Tax Lien Investing in 2008

The year is winding down and the holiday season is upon us. We will soon ring in a new year and a new leader of our country. There have been a lot of changes this year in the real estate and banking industry, and you might be wondering how this has impacted tax lien investing. So what’s been going on around the country in tax lien investing over the past year?

I have just finished my tax lien purchasing for the year. I only went to a handful of tax sales this year, but I’ve been able to acquire a few new liens. This is what I’ve found in the industry this year and what I’ve heard from subscribers to my TaxLienLady.com web site from around the country.

In the last half of this past year I’ve seen that there are more liens available at the tax sale. It seems that fewer liens are getting paid off before the tax sale. Not only are there more liens available, but there also seems to be liens left over, even in places that did not have left over liens in the past couple of years. Though many of the leftover liens are for worthless properties, some good properties have been leftover as well. This is a change from the past couple of years where not much at all was leftover and all of the properties that were left were junk properties.

Here are the reasons that I think this is happening and why now is a really good time to get involved in tax lien investing. First and most obvious is that we are in a recession and money is tight. People have stopped paying taxes on properties that they’ve been holding onto, thinking that someday in the future they’re going to do something with it. Secondly, loans are harder to get and it’s easier for a property owner to let their property sell at a tax sale and pay the interest on the lien than it is for them to get a loan and pay of the taxes right now. Thirdly, there are not as many investors at the tax sales.

Some investors may have dropped out of the arena because they got tired of the fierce competition that has been going on at tax sales in the last few years. Others may have lost money in other investments – like the stock market, or they may have real estate investments that they are loosing money on right now, and they don’t have the money to put into tax liens. All this means is that there is more available and with less competition.

Now is really a great time to get involved in tax lien investing. I don’t know how long this window of opportunity is going to last. If interest rates remain low, or drop even lower, than tax lien investing will attract more investors. If the economy gets better than there will be less liens available again. My advice is to get involved now while your chances of getting a good rate on tax liens are high. To find out more about the basics of tax lien investing go to TaxLienInvestingBasics.com. If you’d like to find out more about tax liens, you can watch a free video on “An Introduction to Tax Lien Investing” at
TaxLienIntro.

Wealth Building Strategies: Ways to Purchase Real Estate Without Getting a Loan

My main wealth building strategy has been investing in tax liens. Now I love investing in tax liens for lots of reasons. You can watch a short video about Why Invest in Tax Lien Certificates on my web site at TaxLienLady.com. But I’ve always wanted to be a real estate investor. Regardless of what you may have seen on a late night infomercial, tax lien investing is a great wealth building strategy but it’s not a good way to purchase real estate. In my experience a tax lien on a good piece of property will almost always redeem. That means that you don’t get to foreclose on the property. What you do get is a great interest rate on your money.

The problem with investing in real estate as a wealth building strategy for me has been that usually you need a lot of money, so I’ve been researching ways to purchase real estate without having to put down a lot of money. After all, I’m used to investing small amounts of money at a time – in tax liens.

We finally did purchase our first investment property. We bought it at a real estate auction and got a great price. But what a rude awakening when we went to get the financing! Things have really changed in the past few months when it comes to getting a loan. Sure there are still some great programs out there for first time home buyers and even for people who are not first time buyers, but are purchasing a home to live in. The problem is that banks do not really want to lend to investors.

Fortunately my husband and I have a really good mortgage broker and a good credit scores, but we still had to put 20% down in order to secure a mortgage on this property. Last time we applied for a loan on an investment property (on a house that we ultimately decided not to purchase), we only had to put 10% down and we were able to lock into an interest rate 1% lower than what we were able to get now. And that was only about four months ago.

Because we intend to purchase more than one investment property, we realize that we’ll have to find another way to buy properties other than getting a conventional mortgage. Now I’ve been to various real estate trainings for different methods of purchasing real estate. I’ve taken trainings from different experts on short sales, subject to deals, foreclosures, etc. But I haven’t actually purchased a deal using any of these methods. Most of them, except for purchasing property “subject to,” require that you have some cash, which I won’t have after we close on this property. So my focus now is to purchase investment property without using my own cash and without bringing in other investors.

Even though I have taken courses on how to purchase property “subject to” the current mortgage, the method that I learned did not really work in my state so I abandoned this method before I even tried it. Then I heard a tele-training with Wendy Patton on lease options and subject to deals on REIBlueprints.com. I wanted to listen to the training because we intended to sell the property that we’re purchasing using a lease option, and I thought that was what this training was about. But it was actually about how to purchase properties using lease options and subject to deals without having to put any money down.

Wendy was awesome! I just had to have her training course that consisted of 4 separate real estate investing courses: Buying with Lease Options, Selling on Lease Options, Working with Realtors, and Taking the Deed Subject To. Wendy offered these 4 courses and personal coaching with her for under $1000. I jumped at the opportunity to purchase this because I had spent more than twice at much for just one of those courses from other real estate gurus. The good news is that if you act now you can still listen to Wendy’s free tele-training with REIBlueprints.com, and get in on this special offer, but hurry because I don’t know how long this offer will last.

Tax Lien Lady’s Rant: Buyer Beware!

I’ve just yet another e-mail from a subscriber to my newsletter who tells me that they are very interested in my courses, but they’ve already spend a great deal of money with someone else’s coaching program. And since their investment is non-refundable, and it was a lot of money, they don’t want to buy any of my programs. And then they go on to ask me a very important question that they have about tax lien investing and they even give me their phone number just in case I would like to discuss their very important question with them.

I guess they were not able to get the answer to their question from the coach that they paid thousands of dollars to, so they figure that they’ll just ask me. The problem is that if I do answer them, they may not like the answer that I give them. I may be telling them the exact opposite of what they’ve been told by their so-called “expert” tax lien investing coach. I may not think that the strategy that they’ve paid thousands of dollars to learn is any good in today’s market at all.

OK, this is my rant. I’ve had enough, so I’m warning everyone who subscribes to my newsletter and reads my articles now, “Buyer Beware,” just because someone says that they’re an expert in tax lien investing doesn’t mean they are. Check them out before you hand over your credit card number and spend thousands of non-refundable dollars to buy their program. You can google the name of the company and see if anything negative about them comes up and you can ask to see some proof that they know what they are doing. How about asking to see a sample of their tax lien portfolio before you give them your hard earned money? Do they have experience in your state, or the state that you are going to invest in?

You should find out exactly what support you are going to get. If you’re paying a few hundred dollars, you should at least get unlimited e-mail support to have someone answer your questions, and some regular coaching sessions or classes. If you’re paying thousands of dollars, that should include phone support and one-on-one coaching as well, not just teleseminars where anyone can call in and ask a question.

Beware of anything that sounds too good to be true. Sometimes in their zeal to sell you their product, companies will make claims about tax lien investing that simply aren’t true. Here are a couple of the buzz words in the industry that really make me mad:

“Government guaranteed” – they throw around this term to make you think that you’re guaranteed to get paid on a tax lien, when in reality no one guarantees that you will be paid. That’s why it’s important to do your due diligence on tax sale properties.

“You can get the property” – this almost never happens with tax liens, and even if in a rare circumstance you did foreclose on a property, in most states it would take at least a couple of years before you can even start the foreclosure process.

“You don’t have to go to the tax sale, you can do this from your computer,” – this is partially true. Some counties do have online tax sales, but there are only 4 states that I know of that have counties with online sales. And that’s only some of the counties in those states, not all of them.

“You don’t have to bid at the tax sale, you can buy left-over liens from the county” – also only partially true, some counties do have left-over liens, but many of them don’t. If you are interested in left-over liens, you have to get the list right after the tax sale, as all of the good liens get picked over pretty quick and all that’s left is the junk. So if you think that you’re going to get properties that are ready for foreclosure and foreclose on them, this is only likely to work with junk properties (properties with no value because it’s unbuildable land).

O.K., I’ve had my rant and vented and hopefully I’ll save someone from making the same mistake that I see over and over again – paying thousands of dollars for a program that they are unhappy with, and that doesn’t help them go out and buy profitable tax liens. When you’re ready for a program that will really show you step-by-step what to do to start your own profitable tax lien portfolio, then check out the courses at www.TaxLienLady.com. My most expensive course is way under $1000 and I have many courses under $100. And even before you’re ready for one of my courses, you can read all of my articles for free at www.taxlienconsulting.blogpot.com and check out my free Tax Lien Investing Tips podcast on iTunes.