Tax Sale Investing – 3 way to buy online

Buying tax sales online is beginning to be the new norm for tax lien certificate investors.

Many people still have the misconception that investing in tax liens takes a lot of time because you have to travel to the courthouse steps for a live auction.  While live auctions are still prevalent a growing number of counties a starting to sell tax lien certificates online.

When looking to purchase online tax liens you will find 3 different ways to buy; Silent auction, live auction and a straight sale.

A silent auction is very similar to eBay.  The auction starts and ends at a specified time.  There is a minimum bid and bidding continues until the clock runs out.  At the end of the time the highest bidder wins.

A live auction takes place very quickly.  It is a live auction with bidders in person and online.  The lien is sold on the spot to the highest bidder.

A straight sale takes place when counties have tried to auction the lien and no one has purchased it.  These liens can be purchased without competition at anytime.  You simply select which ones you want to purchase and pay.

To get started investing in tax lien certificated you never have to leave the house.  In fact you can start right now.  Bid4assets.com is a great place to invest in tax lien certificates online.

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Tax Lien Certificate Investing – Get started for under $100

Tax lien certificate investing will create safe returns and build wealth.  One of the best things about it is that you can invest for as little as a $100 or less.

The fact is with just a few hundred dollars to invest you could pick up some great deals.  The key is to come up with a game plan.  Figure out how much you want to invest in tax liens and then begin to research which state you want to invest in.

Once you have a game plan you can begin to research when the tax sales are held and obtain a list.

Go through the list and pull out all the liens that are under $1000.  You will be pleased to know there are plenty to choose from.

With over 3000 counties in the country and thousands of liens priced under $1000 you will soon realize, anyone with any amount of money can begin tax lien certificate investing.

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Tax Lien Investing – Turn $67.12 into $22,500

Tax lien investing is a great way to earn a guaranteed double digit return, but sometimes it can be like winning the jackpot.

I always heard “It takes money to make money.”  Well that may be true, but in some cases it doesn’t take much.  Try 67 bucks.

Many people think you need a lot of money to invest in tax liens.  Not true.

One tax lien investor bought a tax lien on some land in Oklahoma for $67.12.  When the taxpayer didn’t redeem or pay his taxes, which happens about 1 time out of 10, Bob got the land.

Bob was able to turn around and sell that land for $22,500.  After a few hundred dollars in expenses Bob was able to pocket over $20,000.

That tax lien certificate ended up being just like a lottery ticket.

What would you do with an extra $20,000?  Pay off some debt?  Take a vacation?

Now this doesn’t happen every day, and it took a little bit of work.  But it’s nice to know that when you are buying tax lien certificates and locking in double digit returns, you are also buying a lottery ticket.  You have a 1 in 10 chance of it turning into a deed, and big profits.

Just another example of the awesome benefits of tax lien investing.

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Buying Tax Liens – 3 ways you can beat the “big boys”

Buying tax liens is a great way to earn double digit returns on your money.  Some people are excited by the idea of getting a big return from a tax lien certificate but are doubtful that they can compete against the big guys.

I have great news for you.  In many areas the rules actually favor the “little guy”.  The key is to “think small”

There are 3 areas where the little guy can win.

• Smaller counties with smaller inventory:

The institutional investors can only go to the biggest counties in the country.  The smaller counties do not have the inventory to make it profitable.  Everything they do is going to cost them money. And they have limited resources with staffing.  So they stick to the largest counties.

• Lower priced liens:

They have to pay someone to research all the properties and go to the auctions.  They have overhead and a limited staff.  So they are looking to buy large or high priced liens.  That leaves liens prices under $1500 off of their list

• Certain auction rules:

There are a lot of differing bidding rules and some favor the small investor.  The method that “bids down the interest rate” bidding method is one.  In this auction, the price of the lien stays the same but the interest rate gets bid down.  An institution cannot compete by throwing more money at it.  If you are willing to take 10% and they are not you win.

So by knowing the system and picking your battles the small investor succeed buying tax liens.

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Tax Lien Certificate Risks

Tax lien certificates by far produce the highest returns available with a very low risk.  Frankly, if you can find a return rate of 16% to 24% that has absolutely zero risk, please let me know, because I don’t think it exists.

Sure a certificate of deposit is guaranteed to pay you without risk but the returns of 1 to 2% won’t even cover inflation.

When you purchase a tax lien certificate, you will get paid all your money plus a penalty if the tax payer redeems the property.  However in a small percentage of time they don’t.

The risks are as follows:

1. They pay off right away and you get a smaller return than you were planning on.  In this case you will not loose any money, and you will be able to re-invest again.
2. The owner files bankruptcy and the court may rule that you will not get your interest.  You still get your original investment back however.
3. The biggest risk is that you get the property for what you paid for the tax lien.  That will not be a problem if you did your homework, because it will be worth 3 to 5 times what you paid for it.  If you did not do your homework, you could be stuck with something that is worth nothing.  Worse yet if you invest in commercial property, there may be some environmental liability.

So the lesson here is, even if things don’t go as planned, with a little homework you can’t go wrong.

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Tax Deed Investing – A Great Cash Flow Strategy

Tax deed investing is a great way to buy the deed for a property, free and clear of any mortgage for just pennies on the dollar.  The properties you pick up can be anything from a house to commercial property to vacant land.

With the latest boom in development and the subsequent bust, many would be sub-divisions are abandoned by the developer.  This of course leave the taxes unpaid.  With a little research you can buy land that already has utilities and roads.

My motto is that you can sell anything if the price is right.  So who wants to buy land to build a new house?  Well if the price is right and terms are easy enough the answer is “enough to make a profit.”

Most of these lots can be purchased for less than $1000.00 and you can sell the land with owner financing for a small down and low monthly payments.

Step one : Buy land in a development with utilities

Step two:  List the land for sale on craig’s list, ebay and the classifieds.  Ask for a down payment (equal to or greater than what you paid) plus monthly payments.

Step Three:  Repeat the process. Use the down payment money to go buy more.  After  a year you could easily have 10, 20, 50 properties or more “rented” out.

Arizona is a great place to do this, as well as Nevada.

Improved lots go for less than $1000.00 and have a value of $7,000 to $10,000.  If you can pick up a parcel  for $500 you can turn around and sell it with a $1000.00 down and monthly payments of $100 a month for 84 months.

With this strategy you get your money back today, plus build a monthly income.

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Tax Lien Sales – Bidding Methods

When looking to invest in tax lien certificates and tax deeds you will be purchasing them from auctions.  These auctions can take place live or online but can involve multiple types of bidding methods.  It is important to know the different types of auction styles so that you are prepared.  Contact the county that you plan to purchase tax lien certificates from to learn which bidding method is used because they can vary from county to county.

Tax deed sales are pretty straight forward.  The parcel is sold to the highest bidder.  The opening bid is normally the amount of back taxes owed.

Tax lien certificate auctions can have  vast and varied bidding rules.

Here is a short list

• Bid down the percentage of ownership
• Lottery
• Round robin
• Bid down the interest rate
• Premium bids
• Bulk sales

So it’s important to do your homework.  Know what the bidding rules are and then ask how it works.

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Tax Deed States

19 states sell tax lien certificates and the rest of the states sell tax deeds.  (5 states are hybrid states, meaning they sell both tax lien certificates as well as tax deeds).  If you want to pick up properties for pennies on the dollar, tax deeds are a great way to go.  At a tax deed auction the ownership of the property, free of any mortgage, is sold for the back taxes.

If you want to invest in tax deeds, you will need to know which states are tax lien certificate states.  Once you know those states you can then find out when they conduct the sales and proceed from there.

These are the tax deed states:

Washington, Oregon, California, Idaho, Utah, New Mexico, North Dakota, South Dakota, Minnesota, Kansas, Oklahoma, Arkansas, Wisconsin, Michigan, Virginia, North Carolina, Maine, Massachusetts, New Hampshire, Delaware and Alaska.

There are five other tax deed states, but with a twist.  These states sell what is called “redeemable deeds”.  The deed is sold and the owner has a pre determined redemption period.  If the owner redeems or pays off the taxes the investor will get the penalties and interest and if not, the investor gets the property.

Redeemable states are as follows:

Texas, Rhode Island, Tennessee,  Georgia, and  Connecticut.

Some states are “hybrid” states, meaning they will sell both tax lien certificates as well as tax deeds.  The hybrid states are Nevada, Florida, Ohio, Pennsylvania and New York.

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Tax Lien Certificate States

Not all states sell tax lien certificates.  Some states sell tax deeds.  This just means that they auction the ownership of the property, free of any mortgage, for the back taxes.

If you want to invest in tax lien certificates you will need to know which states are tax lien certificate states.  Once you know those states you can then find out when they conduct the sales and proceed from there.

These are the tax lien states:

Vermont, New Jersey, District of Columbia, Maryland, West Virginia, South Carolina, Kentucky, Indiana, Illinois, Iowa, Missouri, Alabama, Mississippi, Louisiana, Nebraska, Montana, Wyoming, Colorado and Arizona.

Some states are “hybrid” states, meaning they will sell both tax lien certificates as well as tax deeds.  The hybrid states are Nevada, Florida, Ohio, Pennsylvania and New York.

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Tax Lien Investing Basics

Many people have never heard of tax lien certificates so let me go over some tax lien investing basics.

First off buying tax lien certificates is by far the safest and fasted way to get double digit returns from your investment dollar.  A tax lien certificate is secured by real estate but has a guaranteed by law return of 16% up to as much as 24%

Tax lien certificates were created because the county government needs tax revenues to pay for everything from schools to fire departments and real estate taxes are a large part of that revenue.

When homeowners don’t pay their taxes a shortfall is created for the local government.  If there is too much of a shortfall it could mean not being able to make payroll for the teachers at your school.

Therefore to collect the taxes and meet their financial obligations an investor pays the tax money to the government in exchange for a guaranteed rate of return.  This is documented at the courthouse and the investor receives a piece of paper summarizing all the details on a tax lien certificate.

Here is how it works.

A late taxpayer will have a lien placed on the property called a tax lien for the amount of back taxes owed.  The delinquent homeowner will have a predetermined amount of time to pay the late taxes before losing the house to a tax lien foreclosure.  This is called the “redemption period”.

During the redemption period the homeowner can pay the back taxes plus a penalty.  This penalty varies from state to state but is fixed by law.

When the homeowner pays the county the investor will get all their money back plus a guaranteed rate of return.

If the redemption period expires and the homeowner fails to pay what is owed on the property the tax lien certificate holder will then own the property free and clear of a mortgage.

Historically 90 to 95% of the time tax lien investing does not involve getting the property instead of the cash.  However, it almost always means a bigger return.   Many consider this to be a bonus.

So now you know the tax lien investing basics

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