How Can You Beat the Competition at Tax Sales?
If you’ve been to any tax sales lately, online or offline, you know that the competition is pretty stiff and that the institutional buyers are making it more difficult for the individual investors to win any good liens. Remember the old saying “if you can’t beat ’em, join ’em?” One way that you can beat the competition from fund companies at the tax lien sales is instead of bidding against the big companies — join one.
The Fund Advantage
The bigger players have a huge advantage over the little investor, especially at the online auctions. Some of the online auctions allow bidders to have sub-accounts. But you must have a tax ID number for each sub-account. That means that these huge funds can use the social security numbers of all of their members and have hundreds, or even thousands of bids on one property. If there are many bids all at the same lowest percentage bid, the winner is chosen randomly. By having a number of bids in at the lowest rate they are willing to accept, the institutional buyers increase their chances of winning the bid – especially compared to the individual investor who doesn’t have any sub-accounts. So instead of competing with these companies, why not give one of them your money and share in the profits?
That is essentially what you do when you buy shares of tax lien investing fund. The problem though, with the larger tax lien investing funds is twofold. First they usually have a very large minimum investment $50,000 – $100,000, and secondly, their management fees can also be quite large, thus cutting into your rate of return.
Private Investment Funds
Four years ago I stumbled onto a private tax lien investing Fund Company. This company is small enough that it doesn’t have a huge minimum investment or inflated fees. But they do have a proven track record. I started investing with them in 2008 and then I investing in another one of their funds in 2010. And I’ve been recommending them to my members and tax lien coaching clients. They have a new fund offering around once a year.
Each new fund is capped at 2.5 million dollars. That means that once they reach that amount the fund will be closed to any new investors. But that’s not all, there is also a closing date for the fund, even if they don’t reach their maximum capital investment amount, the manager will close the fund to new investors on after the fund closing date.
It has a total investment horizon of 5-6 years with targeted double digit annualized returns over the life cycle of the fund. There are a limited number of unaccredited investors spots (35) available on a first come, first served basis once the fund is opened.
Members of Tax Lien Lady’s Members Area are the first to find out when a new fund is open. If you would like to find out more about Tax Lien Lady’s Members Area and the other advantages to joining, go to www.TaxLienLady.com/MembershipMain.htm.
Follow Us!