Here’s a recent question that I got from Mark in Ohio:

I just was curious to see what your thoughts were on what to do with the $8k?I have left in my IRA/llc I bought a rental with the other $17k and this part is just sitting there. I thought about doing a small loan but also about buying tax liens.?Any thoughts? I have never bought them before but have always been interested. I?live in Ohio.

Answer :

First I’d like to congratulate Mark for have a self-directed IRA, and it sounds like he has one with checkbook control, which is great! Now he is in control of his retirement cash and can invest it what he chooses instead of only in the traditional investments like stock mutual funds or bond funds. He is securing his future by investing in real property and doesn’t have to worry about the ups and downs of the market.

Now of course I would recommend that he invest the remaining amount in tax liens or tax deeds. Generally I would recommend liens because you can usually purchase tax liens with very little money compared to what you have to pay for deeds. Remember that the price of the deed gets bid up at the tax sale and most deeds on houses are going to go for more than $8,000.? The difficulty for Mark is that he lives in Ohio, which is for the most part a deed state. Although a few counties in Ohio do sell liens, they bundle the liens in large packages and sell them for millions (or even billions of dollars to institutional buyers. So Ohio is not a good place for the individual investor to buy tax liens.

Mark has a couple of options. If he wants to invest in tax liens, the 2 closest tax lien states to him are Indiana and West Virginia. Indiana even has a handful of counties that have online tax sales. Both of these states have tax sales going on now through November. Premium is paid for liens in both of these states, but in West Virginia no interest is paid on the premium amount, so I would assume that low premiums would be paid at their tax sales. Since West Virginia has no online tax sales you would have to go there to participate in the tax sale. These 2 states are your best options for tax liens.

Another option for Mark if he doesn’t mind owning the property is to participate in the Michigan tax sales. Many of the Michigan tax sales are online.?Most of them are conducted on the state tax sale website at http://www.tax-sale.info. But there are a couple on http://www.Bid4Assets.com. Tax-Sale.info provides a lot of information on the tax sale properties including property descriptions, pictures of the properties and sometimes additional comments and extra information.

It’s best to stick to the counties on the western side of the state, since there has been a trend for the last few years of the population moving out of the eastern part of the state to the west. The North western part of Michigan is a popular vacation spot and is a good area to invest as well. Also you?ll find that some of the properties in these sales have no minimum bid. Understand that?if you are going to bid online and not in person, that you will have to have a $1000 deposit and your bids submitted at least 48 hours before the tax sale.

For more information about bidding online for Michigan tax sales, I have a course that covers this called Online Tax Deed Sales. You can get more information at http://www.OnlineTaxDeeds.com.

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