Thursday, August 09, 2007

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

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 at

Happy and Prosperous Investing,


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