by Joanne Musa
Recently I sent an e-mail out to my subscribers asking them some questions to find out what it is that most people want to know about tax lien investing. I got a lot of good questions and I won’t be able to answer them all in this article, but I want to try to answer those that were asked most often that weren’t answered in my new free video course.
I especially like to answer questions that start out with the words “How do I…” or “How can I...” This type of questions shows me that someone is really interested and is ready to take action. So lets answer some of these types of questions that are not answered in my video series. So here are some frequently asked questions about tax lien investing.
Q1: How can I buy tax liens or tax deeds without going to the auction?
A: In most states you have to attend the auction in order to bid, or have a representative there to bid on your behalf. But there are 2 ways that you can purchase a tax lien or deed without physically going to the sale. A few states do have online auctions, but not all counties in these states conduct their auctions online. Usually just the larger counties do. Many counties in Florida, California, and Arizona have online tax sales. And I know that some counties in Colorado and Illinois have online tax sales as well. Another way that investors have bought tax lien and tax deeds without going to the sale, is to bid on left-over liens, this can usually be done through the mail. The only problem is that as tax lien and tax deed investing become more popular, there are less and less good properties left-over after the tax sale.
Q2: I don’t live in the US, can I still invest in Tax Liens or Tax Deeds?
A: Yes, in most states you can invest in tax liens and tax deeds even if you are not a US citizen and do not live in the US. There are a couple of states that you have to be a resident of the state to invest, but these are not the most popular tax lien states and they don’t have online sales. All you have to do in order to purchase a tax lien is to fill out a tax form called a W-8BEN form. In order to complete this form you will also need to apply for an Individual Tax Identification Number (ITIN) if you are bidding in your own name. If you are bidding using a business name, you must apply for a Employer Identification Number (EIN). This is only for tax liens. You do not have to do this to participate in a tax deed sale.
Q3: So how much money do you need to get started with tax lien investing?
A: The beauty of tax lien investing as opposed to tax deed investing and other types of real estate investing, you can start with a very small investment. The first very profitable tax lien that I purchased started with an initial investment of only a couple of hundred dollars, on a small sewer lien. Then I was able to pay the subsequent sewer taxes the next couple of years and instead of trying to foreclose I just kept paying the subsequent taxes. After a couple of years, the homeowner moved out of state and stopped paying the taxes on the property, so then I got to pay even bigger payments $5000 over the next couple of years. The lien finally redeemed and I collected 18% per annum on most of my investment plus penalties.
Q4: How often do you acquire the property with tax liens?
A: In the state of NJ where I invest, very, very seldom do you get to foreclose on the property. If you are interested in owning property than tax deed investing or redeemable tax deed investing is the way to go. Only about 1% of tax liens will not redeem and of those properties, once you start the foreclosure process about 80% will redeem sometime during the foreclosure process. I’ve been investing for about 6 or seven years and I haven’t foreclosed on a property yet. I do have a couple of liens that I could start foreclosure on right now, but I know that when I do, they will redeem, so I just let them go.
I know some investor who have foreclosed on a couple of properties, but either it is not recent – we’re talking a few years ago when property values were not what they are today and it was much harder to get a loan, or they have a really huge portfolio with thousands of liens.
Q5: Are there risks involved in this type of investing? What are they?
A: Yes, there are risks involved and that’s what the gurus leave out, they make it sound so easy. They like to use the term “Government Guaranteed” to make people think that they can’t go wrong with tax lien investing, that the government guarantees that they’ll get paid on a tax lien. That’s really not true, what they mean by “government Guaranteed” is that there are laws that protect the investor but you not guaranteed to get paid. The guarantee is the property. Tax Liens are guaranteed by the property that you have a lien on, so if you buy a tax lien on a worthless piece of property, then you made a poor investment and it is possible that you could loose your money. Yes, there is risk involved, but that risk is minimized by doing your due diligence on the property before you purchase the lien, just like you would do due diligence on property before giving someone a loan against it. If you do your due diligence properly than tax lien investing is a very safe investment because it’s secured by something tangible, not just a piece of paper.
One of the things that I do in my courses, John, is teach people how to do due diligence for tax sale properties so that they can totally reduce the risk involved with tax lien investing.
Q6: Can you invest in tax liens and tax deeds in your IRA?
A: We all want to keep more of those profits for ourselves and not give half of it away to Uncle Sam. The good news is that you can use money in your IRA or Roth IRA to invest in tax lien certificates or tax deeds, but only if it’s a true self-directed IRA. With a self-directed IRA, your profits can grow tax-differed, and with a Roth IRA, your profits can be totally tax-free.
In my courses I have 2 audios from different experts from 2 different self-directed IRA companies that explain how to do this.
For more information visit the tax lien lady's website.
Tuesday, July 22, 2008
Monday, July 21, 2008
Tax Lien Investing: Investing Online and by Mail
By Joanne Musa
One of the questions that I frequently get from visitors to my web site,
www.taxlienlady.com, is “Can I invest in tax lien certificates online or through the mail?”
Many people want to invest in tax lien certificates but don’t have the time freedom to physically attend the tax sales, so they want to do it online or by mail. A couple because all they have to do is get to their computer to register for the sale.
Secondly, more money – or lower interest rates are bid for tax lien certificates because there are an increased amount of bidders. And thirdly more properties are sold at these sales. You see, at most tax sales there are “left-over” liens that no one bids on that go to the county. A lot of these properties are junk properties. They are really not worth anything and that’s why the owner stopped paying the taxes. Any bidders that have done their due diligence will know this and will not bid on these properties. But when sales are held online these properties will typically be sold. Don’t you be one of those online bidders who buys a tax lien on a worthless piece of property!
Would you purchase real estate that you didn’t look at first? Even though you are not
purchasing the property when you buy a tax lien (you are only paying the past due taxes and penalties and putting a lien on the property), you still need to make sure that the property is valuable. There is always the chance that the lien will not be redeemed and that you will wind up with the property. And if you do have to foreclose on the property, you want it to be worth much more than you have invested in it. Your investment isn’t only the amount that you paid at the sale, but all of the subsequent taxes that you paid, any legal fees and foreclosure costs, and any costs that you incur to fix up the property before you sell it.
Here is something else to consider if you decide to go ahead and tax lien certificates online anyway. You will pay more money for tax lien certificates online than you would at a regular tax sale.
First of all you will have to have a hefty deposit just to register for
the sale. If you do not purchase any liens your deposit will be refunded. If you do make a purchase it money will be deducted from your deposit. Even if you make a purchase by mistake, the money will be deducted and it will not be returned. If you do not complete the transaction you could be banned from any future sales.
In addition to that you will have to pay the online auction company a commission, which could be as high as 10% of the purchase price of the lien(s) that you buy.
What about purchasing tax lien certificates through the mail? Many states do allow for purchasing of tax lien certificates through the mail. Most states allow this for their “leftover” liens and a couple of states will even allow mailed in bids for their tax sales.
Buying tax lien certificates through the mail does not have all the problems that I
described for online tax sales, especially if you are able to do your due diligence on the properties before placing your bid. You are, however, at a disadvantage when you mail in your bid for a tax sale. I suggest that you find out what the procedure is at the sale. If your bid is read out loud at the sale and those present at the sale have the opportunity to out bid you, then you are at a disadvantage. It is the investors who are present at the sale that have the advantage over you.
There are opportunities in some states that sell leftover liens (sometimes these are referred to as “over-the-counter” liens or “assignment” liens) that are available for purchase through the mail. Be very careful though to do your due diligence on these properties before you placing a bid. Very often, as I mentioned earlier, there is a reason that these liens were not purchased by other investors. If no-body else wanted it maybe there is something wrong with it! Check the property out before you buy. With tax lien investing, there are no refunds!
One of the questions that I frequently get from visitors to my web site,
www.taxlienlady.com, is “Can I invest in tax lien certificates online or through the mail?”
Many people want to invest in tax lien certificates but don’t have the time freedom to physically attend the tax sales, so they want to do it online or by mail. A couple because all they have to do is get to their computer to register for the sale.
Secondly, more money – or lower interest rates are bid for tax lien certificates because there are an increased amount of bidders. And thirdly more properties are sold at these sales. You see, at most tax sales there are “left-over” liens that no one bids on that go to the county. A lot of these properties are junk properties. They are really not worth anything and that’s why the owner stopped paying the taxes. Any bidders that have done their due diligence will know this and will not bid on these properties. But when sales are held online these properties will typically be sold. Don’t you be one of those online bidders who buys a tax lien on a worthless piece of property!
Would you purchase real estate that you didn’t look at first? Even though you are not
purchasing the property when you buy a tax lien (you are only paying the past due taxes and penalties and putting a lien on the property), you still need to make sure that the property is valuable. There is always the chance that the lien will not be redeemed and that you will wind up with the property. And if you do have to foreclose on the property, you want it to be worth much more than you have invested in it. Your investment isn’t only the amount that you paid at the sale, but all of the subsequent taxes that you paid, any legal fees and foreclosure costs, and any costs that you incur to fix up the property before you sell it.
Here is something else to consider if you decide to go ahead and tax lien certificates online anyway. You will pay more money for tax lien certificates online than you would at a regular tax sale.
First of all you will have to have a hefty deposit just to register for
the sale. If you do not purchase any liens your deposit will be refunded. If you do make a purchase it money will be deducted from your deposit. Even if you make a purchase by mistake, the money will be deducted and it will not be returned. If you do not complete the transaction you could be banned from any future sales.
In addition to that you will have to pay the online auction company a commission, which could be as high as 10% of the purchase price of the lien(s) that you buy.
What about purchasing tax lien certificates through the mail? Many states do allow for purchasing of tax lien certificates through the mail. Most states allow this for their “leftover” liens and a couple of states will even allow mailed in bids for their tax sales.
Buying tax lien certificates through the mail does not have all the problems that I
described for online tax sales, especially if you are able to do your due diligence on the properties before placing your bid. You are, however, at a disadvantage when you mail in your bid for a tax sale. I suggest that you find out what the procedure is at the sale. If your bid is read out loud at the sale and those present at the sale have the opportunity to out bid you, then you are at a disadvantage. It is the investors who are present at the sale that have the advantage over you.
There are opportunities in some states that sell leftover liens (sometimes these are referred to as “over-the-counter” liens or “assignment” liens) that are available for purchase through the mail. Be very careful though to do your due diligence on these properties before you placing a bid. Very often, as I mentioned earlier, there is a reason that these liens were not purchased by other investors. If no-body else wanted it maybe there is something wrong with it! Check the property out before you buy. With tax lien investing, there are no refunds!
Thursday, June 12, 2008
Lucky Few are Buying $1 Million Homes for Just 2%
There's a new "secret" that a lucky few have already found that's enabling them to literally buy houses that ordinarily sell for around $1 Million or more - but now for just $1,997 or LESS!
There are 3,141 counties in the United States, and each one possesses this exciting new opportunity whereby anyone with as little as $100 to seldom more than $5,000 canbuy homes ordinarily valued from $30,000 to in quite a number of cases above $5 million! - and for just 1% to rarely above 5% their selling costs!
And the BEST part about this is that you can be located anywhere and still buy any home you want - even if you're 3,000 miles away or more!
But, you don't have to visit the county you buy the homes in - instead, you can do it all from the comfort and privacy of your home using just your tiny 'ole mouse!
This is what makes this such a wonderful opportunity, in that you can go online to some select websites, then pick and choose the properties you want, and then get them for between 1%-5% at most.
No matter what happens you make money!
You basically buy a homeowner's tax lien certificate because he or she wasn't able to pay their property taxes.
They by law must pay you anywhere from 16% to as much as 50% in interest - and in many cases they must pay you back within as little as 6 months.
But, if they can't pay you back, YOU own their home free and clear (and for what usually amounts to just 1% of the house's actually selling value!)
Now, at this point you can either keep the house for yourself, or you can swiftly turn around and resell it (in any economy, good or bad!) to banks, lenders or individual buyers answering your little classified ad! - and where you make a killing!
The site that has all the facts as to how you can do this from your laptop or PC is here: TaxLiensMadeEasy.com
It may sound an immoral way to make money, but the fact is that you can always give a large portion of your profit back to the original home owner and still make money yourself.
Anyway, it's rumoured they may withdraw the opportunity as soon as they reach the maximum number of members they can handle. For less than a $50 investment with a 60 day money back guarantee it's hard to see where you could go wrong.
There are 3,141 counties in the United States, and each one possesses this exciting new opportunity whereby anyone with as little as $100 to seldom more than $5,000 canbuy homes ordinarily valued from $30,000 to in quite a number of cases above $5 million! - and for just 1% to rarely above 5% their selling costs!
And the BEST part about this is that you can be located anywhere and still buy any home you want - even if you're 3,000 miles away or more!
But, you don't have to visit the county you buy the homes in - instead, you can do it all from the comfort and privacy of your home using just your tiny 'ole mouse!
This is what makes this such a wonderful opportunity, in that you can go online to some select websites, then pick and choose the properties you want, and then get them for between 1%-5% at most.
No matter what happens you make money!
You basically buy a homeowner's tax lien certificate because he or she wasn't able to pay their property taxes.
They by law must pay you anywhere from 16% to as much as 50% in interest - and in many cases they must pay you back within as little as 6 months.
But, if they can't pay you back, YOU own their home free and clear (and for what usually amounts to just 1% of the house's actually selling value!)
Now, at this point you can either keep the house for yourself, or you can swiftly turn around and resell it (in any economy, good or bad!) to banks, lenders or individual buyers answering your little classified ad! - and where you make a killing!
The site that has all the facts as to how you can do this from your laptop or PC is here: TaxLiensMadeEasy.com
It may sound an immoral way to make money, but the fact is that you can always give a large portion of your profit back to the original home owner and still make money yourself.
Anyway, it's rumoured they may withdraw the opportunity as soon as they reach the maximum number of members they can handle. For less than a $50 investment with a 60 day money back guarantee it's hard to see where you could go wrong.
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