lot of questions from subscribers to taxlienlady.com that want to know how they can purchase tax liens or tax deeds through the mail. They specifically want to know about left over tax liens and tax deeds. These are tax lien certificates or tax deeds that are “left-over” from the tax sale. In other words no one bid at them at the sale and they were struck of to the county, state, or municipality. In most states if the delinquent tax property is not sold at the tax sale, it is struck of to the county or municipality. A few states allow the assignment of tax lien certificates or tax deeds to investors. There are pros and cons to purchasing leftover or assignment liens or deeds from the county.

On the positive side, there is no competition; you don’t have to bid against other investors. For liens and redeemable deeds, you may be able to purchase a lien or deed in which the redemption period has already ended, or is close to being over, in which case you may wind up with the property. For some deed states, since the county, state, or municipality has already taken title to the property, you may not have to go through a title clearing process (quiet title or title certification process). You’ll have to check with the county to find this out.

On the negative side, leftovers are usually not worth bidding on in the first place and that’s why they were not sold at the sale. In smaller counties, and in states where the tax sales are conducted by the municipality (New Jersey, and the New England states) there is usually nothing worthwhile that is left over. To find leftover tax liens or deeds, you have to go to counties that have very large lists (a few thousand properties) to begin with. And you’ll have to sift through a lot of junk to find good properties.

Sometimes you can find a nugget of gold in the leftover tax sale list. I know a couple of tax lien investors in Arizona who do this regularly as well as a couple of tax deed investors (in Texas and Pennsylvania) who have done this. With more and more people becoming interested in tax lien and tax deed investing and going to the auctions, there are less leftovers available than there used to be. My advice is to use extreme caution and be extremely rigorous with your due diligence when purchasing leftover liens or deeds. I also believe that investing long distance in leftover liens or deeds is a mistake if you do not have someone that can physically look at the property for you.

If you would like to find out more about how to find that nugget of gold in the leftover tax sale list, this is the topic of Tax Lien Lady’s next teleseminar interview with Brendan Monahan of Arizona Tax Liens on March 15, 2007. To register for the teleseminar at no charge go to http://tinyurl.com/f2hy4.

Step Seven to Building Your Profitable Tax Lien Portfolio

OK, so you’ve followed the first six steps to building your profitable tax lien portfolio and you’ve purchased your first tax lien certificate or tax deed. Now what do you do to insure that your investment is a profitable one? The seventh and final step to building your profitable tax lien or tax deed portfolio is protecting your investment and maximizing your return.

Depending on whether you are investing in liens or deeds and which state you are investing in, these steps may include; recording your lien or deed with the county clerk, paying subsequent taxes, Clearing the title to the property, and foreclosing the right to redeem a tax lien. Regardless of whether you purchased a tax lien, a tax deed, or a redeemable tax deed, the first thing that you need to do is record your lien or deed with the county clerk. Unless it is recorded, all you have is a worthless piece of paper. In some states this will done for you, and you will be charged a recording fee when you purchase your tax lien certificate or tax deed. In many states, it is the investors responsibility to do this and you are given a specific time frame in which it needs to be done. In some redeemable deed states, like Texas for example, the redemption period does not start until the deed is recorded, so you’ll want to do that right away. It is to your advantage to check out ahead of time what the procedures and laws are in your state for recording a tax lien or tax deed.

When you purchase a tax lien, some states will allow you to pay the current unpaid taxes (remember that the taxes you paid in order to get the lien are most likely last year’s taxes) and any subsequent taxes that the property owner doesn’t pay. I recommend that you pay the subsequent taxes (referred to as “subs”) , if your state allows it, as soon as possible. Some states will give you the maximum interest on your subs and some will only give you the interest that you bid at the sale, but most states that allow you to pay the subs also allow you to collect interest on them. This is one way that you can maximize your profit in a tax lien.

When you buy a tax deed, in most cases you will get a non-warranty deed. That means that there is not warranty as to the condition of the property or the condition of the title to the property. Basically you are buying the property without clear title and if you want to resell it, you will need to clear the title. Very few states issue a warranty deed at a tax sale. You can clear the title to the property in one of two ways. You can either hire an attorney to do a quiet title process or you could hire a title company to do a title certification process. Which one of these processes are more cost effective and quicker than the other will depend on the state. I have heard that in Texas it is easier and cheaper to use a title company and I know that here in Pennsylvania it can be more cost effective to use an attorney. I do recommend that if you use an attorney that you find one that does a lot of this type of work.

If you purchase a tax lien and it is not redeemed within the redemption period, than you may need to foreclose on the property in order to get paid. In my experience this happens very seldom, but when it does you will need a lawyer to handle this for you. It may seem like a simple process, but there many steps that have to be followed exactly or you could lose your right to the property. I also recommend that you only use a lawyer who specializes in tax lien foreclosures. Lawyers who specialize in this area are familiar with the difficulties that come up and know how to handle them. Because they are very familiar with the process they will be able to get through it faster than a lawyer who does not do many tax lien foreclosures.

This is the last article in this series. 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.

Tips for Bidding at a Tax Sale

Here are some tips from the Tax Lien Lady to help you increase your chances of being a successful bidder at a tax lien or tax deed auction.

Be one of the first to register for the sale and among the first to arrive at the sale. At very large tax sales it’s not easy for the tax collector to see the bidders in the back of the room. More bids are awarded to the buyers that are in front of the tax collector (or who ever is doing the auction). At some sales seating is assigned based on your bidder number, so register early for the sale. If seats aren't assigned, be sure that you arrive at the sale early so that you get a good seat. I like to get to a tax sale one hour before the sale begins, that way I know that I can get a good seat.

Make sure that you turn your cell phone off before the start of the sale. Every thing happens very fast once the sale begins and if you have to stop paying attention to what is going on in order to shut your phone off during the sale, you can easily loose tract of what property is being bid. Also do not talk to anyone while the sale is going on for the same reason. At one sale that I went to, someone came in late and sat down behind me and asked me what property they were on. Because I allowed myself to be distracted and answer his question, I missed the opportunity to bid on a property. Once the sale starts, you’ll have to pay strict attention and avoid distractions.

Know what your bottom line is on each property before you go to the sale. Have a spreadsheet with the maximum amount that you are willing to pay, or the lowest interest that you are willing to pay for each property, or have these numbers written on the tax sale list next to each property. You can easily loose tract of the auction if you have to figure out what you want to pay while the bidding is going on. Also keep a running total of what you are spending so that you don’t go over the total amount you can pay. If you do bid over the funds that you have available and you can’t pay for all of the liens or deeds that you were successful bidding on, you could be barred from attending any more tax sales in that county. It’s a good idea to take a calculator with you to the sale to help you keep tract of what you’re spending. Don’t forget to add in any other costs that you might have to pay at the sale; like recording fees, realty transfer fees, or auctioneer’s fees.

You also might want to have a highlighter and a pen with you. The highlighter is to highlight the properties that you want to bid on. The pen is for crossing out the properties that were paid before the sale and for changing the amounts on the properties where partial payments were made. This is another reason why you want to get to sale an hour early, you’ll need to get the final list and make all of these changes before the sale.

Step Six to Building Your Profitable Tax Lien Portfolio

This is the seventh article in a series of eight articles about how to build a profitable portfolio of tax lien certificates or tax deeds. If you missed the previous articles in this series, you can read them at www.taxlienconsulting.blogspot.com.

OK, so you’ve got the tax sale list and you’ve done your due diligence and you’ve made your preparations to go to the tax sale. You’ve registered for the sale, you have your paperwork in order and you’ve made arrangements to have the proper form of payment at the sale. Since most tax sales are auctions, the next step to building your profitable tax lien portfolio is to bid at the sale.

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 beforehand 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. It’s important to know exactly what you are bidding.

There are four basic types of bidding procedures that you will encounter at a tax sale. At tax lien sales, typically the interest is bid down, or the interest is not bid down and the price of the lien is bid up. This is referred to in the tax lien industry as “premium” or “overbid.” Different states may refer to it differently and they treat it differently. In some states the amount bid is only the premium or overbid amount, and the total price of the lien will be what was bid plus the lien amount. Other states will start the bidding at the lien amount so that the bid price includes the lien amount. Some states do not bid down the interest or bid up the price of the lien. They may use another bidding process in which the percent ownership in the property (should the property be foreclosed) is bid down. In this process it is the bidder willing to receive the lowest percent ownership in the property that wins the bid. Another bid process that is used in some states is random selection or a round robin bidding process. For both of these bidding procedures, the interest rate is not bid down and the price is not bid up; they remain constant. In counties that use the random selection process, a bid is randomly selected among the registered bidders at the sale. In counties that use the round robin procedure, the tax collector will go around the room in a specific order, offering the next tax lien to the next registered bidder in line. The bidder can either accept or refuse the lien; but if the lien is refused, another won’t be offered until his or her turn comes up again.

The procedure used for most deeds sales is the premium bid method. What differs among most tax deed states is the starting bid amount. In some states the starting bid will be the back taxes owed plus any penalties. Some states may start the bidding at a percentage of the assessed value of the property, and a couple of states will start the bidding at the market value of the property. You can see why it’s important to be familiar with the bidding process and what is being bid before you actually start bidding on tax sale properties! Also, you will want to be aware of other costs involved besides the amount you bid. When purchasing a tax deed, there will be other costs involved, not just the amount that you bid. There may be a realty transfer fee and a recording fee. Know what these fees are ahead of time and be prepared.

Due Diligence for Tax Sale Properties, or What You Need to Know Before You Bid

Due diligence is the most important step in the process of investing in tax liens or tax deeds. Whether you do this correctly or not could mean the difference between being extremely profitable or losing your investment. Due diligence for tax deed properties is a little more involved than due diligence for tax lien properties. When you purchase a tax lien certificate, you are not purchasing the property. You are paying the taxes on the property and recording a lien against it. When you purchase a tax deed, however, whether it’s a regular tax deed or a redeemable tax deed, you become the owner of the property and you will be held responsible for any other liens that survive the tax sale. You’ll also be liable for anything that happens on the property and any current taxes, association fees, or special assessments.

Even when you’re purchasing a tax lien, you still want to be sure that the property is worth a few times your initial investment. Even though you don’t own the property, if the property is not worth anything (if you purchase a tax lien on an unbuildable lot, for instance) then you are not likely to get paid. Don’t forget, you may have other costs besides what you pay at the tax sale for your certificate. You will have recording fees, subsequent tax payments (in states that allow you to pay subsequent taxes), and if the lien does not redeem – foreclosure costs.

For both tax lien and tax deed properties, you’ll want to see the tax assessment data for the properties in the sale. Sometimes this is included in the tax sale list that you get from the tax collector, but in most counties it is not. Most tax sale lists will only list the parcel number, a legal description of the property (usually just the block and lot), the name of the owner, and the amount due. The tax assessment data is the data that the county or municipality uses to determine the tax value of a property. It includes the size and type of the property and the assessed value, as well as the owner and property address. Sometimes it will even include the market value and/or last sale price of the property. To find out if you can get this information online, go to the county website and search for the tax assessor’s web page. You might find a link to it there. If it is not available online, you may have to go to the tax assessor’s office to have access to it.

An easy way to get all of this information without doing any work is to buy a detailed list from a tax sale list provider. Sometimes these lists can be expensive; you’ll have to weigh the cost of the list against the value of your time. If you don’t buy a detailed list, you’ll have to do the research yourself, and that could take a lot of your time. To help you to determine if you should purchase a detailed tax list or do the work yourself, you can read my article "When to Buy a Tax Sale List." You can find it at http://tinyurl.com/28ujj2.

Once you have determined what the property is worth, your due diligence for tax lien properties is almost complete. All you have to do now is look at the property. You’ll want to physically look at the property and take a look at the property on a tax map if you can get access to one. Sometimes you can get the tax maps online; other times you will have to go to the tax assessor’s or mapping office. When you look at the tax map you will be able to see if there are any easements or rights of way on the property, or if the property is land locked. These are all things that you want to avoid. Once you’ve done this, your due diligence for tax lien properties is complete; but if you’re going to a tax deed sale, your work is only half done.

The next step in doing due diligence for tax deeds is to search for any liens that survive the tax sale for the properties that you’ve determined you’re going to bid on. First you have to know what liens survive a tax sale. This will be different for different states, and some states can have different types of tax sales. In some tax sales certain liens will not survive the sale and in others they will. It’s very important to know which type of sale you are bidding at! You can either pay someone to do a title search for you, or if you know how, you can do this search yourself.

Even if you find no other liens that survive the tax sale on the properties that you are bidding on, your work is not over yet. You must also make sure that proper notice was given to any lien holders for those liens that do not survive the sale. The reason that these liens do not survive the tax sale is that they’ve been notified that the property is going to be sold for back taxes, and they have been given the opportunity to pay the taxes and keep the property from being sold. If a lien holder did not get properly notified, they could come back later and contest the sale. So the last thing that you want to do as part of your due diligence before you bid on a tax sale property is check to make sure that proper notification was given to all lien holders.

If you follow all the guidelines and steps in this article you will be able to minimize your risk in investing in tax lien certificates and tax deeds. Yes, there are risks involved in tax lien and tax deed investing, but if you know what the risks are you can avoid them. One way to avoid these risks is in doing proper due diligence on tax sale properties before you bid. But remember, even if you do due diligence on the properties before you bid on them at the sale, something could still go wrong; there are no absolute guarantees. But then nothing that is worthwhile in life is completely risk-free. Just remember the old adage, "Buyer Beware."

Step Five to Building Your Profitable Tax Lien Portfolio

This is the six article in a series of eight articles about how to build a profitable portfolio of tax lien certificates or tax deeds. If you missed the previous articles in this series you can read them at www.taxlienconsulting.blogspot.com.

Once you’ve done your due diligence on the tax sale properties that you intend to bid on it’s time to 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 close to the sale as a few minutes before it starts. I’ve even been to some sales in New Jersey where late comers are allowed to register and bid at the tax sale. 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. Nassau County, NY, for instance has a tax lien sale that typically is 3-4 days long. They have a registration fee of at least $100 for each day that you intend to bid and the registration fee is non-refundable.

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. You need to figure out ahead of time how much money you think that you’ll need. This can be a little difficult because you don’t know what properties are going to be left in the sale and you don’t know if you will be the successful bidder on any of them. Sometimes you will be allowed time to go the bank and get payment after the sale. In this case you will be able to go to your bank and get the certified funds in the exact amount that you need. When you’re not allowed the time to go to the bank, you will have to have the certified funds, made out to the county tax collector, with you at the sale. In this case, come up with your best estimate of what you think is the most that you will spend and get certified checks made up in different denominations that total the amount you think that you'll need. This way if you have to wait for a refund check from the county for your change, at least it won’t be for a very large amount. Make sure you check with the tax collector a couple of days before the sale to find out what the acceptable forms of payment are and whether or not you will be allowed to go to the bank and get a check after the sale.

Another thing that you’ll have to have with you for the sale is the proper paper work. In some states you will have to fill this out when you register and in others you will need to bring it to the sale. Most tax collectors will require a W-9 form and a bidder information sheet. The W-9 form is a standard IRS form and you can get it online at the IRS web site. The bidder information sheet is usually filled out during registration and has your personal information, or your business information if you’re investing with a business name. This form is not always standardized and every county may have a different form. For most tax deed states there is another form that you will have to fill out if you are the successful bidder on a tax sale property and that is an affidavit of no taxes due for the county and/or state that you are purchasing a tax deed from. You see most counties will not sell a tax deed to someone who has unpaid taxes in their district. Sometimes a signed affidavit is all that is necessary, but in some states, as in Texas, the county clerk has to sign off on a statement verifying the fact that you do not owe any taxes.

This is a summary of step five to building a profitable tax lien or tax deed portfolio. In subsequent articles I will take each one of the remaining steps 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, go to http://www.taxlienlady.com/ProfitablePortfolio.html

When to Buy a Tax Sale List

One of the first things that you have to do to invest in tax lien certificates or tax deeds is to get the list of properties that are in the tax sale. Sometimes you can find this list online, on the tax collector’s website. In most counties the list has to be published in the local paper 2-4 weeks before the sale. In states where tax sales are held on the municipal level, most of these lists will be small (less than 100 properties) and easy to manage. But in large cities and in states where tax sales are held by the county, these lists can be quite large. Although you can get these lists for free, there are times when you will want to pay for a detailed tax sale list from a tax sale list provider.

The tax sale lists that you get from the municipality or county do not always have the information that you need. Often, they will not include the address or physical location of the property. Usually these lists will only list the tax ID or parcel number, block and lot, owner of record, and amount due on the properties in the tax sale. It will not tell you things that you need to know before bidding on the property like: the acreage, type of property, assessed value, last sale price, and whether or not there is a mortgage on the property. To find out this information you can either go to the tax collector’s or tax assessor’s office and look it up yourself, or you can buy a detailed tax sale list that provides all of the tax assessment information, including the physical address of the property.

For smaller tax sales you may want to buy a detailed list. You might think that since the list is small, you could save the money and look it up yourself. I have found that this process is time consuming and that for small lists I am better off buying the detailed list. It saves me a lot of time in my due diligence; I get all the information that I need; and I only have to go out and look at the properties. For larger lists, I would rather do my own research. Detailed tax sale lists that are over 500 properties can cost over $50 and lists that are over 1000 properties can cost over $100. Large counties and counties with big cities can have lists of a few thousand properties and that can cost a few hundred dollars. So how do you decide whether you should buy the detailed list or do the research yourself for these tax sale lists?

First remember that if the original tax sale list has 1000 properties, there will probably be only 500 or so properties left on the day of the sale. Since most tax sale list providers do not update the lists that they have for sale, you will have to purchase the detailed information on all 1000 properties even though you will probably only use half of the information. If you choose not to buy a detailed list, then you may be doing research on a lot of properties for nothing, since half of them will not be in the tax sale.

So here’s what I do. If there is an easy way to get the assessment information that I need, that is if it is available online, I wait until about 4 or 5 days before the sale, get an updated list from the tax collector, and then I get the assessment information on the properties. To make it even easier, I limit the properties that I research to only certain areas that I’m interested in investing in. I may limit it to only 3 or 4 townships in the county and to only certain types of properties. If the assessment information is not that readily available, I’ll buy the detailed list. Some list providers will allow you to filter the list by property type, thus you only buy information on the type of properties that you are interested in.

To find out more about the steps involved in building your profitable tax lien or tax deed portfolio, go to http://www.taxlienlady.com/ProfitablePortfolio.html.

Step Four to Building Your Profitable Tax Lien Portfolio

Once you’ve completed the first three steps in the process of building your profitable tax lien portfolio, your real work begins. Now that you know where you’re going to invest and you have the tax sale information and have a list of the properties that are in the sale, you can progress to step four to building your profitable tax lien portfolio, which is doing due diligence on the properties in the sale.

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 on your investment. You need to do due diligence on tax sale properties before you bid at the tax sale. 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 will have to be a little more rigorous when doing due diligence for tax deeds than you than you do for tax liens.

When you buy a tax lien, you are not buying the property, you are only paying the taxes and putting a lien on the property. But when you buy a tax deed, whether it is a regular tax deed or a redeemable tax deed, you are actually purchasing the property and you are now the owner of record. That means that you are now responsible for paying the taxes and any assessments on the property and you are liable for anything that happens on the property. If there is an environmental problem with the property, you're responsible for cleaning it up and that could cost you more than any profit that you might make on your investment.

Another reason that you’ll want to check out tax sale properties for deed sales a little more rigorously than tax lien properties is that not all tax deeds are sold “free and clear” of any other liens. You may have been told that when you buy a property at a tax deed sale you are not responsible for any other liens on the property, like an existing mortgage, for instance. Depending on the state, this may or may not be true. Different states have different laws regarding what liens survive a tax sale. You need to know if there are any types of liens that do survive the tax sale and you need to look for them before you bid on a property in the sale. Even for liens that do not survive the tax sale, you still need to check to see that proper notification was given to all lien holders. If proper notification was not given to a lien holder before the tax sale, the lien holder could contest the sale.

Whether you are investing in tax liens or tax deeds you will still have to find the value of the property to make sure that it’s worth it. You do not want to buy a tax lien certificate on a property that is not worth a few times your initial investment. You have to plan on your expenses for recording your tax lien certificate, paying subsequent taxes for the duration of the redemption period (in states that allow you to pay them), and any foreclosure costs that you might incur if the lien is not redeemed. The property should be worth at least 3 times what you determine your investment will be, taking all these expenses into account.

You can use one of two different methods to find the value of tax sale properties. You can find the tax assessment data, or you can check with a web site that gives recent sales prices of properties in the area. Some states have assessment data online. If the tax assessment information is not online, you will have to make a trip to tax assessor’s office to find the information that you need.

This is the fifth article in a series of eight articles about the seven steps that you need to follow in order to build a profitable portfolio of tax lien certificates or tax deeds. If you missed the previous articles in this series you can read them on this blog.

For more information about how you can build your own profitable tax lien portfolio, I invite you to listen to my mini seminar at www.taxlienlady.com/ProfitablePortfolio.html.

Organizing Your Business for Success

Report From the Women's Power Summit - Part 3

In my first two articles on the Women’s Power Summit, I summarized presentations from Jeanette Cates, the Technology Tamer and Loral Langmeier, the Millionaire Maker. I consider both of these women to be my mentors, since I have taken their courses, read their books, and heard them speak before, though I had never met them in person. So of course I was looking forward to meeting these two very successful women that I continue to learn from. But the presentation that I really needed to hear at the Women’s Power Summit was “How to Play to Win with Your Business,” given by Barbara Hamphill.

Barbara Hamphill is a nationally renowned professional organizer. She is a past president of the National Association of Professional Organizers and has appeared on many television shows including Today, Good Morning America, and CBS This Morning. She is a sought after speaker and who counsels major corporations on organizing for efficiency. She is the creator of Taming the Paper Tiger Software and the Author of Taming the Paper Tiger at Home and Taming the Paper Tiger at Work. Her presentation, “How to Play to Win with Your Business,” was all about how to organize your business for success.

Her organizing SYSTEM is an acronym for Saves You Space, Time, Energy, and Money. According to Ms. Hamphill there are three essential components to any system of organization. Your individual methodology, or a way to think about organizing that works for you. Tools that you will need to get organized. And maintenance, which is the actual system that you will use to stay organized. Ms. Hamphill argues that there is no one organizing system or method that works for everybody, but that you have to find a method that works for you.

Start with a productive setting or environment. A productive environment is one in which everything around you supports who you would like to be. One of her favorite statements in her organizing seminars is “have nothing which you do not know to be useful, think to be beautiful, or love.” You know that you have a productive setting when there is no clutter, there is a place for everything, you can find anything you need, and you have a beautiful environment.

Although there is no one “system” that works for everyone, there are six tools that everyone needs to have in order to get organized. Barbara calls them the “magic six.” These consist of: your desk top tools, she recommends a 3 tired box consisting of an in box, an out box and a “to file” box; your waste basket; your calendar, which is actually three different calendars – a planner pad, your personal calendar and your family calendar; your database; your action files; and your reference files.

Barbara teaches the FAT system to get rid of clutter. FAT stands for File it, Act on it, or Toss it. She says that when it comes to clutter, these are the only choices that you have. One of the skills that you need have in order to deal with the clutter in your home or office is something that she calls “the art of wastbasketry.” When you go through the mail or anything that comes into your inbox, ask yourself these questions:

Does it require action?
Is it recent?
Is it difficult to get again?
Does it have legal or tax implications?
Does it have a specific use?

If you answer yes to any of these questions either file it or act on it. If you answered no to all of these questions, then ask yourself what is the worst possible thing that could happen if you tossed it out. If you and your organization can live with the consequences, then toss it, if not, file it.

For more help in the clearing clutter and getting your home or office organized, you can read one of Barbara Hamphill books. Her books are also available on CD and she also has a Taming the Paper Tiger software program.

This is the third article in a series about the Women’s Power Summit that was held in Atlanta in October of 2006. If you missed the previous articles, you can read them on this blog.

Joanne Musa is a tax lien investing consultant and creator of taxlienlady.com, an educational web site to help people that want to learn how to invest in tax lien certificates and tax deeds. To find out more about tax lien investing, go to http://www.taxlienlady.com/.

Step Three to Building Your Profitable Tax Lien Portfolio

This is the fourth article in a series of eight about the seven steps that you need to follow in order to build a profitable portfolio of tax lien certificates or tax deeds. If you missed the previous article in this series you can read them at http://www.taxlienconsulting.blogspot.com/.

Once you determine where you are going to invest, the next step in the process to building your profitable tax lien portfolio is finding the tax sale information. 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.

In my e-book, Tax Lien Lady’s State Guide, I tell you who to contact in each state to find out about tax sales. I also give links to the state and county web sites. I recommend that you first contact the county tax collector, or whoever is responsible for the tax sale and ask for the tax sale information. Ask for a list of tax sale properties. Usually you can get this list for free and sometimes you can even get it online.

All tax sale lists are not created equal. Some lists will have all the information that you need to do your due diligence (the next step in the process of building your profitable tax lien portfolio) and some will only list the properties tax number, block and lot, owner of record, and amount due. It may not even include a physical address. If that is the case, then you have two choices, you can buy a detailed tax sale list that includes all of the information that you need, or you can look the information up yourself, which can be a very tedious process.

Very large detailed tax sale lists can be quite expensive, even a few hundred dollars, so if there are a lot of properties in the tax sale you would be better off to limit the amount of properties that you are interested in and look up the information that you need yourself. You can limit yourself to a particular area or to only certain types of properties to make the next step in the process a little easier. If the list is not that large and costly you may want to buy the tax sale list from a tax sale list provider. It will save you lots of time in doing your due diligence. This is a summary of step three to building a profitable tax lien or tax deed portfolio. In subsequent articles I will go over the remaining four steps to building your profitable tax lien portfolio 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.