Buying Tax Liens

Recently I got a question from someone who was looking into getting involved in tax lien investing in the state of Indiana. She was surprised at the amount of money being paid for tax lien certificates and was wondering if it was worth it. It seems like the people that she was getting involved in tax lien investing with were making some of the typical mistakes that new investors make. They were buying liens on “junk property” and she could not see the benefit to this. Also, she witnessed institutional buyers bidding large premiums for tax liens and couldn’t understand how they are making a profit on their investment.

The reason for her confusion has to do with the type of bidding method used (premium or “over-bid”) in Indiana and the Indiana state laws that govern the tax lien investing process. What she witnessed in Indiana is extreme competition due to favorable state laws for tax lien investing. In Indiana there is a hefty penalty (10 – 15%) on the certificate amount and you do get interest on the premium or “over-bid” amount if the lien is redeemed. You also get interest (10% per annum) on any subsequent taxes paid as well. The redemption periods vary from county to county, but are short - from only four months to one year. And all you have to do to foreclose is petition the court for the deed to the property. Everything has to be done in a timely manner however, or you could loose your claim on the property.

When most new investors go to these sales and see the large over-bids paid for tax liens, they assume that the companies and investors that are paying these large amounts are doing so in hopes to foreclose on the property. While occasionally that might be true, whenever you see banks doing this there is usually another reason for it. Banks do not want to be in the property management business, they want to invest their money at higher returns than then they can get by lending it out, and they wish to diversify their investments. The reason why they are paying so much for these tax liens is because it is worth it – they are making good profits on their investment.

Because they have the ability to let large amounts of money sit in an investment, institutional buyers can bid large amounts on properties that they think will redeem. And because they have done their due diligence on these properties, they know that even if the property doesn’t redeem they will be able to sell it and make a hefty profit. The danger for new investors is that they see these institutional lien buyers and other seasoned investors paying large premiums for tax liens and they start paying large premiums for tax lien certificates on properties that they did not check out. Maybe they heard about tax lien investing from a real estate guru who touted tax lien investing as being totally risk free and “government guaranteed.” What they need to realize is that no one guarantees that you will get paid on a tax lien certificate and that the only thing guaranteeing the lien is the property. Therefore the property better be worth more than what you paid for the lien. And because you will have other expenses involved in your investment and you will have to pay subsequent taxes, the property should be worth a few times what you paid for the tax lien certificate.

If you are considering tax lien investing you might want to read all of the articles on the article page of taxlienlady.com at www.taxlienlady.com/articles.htm, and on my blog at www.taxlienconsulting.blogspot.com. Here you will find a wealth of free information about how to due diligence for tax lien investing and how to determine if tax lien investing is right for you.

Joanne Musa is a Tax Lien Investing Coach and Consultant who works with investors who want to learn how to buy profitable tax lien certificates and tax deeds. For more detailed step-by-step course on how to invest in tax lien certificates and tax deeds, go to http://www.taxlieninvestingsecrets.com

For more tips on investing in tax lien certificates send an e-mail to MoreTips@taxlienconsulting.com

Real estate in the same breath as tax lien certificates are not a big deal to most people, but to a savvy investor they can resemble $$.

Lets take that bad word named “tax” and turn it into lien certificate holder and the owner of this lien certificate will have a big smile on his face. He may not tell you why as not many investors share their guarded secret of investing.

Real Estate And Tax Lien Certificates is one of the safest types of investments you can make with generally a good above average of return. It is not hard to invest in certificates and if you are in the know how they are usually quite profitable; however investing blindly without sound solid advice can cost you money.

For example buy a tax certificate without research on commercial property for $500 and find out it is next to a pig farm your choices for that property use becomes severely limited and selling it might be a hard proposition.

So how do you know if investing in real estate and certificates is a wise decision?

A lien is levied against a property owner who has not paid his taxes on time by the government against the non-payer’s property until he pays his bill.

This lien (if sales are allowed in that sate) should be make public and give the opportunity for investors to bid on tax certificates. When you bid and become owner of the certificate you have agreed to pay the taxes for the non-payer that did not pay them and in return you have won the right to collect the delinquent non-payers taxes that he owes plus a surcharge in the form of an inflated interest fee for the non-payer not paying his bill on time, mind you this does not give you rights to anyone’s property. This fee is an interest rate which depending on the state could up to 18%, now that’s a high interest rate any investor would love. The rate could be lower but it can also be even higher. This late penalty fee is an incentive to taxpayers to pay their taxes on time and the reason investors buy certificates.

Now the good part, nothing is guaranteed in life but buying lien certificates might be the closest thing that is and here’s why. If the property owner after a certain length of time still has not paid his back taxes the government will auction off his property to get their money, what does this have to do with you the owner of tax lien certificate? No one wants to lose their property outright so 98% of the delinquent non-payers pay their late bill, so you not only get your investment back you get the interest penalty the delinquent non-payer paid to settle his debt.

I bet you are starting to see the incredible opportunity investing in real estate and tax lien investing has to offer.

Stuart J Miller is enamored with tax lien investing. If what you have just read grabbed your attention on the possibilities of investing, go to Real Estate And Tax Lien Certificates for more information and a complete ‘System’ to show you how to invest in profitable Certificates and Tax Deeds. Plus grab these 3 bonuses FREE- 1) Exclusive private invitation to attend a one-of-a-kind Q & A teleseminar with the Tax Lien lady, 2) How to use a Self-directed IRA to invest in Tax Lien Certificates and Deeds, 3) State guide to Tax Lien and Deed Investing in every state. Real Estate And Tax Lien Certificates

Make 16-32% on your money Buying Tax liens from the comfort of your home.

Most people teaching Tax Lien Investing or actually doing the investing believe that the only way to obtain a Tax Lien is by going to the actual auction in person and bid. This is still the normal procedure for most counties but what most people don’t know is a little hidden secret which allows anyone to get them from the comfort of your own home. All you need to have is a computer and access to the internet or in the worst case a stamp, a piece of paper and an envelope. Just imagine what you could do if you would not have to travel to make money. Technique #1:

More and more states and counties have already transferred their Tax Deed auctions onto the internet and now the Tax Lien States are following suit and doing the same with their Tax Lien Auctions. In Maricopa County, AZ (Phoenix, AZ), between 6,000 and 11,000 tax Liens come up for auction each year in January or February through their own tax Lien auction webpage. Webpages like www.bid4assets.com also on a regular basis host county Tax lien auctions. All you need to do is look online for Online Tax Lien auctions in the area you are interested in, read the terms of the auction, and participate. In most cases you will have to send a cashier’s check (or a wire transfer) with a security deposit, so the county is sure you are a “real” bidder, and then if you buy something, they will use these funds as part of the payment. If you don’t buy something they will send you the money back. Technique #2:

But even if you miss a state’s/ county’s live auction, there is still hope. You still can make extraordinary returns on your money with just the expense of mailing a letter. Here is how this works;

Usually during a county Tax lien Sale, not all Liens on all properties are being sold. The “left-over” liens, which are now held by the state, are placed on a publicly available list (and more and more even online available).

You as an investor can now purchase these property liens outside of the auction at the highest interest rate available. All you need to do is request the most recent list of “Over the counter Tax liens from the county. If it is not available online, the county often can mail you a CD for a nominal charge or send you the actual list (you might not want to do that in a large county, because the county often charges $0.50 per page for the actual paper list.

Once you have the list all you need to do is select the properties you want, send the county a cashier’s check for the lien amount along with the Parcel ID/ Lien ID and your Bidder ID (which you can also get by mail or over the phone) and you are done. The county will then send you your Tax lien Certificates (TLC’s) by mail.

Now you just wait until the owner redeems the Tax Lien and you get your money plus a GREAT interest rate back and then you do it all over again. Or if the owner never redeems the Tax lien you have hit the Jackpot and can foreclose on it.

Jack Bosch began investing in real estate in 1999. Along the way he discovered a secret system of buying land for literally pennies on the dollar and reselling the property for thousands more. Since his first transaction he has personally bought and sold over 5000 properties using his fine tuned system. Jack to this day still invests and profits from real estate, however now he also offers his secret strategy of buying and selling real estate for huge profits to You! You can find his complete wealth building system at http://www.LandForPennies.com and at http://www.SecretLandProfits.com

Tax Lien Homes can be figure of speech like hitting a grand slam in baseball, more times than not it is like batting having a batting average of 295. If you understand baseball you see that a 295 average is considered quite good, and grand slams are the Holy Grail.

Real estate investing in Tax Lien Homes has come out of hiding so to speak. Investors in the past who knew of this ultra safe method with above average returns on their money could walk around with a big smile on their face saying “I have a secret and I ‘m not telling”. Those days are dwindling as more and more people are realizing the profit potential when investing in Tax Lien Homes.

Not to dare say the best days are behind us; not to say that at all, but what were easy pickings before when it came to investing now is becoming shrewd fact based tactics to turn the same profit.

I say all this and I still say I believe the safest way to financial security and independence with the smallest financial risk involved is through this type of investment.

TV infomercials and advertisements claiming overnight wealth in regards to investing in Tax Lien Homes are unrealistic and bias. We all want it yesterday and entrepreneurs will always feed that emotion as long as the public begs for it.

Tax lien investing is fast becoming very competitive, if you are a potential investor it is more critical than ever to be educated with the correct information, no doubt trial by error methods will teach you what and what not to do, but those tactics will cost you big not only financially but mentally as well.

If you do not know the simple basics of investing and do not have the proper knowledge to navigate a listing you are already starting out on the wrong foot.

Questions such as these below require straightforward honest answers:

Where do I find out about sales?

What will cost be?

Where is the information for the properties?

After I buy a certificate what do I do?

How can I know what a good price to pay for a certificate is?

How much money can I really make doing this type of investing?

Registering for the sales, where when and how?

What information do I need to provide?

Which forms are required and where can I obtain them?

Can I buy certificates or deeds online or through the mail?

How do I profit from my tax lien or deed?

How long to collect my profit?

How do I clear the title to a property that I purchased from a sale?

Will I need legal advice?

Can I buy liens and deeds in my own name or do I need a business?

Do not say forget it and drop what I consider to be the greatest investment opportunity you will be presented with because these questions might overwhelm you; these are the easy ones! Once armed and knowledgeable you will have all the answers.

To realize your financial dreams and security; walk before you run. Educate yourself on investing in homes and you to will not dream about it, you will live your dream.

Stuart J Miller is enamored with tax lien investing. If what you have just read grabbed your attention on the possibilities of investing, go to TAX LIEN HOMES for more information and a complete ‘System’ to show you how to invest in profitable Certificates and Tax Deeds.

Plus receive these 3 bonuses FREE-

1) Exclusive private invitation to attend a one-of-a-kind Q & A teleseminar with the tax Lien lady,
2) How to use a Self-directed IRA to invest in tax lien certificates and deeds,
3) State guide to tax lien and deed Investing in every state.
TAX LIEN HOMES

One type of investment that is growing in popularity is the buying of Tax Liens on Real Estate. While on the surface, this investment seems like a sure fire winner, there are some pitfalls in the process.

A Tax Lien is a claim against a property for the non-payment of taxes. In the case of Real Estate this is usually the local property tax. When the property owner fails to satisfy his tax obligation, the taxing municipality will place a lien on the property. The tax lien does not allow transfer of ownership to pass to anyone until the lien has been released. The municipality will then issue a Tax Lien Certificate that they will sell at auction.

The Tax Lien Certificate will require the property owner to pay off the lien at a mandated yield amount to the lien holder. If the homeowner fails to pay the yield in a set amount of time, title to the property passes to the lien holder. These yields and times are a bit vague here because they are established by the local jurisdiction and vary widely from one to another.

The idea of Tax Liens seems to be an excellent investment choice on the surface. You are going to either get a guaranteed and known yield and return on your investment, or you are going to receive title to a piece of property at a cost that should be considerably under market value creating instant equity. It is little wonder that auctions of Tax Lien Certificates are popular with Real Estate Investors.

There are a few things that cloud this rosy picture. As with all investments, there is some risk. One problem is that other creditors and the Internal Revenue Service might have a prior claim to the property in the case of bankruptcy of the original owner. Also, most Tax Lien Certificates are sold with only very skimpy details as to the actual condition of the property. It is almost a sight unseen type of auction. This is obviously risky. You might be visualizing a big house with a cozy white picket fence only to discover the property is actually a run down shack on a dusty lot.

This should not discourage the Tax Lien Certificate investor. What it should do is remind him that all Real Estate investment requires caution and a lot of preparation and legwork to insure success. The potential rewards are well worth the effort. In the case of buying Tax Lien Certificates, this legwork involves actual inspections of the property and research into the title and bankruptcy status as well.

Learn how to use a self-directed Roth IRA to invest in real estate at UFCAmerica.com.

There are times when a property owner is unable to pay the required property tax. At such time they become delinquent taxpayer and the appropriate governing authority is in charge for collecting property taxes. This collection can be achieved through a tax auction. That brings us to the question, What is a Tax Lien auction? A tax lien auction is a court-ordered auction. Depending upon the state and the nature of sales it can be an auction for a Tax Deed Sales or Tax Lien Certificates.

You can buy a tax lien at auctions held by the taxing authority, which are generally held once a year. Depending upon the state and county that you are accessing there may be several types of auction bidding. Sometimes, not all Tax Liens are sold at the auction. This could either because of lack of bidding or because there were no acceptable bids. In such scenario, the Tax Lien can be bought over the counter at a later date.

You are not required to attend the auction to make a purchase. You can also buy a Tax Lien over the web and in mail. However, it is recommended that you buy them in person over the counter to eliminate error.

Buying tax liens is a very well hidden real estate investing secret. Many Americans are still not aware of the profit potential of such investment. Depending on the state where you buy the tax lien you can more often than not earn 18% to 50% or more per year. And if the delinquent taxpayer does not fall through the repayment, you still have the court backing the foreclosure of the property. Therefore, buying a tax lien allows you to have either the higher yield from repayment of tax or the actual title to property at a substantial discount.

However, before you jump onto this band wagon, it is advised that you do all the required homework. You can get information on a regular basis from the Review regional foreclosure lists.

Tax Liens provides detailed information about tax liens, government tax liens, tax lien auctions, and more. Tax Liens is affiliated with Tax Attorneys In California.

With so many homes going to foreclosure, how do I buy one?

There are a few things to consider when buying a foreclosure:

• In most states, you buy the house at auction. You are not provided access into the house prior to the auction. You will have the address in advance and you should at least drive by. Sometimes when you drive by you will see that the house is vacant or occupied.

o In most states if the house is occupied, you will have to evict the current owners following the local laws. This means that even after you buy the house, the people who were foreclosed on could be living there. To prevent them from causing damage to the house, you may consider paying them to move out. After all, it is much easier to pay $1000 for someone to move out than to replace all the broken windows.

o If the house is vacant, try to find out if it has sit through a winter vacant. If so, you may have frozen pipe damage.

• You can usually get a listing of all the foreclosures that are going to be auctioned off at the Sheriff’s office.

• It would advisable partnering with a REALTOR, or someone who understands the current market value of the home prior to making a bid on the home. This will tell you the value for the home if it were on the market today in average condition.

• You must ensure that you know the liens against the property. (A lien is someone who has an interest in the property, like a bank or a tax lien may also be imposed if the person has not paid their taxes.) You can find this out through the Recorder of Deeds or the county office in your area that handles property registration. All liens on property should be recorded, but you can check with your local municipality to understand the rules in your area.

o Typically liens are in this order: 1. Federal Tax
2. State Tax
3. Local Tax
4. 1st. Mortgage recorded.(this is usually the primary mortgage)
5. 2nd Mortgage recorded (this is usually a Home Equity loan).
o Usually, when the higher ranking entity forecloses the lower ranking items are cleared unless they are TAX liens. However, this is not always the case. You should verify with your local municipality to ensure. Here are a few examples.

1. The home has 10K in tax liens, 200K in first mortgage and 50 K in second mortgage. The house auctions for $205,000. The tax lien is paid off, the first mortgage receives $195,000 (loosing $5,000) and the second mortgage and any subsequent liens would receive nothing. You own the home and the title is clear. (This is an example and is not guaranteed.)

2. The home has 50K in tax liens and is foreclosed by the government for TAX Sale. The house as $250,000 in other mortgages on the property. You win the auction at $38,000. This clears the tax lien that foreclosed and usually all subordinate leans. Usually in a case like this, the first mortgage company will bid on the home to protect their interests.

• Once you win the auction, you typically have to immediately pay 10% in the form of a cashiers check. The balance is due within 30 days.
• Now I suggest that you retain an attorney and perform a thorough title search on the property, buy title insurance and have the deed prepared.
o If you title search looks positive (you did not miss any outstanding liens), then pay the other 90%.
o If the title search indicated that you GOOFED, then you will need to decide if it is in your best interest to complete the deal or loose your 10% deposit.
• Pay the 90% and record the deed (your attorney can help with this).
• Now, if the house is vacant, you need to gain access, (you won’t get any keys). The house is yours. (In some states the previous owners have a period of time where they can reverse the foreclosure and pay the entire amount owed to the foreclosing entity. This is usually 30 to 90 days if it applies at all. You can still gain access to the property; you just have a higher degree of risk for that period.

• If the house is not vacant, you have to work with the local sheriff to evict the current tenants. Note my suggestion above.

As you can see, there is a great deal of risk in buying a foreclosure. It is not nearly as easy as it sounds. There are a few alternatives.

1. Work with a local realtor and buy the house through the normal channel. Banks will sometimes lower their lien (called a short sale) to avoid the cost of foreclosure and the risk with it.
2. You can sometimes contact banks and buy bank owned property. Many banks use local realtors to list their property; so again, working with a REALTOR will help in this case.

Buying a foreclosure can be extremely rewarding. However it can also be extremely costly. Please make sure that you know what you are in for, if you choose to pursue this route.

Using a Licensed REALTOR is the safest way to ensure that you are buying a house for the right value. Your sales proposal / contract, whether prepared by an attorney or REALTOR, will ensure that your property is free and clear of all liens or the closing will not occur.

For those of you looking into foreclosures, best of luck. For those of you looking to buy a house in much less risky manner, call a REALTOR and let the shopping begin.

(All information contained within should be considered informative only. Local Laws and ordinances will dictate the exact foreclosure process in your area. You should validate your local laws/ordinances as they will supercede any information contained here within.)

Written by James Boyer REALTOR, specializing in Morristown NJ Real Estate and areas around Morristown, including Madison, Chatham, & Summit NJ. When thinking of buying or selling real estate in Morris County call on Jim your Morristown REALTOR.