The Tax Lien Loophole
Tax liens can be an excellent investment. And, in the rare cases when an investor actually does get a bargain property directly from a tax sale, it’s usually the result of a successful tax lien purchase.
In the event one of your tax lien investment pays off (the homeowner pays the back taxes along with interest to redeem your tax lien), it’s likely that you’ve earned a handsome double-digit return on your money. However, it may surprise you that tax lien investments are COMPLETELY unsuitable for the casual investor or the investor with only a few thousand dollars to invest.
Here’s why: Contrary to popular belief, tax liens ARE NOT guaranteed by the government. They are guaranteed only by the underlying property with delinquent taxes. If your lien does not pay off, and you receive a property that is worth less than you paid for the lien and expenses, you lose money!
And in many areas, 50% or more of the liens offered at the sale are against completely worthless properties. So, this means that you must research all the properties offered at the sale to make sure they are going to be worth more than your ultimate investment in the lien.
If you try to “cherry pick” the properties on the sale to cut down on research, there is a good chance that you will only have the opportunity to buy a small fraction of those liens. Even if you invest $50,000 in liens, you would stand to make $5,000 in interest or so, and this barely reimburses you for the time you had to spend researching and the risk you took with your money.
Better than a hole in the head I guess, though! A few more things to be aware of: You will need to perform legal noticing to the owner, and pay a lawyer to do so, for your lien to remain valid. You will have to wait many months to several years to get title to the property if your tax lien is not paid off. Ironically, if you do a good job in your research and buy only liens with solid collateral behind them, you will likely obtain NO properties – 95%+ of quality liens that are purchased at a good price, pay off.
Let’s avoid all that investment, waiting, risk, research, legal work, and other terrible stuff. Here’s how you’ll profit in a tax lien state ANYTIME without doing any of that:
The Tax Lien Loophole
1. Do a public records request for a listing of all the liens that were ALREADY SOLD IN THE PAST, and NOT REDEEMED.
2. Find out how long the owner has, to pay off the lien (the redemption period), and see which owners are about to run out of time!
3. Then contact them. A lot of them don’t even realize the deadline is approaching! Or, like the tax deed sale property owner, they’ve given up on raising the taxes and they’ll take something instead of nothing.
4. Get out your list of cash buyers, hustle a few over to the property, and put a deal together. No fuss, no muss!”
{ 26 comments… read them below or add one }
I don’t know anything about this, But I want to learn.
at what point in a deal that you need to hire a lawyer, in buying a tax lien certificate?
In some tax sales, you have to put out an official notice to all parties
involved including the owner, in as little as 30 days after buying the
certificate. In other area, you may not need a lawyer’s involvement for
much longer.
One of the many reasons I suggest using the strategies above to get properties, NOT buying tax lien certificates.
hello, i’m a lil confused, but this sounds to easy to be tru../.
step 3 contact the owner, or the lein holder. then I make an offer to buy, is that right..?
Pretty much contact the owner, not the lienholder. But yes, all it takes is for you to get out and do it!
I might have four propertys this year from tax lein hope to flip fast and with out waiting to clear title
I wish you luck! They always paid off last-minute for me.
How are you going to sell them without a quiet title? To someone who
understands the situation, and will quiet the title themselves?
Have you heard of tax title services? They’ll insure title (expensive) without quiet title on many tax sale properties.
http://taxtitleservices.com/
Not to jinx you, but what are you hoping to get? How long have you been waiting?
I am on deedgrabber site but cant find where i need to click to order your course how do I get it?
Go on the homepage http://deedgrabber.com. There is a slideshow there with a +1 button, and further down the page there are 10 more, one with each post.
Hello my name is Larry I have been buying propertys for years had a heart attact,and stork the same night. I did survrive them and now am getting back in the busness. I am in this class to try to improve my old time straterg As anybody can tell I cant spell worth a crap. but have comfidence I can get in the bussness of buying and selling the tax propertys.
i would love to know how you do leins but with so many peaple out here that said they can show you how to do this some of them are not telling you the truth about so how do we know the good from the bad
I don’t “do” liens – I show you how to get properties that are tax delinquent, any time of year without sales (from the owner, actually). Since you don’t have to invest much to either get started on my material or even do a few deals, you really don’t have too much to risk.
If you aren’t willing to risk a few hundred dollars to buy my ebook and do some marketing, then I’m not sure what to tell you. Good luck.
Hey Rick!
I am looking to add tax delinquents to our mailing campaign…..already do absentee and probates.
I am strictly a wholesaler and didn’t know if tax delinquents lend themselves to good wholesale deals?
Tara Brown
Des Moines, Iowa
Yes, they are excellent for wholesale deals and that’s all I usually do with them myself.
Rick this is CRAZy….I’ve been researching various online experts selling “how-to” info on tax lien investments over the last few days…some are charging $1500 (sean higgins/tony martinez, u.s tax lien assoc), others are charging peanuts ( dustin hahn $27) and one other guy was charging a one time fee for $17….then I remembered…..I’ve been getting e-newsletters from you for over one YEAR now after subscribing and FORGOT about them…..you’re the ONLY one who told me that it isnt as simple as buying the tax lien, collecting your interest rate and then filing foreclosure after the redepmtion expires if the lien isnt paid off to get your brand new “free and clear” property….so now that I’ve come back FULL CIRCLE, the universe is trying to tell me something and i’m finally listening, 395 days later…….FORM an INVESTMENT GROUP made up of a close 5-10 person inner circle of family and friends, GET RICK’S COURSE AND DOMINATE THIS NICHE WHILE THERE HAS NEVER BEEN A BETTER TIME IN HISTORY….they’re all excited, can’t wait to jump start this baby…thanks for the HONESTY about the tax lien world, it made all the difference….and when we get our first check, could you show it on the video, thanx again RD, you KICK MAJOR ASS
isnt this the same info you are selling in your free and clear foreclosures system without all the bells and whistles.? I really want to learn about this but I dont have enough money hardly for your go ahead and be A deed grabber book and I know I cant afford the free and clear foreclosures system. I would really like to get started on this but I am disabled and have A hard time saving money but I like the fact that I may be able to do deedgrabbing from home. But that money for your book may take me A long time to save up.
I suppose…a do-it-yourself version.
Hi, just attended a webinar that sold the system plus support-costly- for me anyway, they provided support, scripts for property owner and letter template to mail as well as the purchase agreement & forms needed. does any of your programs provide this info, if so which one, if not why not, thanks
Much of that is available in the DeedGrabber ebook or Study course, found in the Products section.
Rick,
I am only interested in going direct to the free and clear homeowners that are delinquent in taxes and have no time left and are no doubt going to tax sale.
It seems the key here is how to get a list that is short enough to work with that has been weeded out by time. Tie up the property with a lease option or some kind of contract and quickly sell it to an investor for a profit.
Is there any information you have for sale other than the whole system you are selling that would isolate this process
Thank You,
David
Let the owners weed themselves out. Too much upfront work trying to make sure free and clear.
Just get a hold of as many as you can, and get straight to the point of whether they have equity or not.
You’ll talk to a lot more sellers, including those with free and clear properties, than if you spend most time deciding who to contact. Just takes a second to chat and hang up with them if not a deal.
My husband and i are interested in doing this as extra income, however right now we are only looking to find a property for our enjoyment and raising our children. What do you suggest for someone who isn’t looking currently for investment property but for themselves?
Unfortunately I only rarely run across property that would be suitable for this, though I sometimes do. Most property needs to be resold to someone who can handle it or has a particular need for it, it’s not really in our control what kinds we get when. So you could run the business to make extra income and wait for that “right” property to come, and keep it.
If you have some idea what you want, you could also keep an eye out for just that at upcoming tax sales. Depending on what you want (some beautiful land, far from an urban area for example) you may even be able to find a good deal on that AT the tax sale.
hi rick.
are there any state u should stay out of and what if the house are up for sale by real state agent
If the house is for sale with an agent, I usually skip it. There are no states to “stay out of” but make SURE you know what you’re doing if you are going to let someone stay in the house that you are buying. I know IL, FL, and WA among others have strict laws that regulate this practice. I don’t know of any laws that restrict buying a vacant house that is not the seller’s residence.
I would love to find out how to buy homes at CHEAP CHEAP prices & double my money. How do i do it?
I don’t know how you double your money – that would be a bad return. Maybe 10-100X? I like those numbers better.