Tax Lien Investing Scenario #1: Buy the Liens or Deeds

Hey I wanted to review some of the things we learned at the workshop on Saturday.

2014-06-14 09.43.32

Tom did not go into the mechanics of how to buy a tax lien or deed as that will be different in every state and county, but he covered ways to profit from the sale.

One opportunity is to buy the Lien or Deed.

This is a strategy to earn a return on investment when the property owner comes back and pays their taxes, which according to Tom is 97% of the time.

Let’s look at how this works.

Property owner does not pay their taxes and the county needs the money to maintain the county.  So the county asks people like you and I to come in and pay the taxes on behalf of the property owner in exchange for a lien on the property.  The property owner pays their taxes, and you and I get paid with interest.  In other cases they might sell a deed subject to a redemption period.  If the property owner pays the taxes during the redemption period, you and I again get paid with interest.

What is interesting to note is that this interest is not exactly a straight annualized interest.  Let me explain.

For example the home owner owes $350 in taxes.  You buy pay that lien and the county says you get paid 10% for your troubles when the home owner pays off.  So if for example the home owner pays off the next day you get your $350 back, plus 10% or a whopping $35.  So the sooner the homeowner pays off the faster you make your percentage.

If the home owner does not pay, the county will then foreclose on the property and you get the house.  Or if it is a deed, you already own the house, you are just waiting out the redemption period.

But there are some cool strategies that Tom outlined that could make you a lot more than $35.

The scenario he outlined sounded excellent.  He found a condo project in Florida in a high rise on the beach with quite a few unpaid taxes and he purchased them for next to nothing . . . about $199 each.  In this county in Florida, Tom explained they have a bid down auction meaning the bidder trying to buy the lien offers lower and lower interest that they want, the lowest interest wins.  So he bid zero percent, meaning that if the person paid their taxes, he only got his money back.  Not too sound?  Right? .. . . well he went on to explain his strategy.

He looked for units on the ocean side with a view.  He bid zero on purpose so he could get the ax deeds.  He then offered to sell these tax liens on a few online auction sites, stating that it was highly unlikely that the person would get the property, but if they did, they would be getting a high end condo unit in a high end complex with an awesome view.  And people paid him in some cases over $1000 to buy the certificate, all in a gamble that the property owner might not pay the taxes and the lien holder would get the property.

The buying of liens and deeds for an interest rate is a can’t loose proposition, as long as you do your home work.  Tom says to always buy a lien with the idea that you might eventually end up with the property.  So look at the property, the repairs needed, and the cost of the lien and your profit, just like if you were investing in House.  Then if you do end up with the house you are good. . . in other words, don’t buy a lien or deed in this strategy on a property you would not want to end up with, because you might just end up with it.

Note, that Tom is holding a Bootcamp in Tampa this week end – June 21st & 22nd.  He offered this bootcamp, along with the home study course, his training and support  dashboard and a ton of other bonuses for $2397.  He asked $1200 now and $1197 after the event. . . if you wanted to attend this event or find out more about it . . Download Sales Flyer that you can email or fax in . . note that to attend the event that they only have one seat left, or you can opt for a live stream or just the Elite Tax Sales Training Course.