Purchasing Tax Liens – Everything You Need To Know

Posted on July 29, 2011 by Joanne

Alright, so I can’t cover everything there is to know about purchasing tax liens in this article but I can give you what you need to know to get started.

What is a Tax Lien Anyway?

First let’s start with understanding just what a tax lien is. When property taxes are delinquent, the government can either sell your property right out from under you – that’s a tax deed, or they can sell the delinquent taxes to an investor, giving you extra time to pay them, and giving the investor the interest and penalties that you would normally pay to the taxing district.

Why Would You Want A Tax Lien?

Depending on the state, the interest collected when the lien redeems (is paid off) can be anywhere from 8% to 36% per annum. This certainly beats the interest that you get in a CD. Although the money you invest in a tax lien is not guaranteed by the FDIC, the interest rate is guaranteed by the government, and your investment is guaranteed by the property. It’s called a “tax lien” because there is a lien put on the property for the tax amount – which is really the amount of taxes owed plus penalties accrued up to the date of the tax sale.

Doing Your Due Diligence

Because the lien is guaranteed by the property, it makes sense that you should do some due diligence on the property before you purchase a lien on it. Since in most states a tax lien is in first position (it comes before a mortgage or other non-governmental liens), a title search is not necessary, and could cut into your profit if you did a title search on all the properties that you intend to bid on. But you do want to make sure that the property is worth a few times what you will pay for the tax lien. You need to check the value of the property. You should look at the tax assessment data for the property and physically look at the property to assess its value and the desirability or lack thereof of the area where the property is located.

This is the minimum due diligence that you need to do for residential properties. I don’t recommend that new investors bid on commercial properties or vacant land. But if you do decide to bid on these types of properties, you will have to do some more checking before purchasing a tax lien. You can check the state environmental web site and make sure that there are no known environmental problems with the property. I would also check with the zoning department to make sure that the property is zoned correctly for what it’s being used for, or that if it’s vacant land it can be built on.

After that, you want to make some kind of determination of its market value before bidding on a property at the tax sale. You’ll also have to know just what is being bid at the sale. Is the price of lien bid up (premium bid) or is the interest rate bid down, or is something else being bid. You’ll have to know the bidding rules and procedures and the procedures for registering to bid at the sale. Some counties require that you register way ahead of time and that you give them a deposit before you are allowed to bid.

Other Things You Need To Know

You’ll also need to know how and when you are expected pay for any successful bids, and what is conveyed to you when you are the successful bidder. Will you receive the tax lien certificate and need to record it with the county clerk? Or will you simply receive a receipt of all your tax liens and will the recording be done for you? Will you have to pay the subsequent taxes until the lien redeems, and what are the procedures when the lien redeems? What procedures will you have to follow to receive the deed if the lien doesn’t redeem and is there a time deadline for you to follow them?

Because in each state the rules and procedures for purchasing tax liens are different, I cannot give you a step-by-step procedure in this short article, but I can tell you what it is you need to know. You can fill in the details by asking the tax collector, county treasurer, or whoever is responsible for conducting the tax sale. You can also get more detailed information and answers to your questions about purchasing tax liens in the Members Area of TaxLienLady.com at www.TaxLienLadyMembers.com.

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Tax Lien Investing Basics: The Difference Between Tax Liens and Tax Deeds

Posted on July 26, 2011 by Joanne

So many new tax lien investors don’t know the difference between a tax lien and tax deed.

They’ve heard that tax liens are a great investment and that you can get the property with a tax lien. So they confuse tax liens and tax deeds. For those of you who think that buying a tax lien is a good way to get property, you’re wrong.

Tax Liens

Tax lien investing is not a good way to get property for back taxes. When you purchase a tax lien, you are not purchasing the property. You are simply paying the property owner’s taxes and getting the interest and the penalties that the government would normally collect. One of the reasons that tax liens are such a good investment is that if the lien is not redeemed within a given amount of time (this is the redemption period and varies with the county and state that the lien is purchased in), then the lien holder can foreclose on the property.

It is very seldom that a tax lien on a good property will not redeem. So the lien buyer almost never gets the property, unless the lien buyer specializes in buying liens on vacant land, or properties that have problems, or unless the lien buyer doesn’t do his or her homework and buys liens on junk properties. Tax lien investing, while it’s a great way to invest your money at a high return, is not a way to buy properties for a fraction of their value.

Tax Deeds

What’s different about a tax deed is that when you purchase a tax deed you are actually purchasing the deed to the property, not just a lien. When you are the successful bidder at a tax deed sale, or if you purchase a tax deed directly from the county, you are actually purchasing the property and will receive some sort of deed to that effect. Usually it is a non-warrantee deed. In most deed states (but not all of them, there are a couple of exceptions), the property is conveyed free of any liens, but there is no warrantee on the title. The title may have to be cleared before title insurance can be issued on the property, and the tax deed buyer may have to evict any inhabitants, but the property reverts to the deed buyer once the deed is recorded.

Redeemable Tax Deeds

Now I don’t want to confuse you, but there are a few states that sell redeemable deeds, and in these states the deed does not actually revert to the tax deed purchaser until the redemption period is over and the deed is not redeemed. It’s somewhat in-between a tax lien and tax deed, in that you’re actually purchasing the deed at the tax sale, but the previous owner has a period of time to redeem the property. There are usually steep penalties when redeeming these deeds that go to the investor, so redeemable deeds are a good investment for the purchaser either way. Either they come away with the property or get a great return on their money.

For more information about which states sell liens, which states sell deeds and which states sell redeemable deeds see the online home study course Tax Lien Investing Basics.

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Monday Motivation: Success Factors

Posted on July 25, 2011 by Joanne

I read a great article to today by Mary Ellen Tribby, in her Working Moms Only newsletter entitled “Eliminate The Jealousy Factor And Success Will Follow.” The article was about how some people reacted to a story on USA today (online) about Ann Curry, a very successful working mom. The story was about how she makes her successful career and family life work, but the feedback and comments from the story?exuded jealousy and resentment.

Instead of following along, Mary Ellen decided to her own research into what lead to Ann Curry’s success. She found that Ann had studied and worked hard to achieve her success and as Mary Ellen put it, “was not born with a silver spoon in her mouth. She went on to she had noticed certain traits that successful people exhibit that are in contrast to certain behaviors that less successful people display. She published a chart of these traits in her article that I thought was very helpful. In reading her chart I could see that I was only halfway there myself. I was only exhibiting the some of the successful traits behaviors and still doing some of the things that do not lead to success.

You can read Mary Ellen’s article see?her “Success Indicator Chart” to see how many successful traits you already have and how?what non-successful behaviors you?have yet to change on her blog at http://www.workingmomsonly.com/issues/eliminate-the-jealousy-factor-and-success-will-follow/

Have a great week,

Joanne

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How You Can Profit From Tax Liens

Posted on July 21, 2011 by Joanne

“Tax Certificate Sales: The Secret of the Rich That Will Grow Your Wealth,” is the new free report that will show you how you can profit from tax lien investing.

This report covers the basics of tax lien investing as well as some advanced strategies for making more money on your tax liens and deeds and also ways to profit from tax delinquent properties without going to the tax sale or having to do any research on tax sale properties.

The report is divided into 2 parts. Part 1, “What is Tax Lien Investing And How to Get Started,” covers the basics of tax lien investing. This section of the report answers the questions “What is tax lien investing anyway and why is it such a good investment,” what is the difference between tax lien and tax deed investing,” and “what are some of the misconceptions about this type of investment.” It cuts through the hype that’s out there and gets right to the truth about what you can expect and discusses if this is for you or not. It also gives you 5 simple steps that you can follow to build your own profitable portfolio of tax liens or tax deeds.

In Part 2, “Beyond The Basics of Tax Lien Investing,” you’ll learn 8 advanced strategies for making money with tax delinquent properties. You’ll also learn which strategy is the easiest way to make money in the shortest time, and reason why even if you were unsuccessful at other real estate investment strategies, tax lien investing may work very well for you.

The report is available for free for a limited time at www.ProfitFromTaxLiens.com

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Monday Motivation

Posted on July 17, 2011 by Joanne

Your Life Is A Reflection Of You

A son and his father were walking on the mountains. Suddenly, his son falls, hurts himself and screams: “AAAhhhhhhhhhhh!!!” To his surprise, he hears the voice repeating, somewhere in the mountain: “AAAhhhhhhhhhhh!!!” Curious, he yells: “Who are you?” He receives the answer: “Who are you?” And then he screams to the mountain: “Answer me!” The voice answers: “Answer me!” Angered at the response, he screams: “Coward!” He receives the answer: “Coward!” He looks to his father and asks: “What’s going on?” The father smiles and says: “My son, pay attention.” Again the man screams: “You are a champion!”? The voice answers: “You are a champion!”

The boy is surprised, but does not understand. Then the father explains: “People call this ECHO, but really this is LIFE. It gives you back everything you say or do. Our life is simply a reflection of our actions. If you want more love in the world, create more love in your heart. If you want more competence in your team, improve your competence. This relationship applies to everything, in all aspects of life. Life will give you back everything you have given to it.”
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YOUR LIFE IS NOT A COINCIDENCE. IT’S A REFLECTION OF YOU!
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Affirmations:
I love people
I love to serve others
I make a real difference

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Register for a 14-day FR’EE Trial of the Daily PEP-Talk at http://www.BeMotivatedToday.com/71058. Watch a short video and download an e-book on releasing your potential and a report on a unique way to help you create a passive income that actually works. Visit http://www.BeMotivatedToday.com/71058.

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