Invest in Tax Lien Certificates From Home!

One of the advanced techniques that I teach in my More Profit From Tax Liens course is how to buy tax liens without leaving home.
 
I know that there are some tax lien investing “experts” that claim the best way for you to get tax liens at the maximum interest rate, without bidding down the interest, is to buy the left-over or “over-the-counter” liens from the county. The problem with buying these left-over liens though is that there aren’t many good liens left after the tax sale. These gurus claim that bidding at tax sales is just so competitive that in order to get anything good you should buy direct from the county. My concern about that strategy is that if the bidding is really that  competitive (and it is – there are sometimes thousands of bids on one lien), then what makes you think that there is anything good left over?


The secret to getting good deals from these left-over tax liens is to get the list of county held liens as soon as it’s available and to put your bids in for these properties as soon as you can, before all the good properties are taken. With these lists, there is no bidding, it’s first come – first served, so it’s the early bird that gets the worm so to speak. The good news is that some of these sales are online and you can purchase these liens without having to leave home. Just don’t wait until a couple of weeks after the list is available to bid or you will find that all the good properties are gone already.

In my More Profit From Tax Liens course I also let you know about one state that doesn’t even really have live tax lien auctions at all. They do have tax sales, but their “tax sales” really just consist of the county publishing a list of properties  that investors can bid on. Bidding can be done by e-mail, in person, by mail or by fax, but there is a catch. The investor must make notification to the property owners, and provide proof of notification along with payment for the lien before being awarded the tax lien. Basically in this state the investor has to do the work that the tax collector does in most other states. And it’s first come, first serve, so that the investor that gets the paperwork and the money into the county treasurer’s office first gets the lien.

Curious to know more about what state this is and how you can profit from investing in tax liens there? You can get the More Profit From Tax Liens course and find out, or you can Join me Monday August 27th for an informative complimentary webinar with Rachel Seidensticker. Rachel will let us know all about how this system works and how you can make money investing in tax liens and in liens that are ready to foreclose in this state. You can register at https://www1.gotomeeting.com/register/563093560.

States With the Highest Return on Tax Liens

Change: Posting to Tax Lien Investing Tips Blog

All new articles will be posted to my Tax Lien Investing Tips blog at http://TaxLienInvestingTips.com.
I am combining my articles with my audios, videos, and anything else I can think of. The articles already here will stay here. So keep this blog site taged for reference, but make sure and note the new site for current,updated information. Look to http://TaxLienInvestingTips.com for continuing assistance with tax liens, tax deeds, and new strategies on investing in real estate.

Happy and Prosperous Investing,

Joanne Musa

April 2009 Q & A Webinar

The April 2009 Q & A Webinar is now posted on the Members Area of TaxLienLady.com. In this webinar I answer some questions about deed sales in California and in Pennsylvania, and I talk about what you can expect from tax lien and tax deed investing. It may not be what you think!

I've also posted a bonus video to show you how you can use Bid4Assets.com to find out about California online tax sales, including how to register to bid at the sale, and how to get the tax sale list.

If you're already a member of TaxLienLady.com's Members Area, just go to www.taxlienlady.com/membersarea and put in your name and password. Then click on the teleseminars link on the left side bar to go to the page with all of the recorded webinars and teleseminars. The April call will be at the top of the page.

If you haven't yet taken advantage of the 30 day free trial to the members area, you can do so at http://budurl.com/30daytrial.

Many California counties have online tax sales, and many of them are in April, May and June. So don't miss out, get your free 30 day trial and listen to the replay of April's webinar and the bonus video to find out how you can start bidding on California tax deeds. Go to http://budurl.com/30daytrial.

Update to Tax Lien Investing Book Review: New Edition of The 16% Solution

Just after I wrote a review of three of my favorite books about tax lien investing, I got a call asking me if I’d like to review a brand new edition of one of them. A second edition of The 16% Solution, by Joel S. Moskowitz, is now in bookstores and I’ve just finished reading it. It’s been a while (more than 6 years) since I read the original version of this book – which was somewhat outdated then, so I wasn’t sure just how different the second edition would be from the first.

I was pleasantly surprised! With all of the hype and recent infomercials lately touting tax lien investing as a way to get rich quick, this book is very refreshing. Right from the beginning Mr. Moskowitz sets the reader straight, giving honest and straightforward information. I was really impressed with the forward to this second edition where he likened the chances of someone getting a property for pennies on the dollar from a tax lien to someone winning one million dollars from a one-dollar lottery ticket. Yeah it happens every now and then, but it’s not likely. And then he tells you what you can expect from tax lien investing – “super-high interest combined with safety.”

This book is divided into four sections. In the first section Mr. Moskowitz explains what tax liens are, why they are such a safe investment, and why now, more than ever before you need to include them in your investment plan. At the end of the section he has a chart that shows how tax lien certificates compare to other investments in terms of income and growth potential, risk avoidance, safety, and liquidity.

Section 2 talks about how to buy tax lien certificates; how to choose a state and county to invest in and how to choose the properties to buy tax liens on. It also covers bidding at the auction and buying over-the-counter and assignment liens. There is even a chapter on how to get local officials to help you do your due diligence (This doesn’t always work in every county, but it’s certainly worth a try).

Section 3 of The 16% Solution talks about how you get paid on a tax lien certificate and how to foreclose on the property. Mr. Moskowitz explains how a tax lien certificate is redeemed, how to foreclose on a tax lien, and what to do with the property once you foreclose on it. Section 4 talks about avoiding and managing risks. Mr. Moskowitz explains just what the risks of tax lien investing are and how to avoid them. That’s something that most tax lien investing “gurus” never tell you until you give them thousands of dollars for coaching. I recommend that anyone interested in tax lien investing read this book for this section alone. Buy this book and save your thousands for investing in tax liens!

Also included in the book are a couple of appendixes with helpful information. In Appendix I there is a chart of state laws for all of the tax lien states. Georgia is included even though it’s technically a redeemable deed state. This chart is a good tool, but remember, just because a state has laws that allow it to have tax lien sales doesn’t mean that they actually have any. There are at least a couple of states on this list that either have only a couple of counties or municipalities that have tax lien sales, or have hardly any properties available in their sales.

Appendix II has some more detailed information for 14 of the tax lien states (these are the states that have an interest rate of 16% or higher). Some of these states are covered more thoroughly than others. My guess is that the states that are covered well are the ones that Mr. Moskowitz personally invests in. The states that are covered thoroughly are: Arizona, Colorado, Florida, Georgia, and Iowa. Detailed information on the other states is lacking. If you are investing in one of the above-mentioned states or planning to invest in one of these states I recommend that you purchase this book. Also if you are planning to invest in tax liens on commercial or industrial properties there are helpful forms for avoiding environmental problems in Appendix III.

This book is great for beginner investors in tax liens, it does not have information about tax deed investing, but it does have detailed information for 4 of the more popular tax lien states, and one redeemable deed state, plus general information for the other tax lien states. It also discusses investing online and purchasing leftover liens. You can purchase this book at a discount on Amazon at http://budurl.com/vdns.

Tax Deed Investing on Steroids Part 2

In Part 1 of this series on tax deed investing, I introduced you to a strategy for cashing in on tax deeds without even going to the tax sale. In this article I’d like to answer some questions that you may have about the excess proceeds strategy that I introduced you to in Part 1. About a year ago, I did a very informative teleseminar interview with tax deed and real estate investing expert Cody Matousek. Cody divulged the “little known secret” of tax deed investing know as “excess proceeds.”

This seminar entitled “Cashing in on Tax Deeds Without Going to the Sale,” was the most popular teleseminar that I had by far. In fact we had over 200 people sign up for this call! Everyone was so excited about this little known method for making money on Tax Deed properties – without actually owning the property, at least, not for very long, that I got a lot of questions as well as some great testimonials regarding the teleseminar with Cody. Following are the answers to some of the frequently asked questions that we got about this seminar. You can find out more about this “secret” investing strategy at www.TaxForeclosureFortunes.com

Q1: How does it affect your credit if you buy a tax delinquent property and then let it go to tax sale (i.e. you don’t satisfy the delinquent taxes on the property)?

A: This depends on the state and county. Remember that the excess proceeds strategy does not work in every state. In most states property tax delinquencies, and foreclosures, are not reported to the credit bureaus. The counties simply to not have the wherewithal to report hundreds or thousands of delinquent property owners every year. You may want to check this out before you use this strategy. Just call the county tax collector and ask what happens if you’re delinquent with your taxes and your property is sold in a tax sale – do they report it to a credit bureau?

Letting a property that you own go to tax sale may affect your ability to purchase any other properties in that sale, however. In most tax deed sales, you have to sign an affidavit stating that you do not owe any property taxes in that county when you purchase a tax deed at the sale.

Q2: What about liens and judgments on tax delinquent properties? If you purchase a property before the sale from the owner, are you responsible for them?

A: Yes, you are responsible for any liens or judgments on a property that you purchase from the owner before the tax sale. If there is a mortgage on the property, for example, and you purchase it from the owner before the sale, you can be held responsible to pay that mortgage. You should do a title search on a property before you purchase it and stay away from properties that have mortgages or other liens on them.

Q3: How do you do a title search on a tax delinquent property? Do you have to hire a title company and get title insurance?

A: Although you should do a title search to find out if there are any liens or encumbrances on the property, you do not necessarily need to pay a title company to do this for you. Since you do not intend to hold on to the property and sell it, you do not need title insurance. You can either hire a title abstractor (these are the people who actually do the work for the title company) to search the title for you, or you can do it yourself. You search the title by going to the county Hall of Records (or where-ever the records are kept) and searching on the name of the owner or owners of the property. Any liens or judgments recorded in their name would attach to the property that they own.

Q4: Why would a person practically give their property away to someone they don’t even know?

A: Great question, and if this didn’t happen than this whole system of buying tax deed properties for pennies on the dollar – before the tax sale wouldn’t work. There are many reasons why someone would give you their property for little consideration. Remember you are looking for people that are just going to let their property go to tax sale anyway. They have already decided that they don’t want the property anymore, for whatever reason, and are willing to give it up. They don’t think (or they don’t know) that they can get anything for their property and you are going to offer them something for the trouble of signing over the deed. In many cases they have already left the property and it’s vacant, or they are living in another state and don’t want to be bothered with it anymore.

Q6: How do I find the owners of the property if county can’t find them to deliver the tax bill?

A: Look in the Tax Foreclosure Fortunes Manual for some links to free sites where you can look up hard to find people. There is also a reference to low cost service that you can pay for if the free sites don’t work.

Q7: Which states can I do this in?

A: Only deed states that award the excess proceeds to the owner of record of the property at the time of the tax sale. Keep in mind that you have be the owner of record at the time of the sale, which means that the deed needs to be recorded a couple of weeks before the tax sale. This can be difficult if the tax sale list is not published until 4 weeks before the tax sale. Another way to do this more efficiently is to use the delinquent tax role instead of the tax sale list. You can get the delinquent tax role at any time – not just before the tax sale, but you may have to pay the county to get it. Also you need to contact the right person to get this list.

Q8: How do I get the excess proceeds once the property is sold at the tax sale?

A: Some states will notify you of the excess proceeds and tell you what you have to do to collect it. In other states you may have to request the excess proceeds. It is helpful if you talk to someone at the county tax office before using this method of investing to find out what happens to the excess proceeds and what the owner of a property needs to do in order to collect them.

Q9: Can the owner of record on a tax delinquent property collect the excess proceeds even if there is a mortgage or lien on the property?

A: Each state handles this differently. Some states will notify the owner and all the lien holders of the excess proceeds. Some states give the lien holders the first right to the excess proceeds, and then if it isn’t claimed in a certain amount of time the owner can request it. Other states will give the owner the first right to the excess proceeds. Again, you can check with the tax collectors office before you use this strategy in any given state to find out what the rules are. You can also do your due diligence a head of time to make sure that there are no mortgages or liens on the property before you purchase it from the owner.

California Tax Deed Sales

I recently received an e-mail from a subscriber in California. He had paid to get a tax sale list for one of the counties in California. He got the list from the county, but it came too late for him to do his due diligence on any of the properties in the tax sale. His question to me was “where can I get the tax sale lists in time to do due diligence.” I happened to get his question as I was getting ready to go to San Francisco for personal reasons, but since I knew that there were a couple of tax sales coming up in that area, I decided to check out a couple of the California deed sales myself. In this article I’m going to let you in on the tools that I used to find out about tax sales in California.

First of all for those of you who are not familiar with tax sales in California, California is a deed state and many counties have online sales. Most of the online sales in California are conducted by Bid4Assets. You can sign up for free at www.Bid4Assets.com to get notified of upcoming online tax sales. Many of these tax sales do require that you put down a large deposit ($5000) in order to bid, but they do give you access to the list of properties even if you are not a registered bidder.

Some counties do a great job of providing the list of properties in the sale and property information, and some counties do not. The information given can vary greatly by county. Some counties will only provide the tax number of the property, a legal description, (which is impossible to decipher unless you’re a surveyor), and the minimum bid amount. Other counties will give you the address of the property and tell you what type of property it is and even tell you about any other liens, thus saving you a lot of time in doing your due diligence. Some counties will even provide pictures of the properties.

So what do you do when you find that the list only has minimal information and does not even give you the property address? There are two things that you can do when you find that the list that you get for free online does not supply all the information that you need. The first option is free, but will cost you your time, and is a bit tedious. Usually there is a link provided on the Bid4Assets web site to look up the assessment information. But you have to type the property ID number in for each property on the list and look each one up separately, and then transfer the information to a spreadsheet in order to keep track of it. I tried this for one of the counties and gave up after it took me an hour to research about 15 properties.

The second option will cost you some money but save you a lot of time. You can go to www.TaxSaleLists.com and purchase a detailed list, which most of the time will have all the information you need for the tax sale properties. There is one more option that I haven’t tried yet, but it may work for tax sales that are not held online. You could call the County Treasurer and ask if they have the information available either online or on a CD, and ask them if it includes the property owner’s name, and the address of the property. Those are the most important thinks that you need in order to do your due diligence.

Investing in Tax Liens: What if I’m in a Deed State?

Frequently I get asked this question: “I really want to start investing in tax liens, but I live in a deed state. Should I look into investing in tax liens in another state, or try to invest in tax deeds in my own state.” In this article I’ll give you what I recommend for investors want to invest in tax liens, but find that in their state they only sell tax deeds. It’s not a one-size fits all answer, it really depends on what your goals are and on your particular state.

You really have two options, either find a way to invest profitably in your state, or look at some of the online tax lien sales, you may even want to do both. First, find out what goes on in your state. Are there many deed sales? How often are the tax sales? How many properties are available and how competitive are they? You will actually have to go to some tax sales and see what they are like.

Some states just don’t have very much available, if that’s the case, you may want to try the online tax lien sales. Other states may be very competitive and properties may get bid close to market value. If that’s the case there is still a way that you may be able to profit from tax deed sales in your state. Some counties give the excess proceeds – that’s the amount that’s bid in excess of the minimum bid amount, back to the owner of the property.

Here’s how the excess proceeds strategy works in a nutshell. Instead of waiting for the tax sale you contact the owner of the property before the sale and see if they are going to let their property go for back taxes. If they have already decided to walk away from the property, perhaps they would be willing to give you a quitclaim deed to their property for a small fee. You record the deed with the county clerk a few weeks before the tax sale. Let the property go tax sale and after it is sold you apply for the excess proceeds.

This strategy only works in a few deed states that give the excess proceeds back to the owner of the property – not all deed states do this. So before you try this strategy check with the county tax collector or county treasurer and make sure that the owner of record of the tax delinquent property can apply for the excess proceeds from the sale. Also you do have to check for any other liens, since you are buying the property from the owner and not purchasing the deed at the tax sale, you will be held responsible for any other liens on the property.