Tax Lien Investment Club

83 Replies

Hello BP!!!

Does anybody have experience being a member of Tax Lien Investment Club. I was quite quick to join them in a "free real estate investment seminar" from  Success Path, but after realizing that Succes Path is not what they promised, I started doubting Tax Lien Investment Club (after all they are working together).

In theory, they are a secondary market for tax liens that they purchase from large hedge funds. My worry now is that they would just sell the "trash".

Any experience with them?

Thanks a lot for everyone's help.

Juan

Sorry, the correct name is Tax Lien Buyers Club.

Just watch out for the up sell. Success path is one of those guru courses that up sell packages.

Hi Juan,

I, too, am new to BP. Yes, I have some experience with The Tax Lien Buyers Club. I signed up back in October just like you. There is a lot of good and useful information on their web site, so I recommend reading it all. When you decide to purchase tax liens from them, do your research. Lucky for you they like doing business in Florida so you can drive the properties before making your purchase. I highly recommend you do that. Here is what my experience has been. I called them to purchase 10 tax liens just like they tell you at the seminar. When you call, you will get a salesman on the phone who will tell you that all of the properties have been researched and are investment quality. I think they tell you this so you just give them your money and don’t do any research for yourself. Always do your own research! Well, I signed on the bottom line and now I am in the process of transferring them into my name. If you would like to private message me, I will send you the list of properties that I have purchased. Let’s just say that I am not exactly thrilled by all of the property they sold me and hope they are redeemed, because I don’t think I will be wasting any more money to foreclose on them. This might be an expensive lesson in tax liens on my part, but I am learning more and more every day. I hope this helps.

Thank you very much Chris, indeed I did think their education resources were very good. I have yet to call them but I do want to learn and invest in Tax Liens, I will probably give them a call next week to get started.

I was under the impression that they would let you choose between their inventory. Was that not the case? Do they bundle a package ?

@Chris Weaver @Juan Gomez The whole idea of buying tax liens in the "secondary market", in Florida anyway, is troublesome to me.  First, "hedge funds" don't sell off their tax certificates in their normal course of business, and "hedge funds" don't normally buy them at all. If you are getting any kind of yield at all, above 4-5%, I suspect these certificates were the left overs that no one wanted.  Or, someone realized they had screwed up, and are dumping them at a loss to minimize further losses.

You guys do realize that to collect your money, if they are not redeemed , you have to send them to a tax deed auction.  To do this, you have to pay off all the other certificates outstanding.  Many times these properties never make it to auction because the total of all outstanding certificates is greater than the property is worth.  If it gets to auction, and someone bids the minimum, total due, you get your money back.  Otherwise, you get the property for what you have in it.  The bidding is competitive here, so if you get for more than anyone else is willing to bid, you're not going to do well.

Hello @Wayne Brooks, thank you very much for your comment.

You bring an excellent point, which has made me doubt investing in Tax Liens in FL, unless it is seen just as an alternative to CDs, Stocks, etc. One advantage on buying from the secondary market is that you avoid the bidding process so you know what you will get (from a return perspective). However the promise of owning a property with a couple thousand dollars will never apply because you have to go through the auction.

What is the benefit of purchasing tax liens?

@Carolyn Morales I am no expert at all, in fact I have yet to invest in Tax Liens. I am interested in it because of the following apparent reasons:

1. High yield investment (fixed rate) if the lien is redeemed

2. Potential of receiving a property for a very low cost  if the lien is not redeemed (here is where it gets very tricky from what I have read)

I am in a learning process here.....

right it is the tricky part that would scare me but knowledge is power

In Florida, you simply get an interest yield, usually 1-4%/year, with a 5% total minimum, regardless of how many years.  The tricky part is collecting as mentioned above if it's not redeemed.  It gives you no advantage toward owning the property at all.

@Juan Gomez In regards to receiving a property (this info in for dade county) you have no advantage compared to non-tax lien holders. What happens. When you hold the tax certificate (AKA Tax lien) for 3 years or more you can trigger a tax deed (AKA forced sale). The property then goes on public auction. The only way for you to get the property physically is for you to be the highest bidder on that auction. If you do not win the auction the proceeds from the auction will be used to pay off your tax certificate plus interest.

Check about the procedure for other states and counties.

 

Tax Lien Buyers Club will give you the advantage of looking at liens you have been provided with and you never have to purchase anything you don't want as with all things in life.  If you take the time to do your own research and you are happy with what is provided to you then it is a very easy purchase as they have already done the hard part for you.  When working with hedge funds you are able to purchase a large batch of tax liens that would not be available otherwise.  To say that they are things that no one wants is merely speculation.  In order to get a discount on the purchase price of larger amounts of tax liens one must put in large sums of money in turn making it possible to assign tax liens to an investor for the same price the county would give it to you for.  There is no competition in purchasing which makes it very easy.  

When a foreclosure or tax deed application occurs in Florida, an 18% interest rate per annum is applicable on "everything", including all of the other back taxes.  This interest will accrue until the tax deed auction takes place.  When the tax deed auction takes place one of two things will occur. You will either get all of your money back with interest or you will acquire the property.  If you want to "guarantee" that you acquire the property you can always participate in the auction and become the highest bidder so you can maintain ownership. The advantage to the tax lien holders that apply for a tax deed, is that they may acquire the property for the price of the back taxes plus the tax deed application fee which is minimal, usually around 200-250.  If they do not get to own the property they will get their money back plus interest. 

Thank you very much @Josh Carr , I see that you are in the same line of business... May I ask you a couple questions:

1. In your opinion, which is the best state for a Tax Lien investor that is interested in receiving the properties that do not redeem?

2. Any watch outs when investing through a company like Tax Liens Buyers Club?

Merry Christmas,

Juan

Juan, 

I'm not an expert on tax liens but I have been reading hundreds of forum posts about it here on BP. And all the people who have successfully invested for years say the most important part is to be familiar with your county laws and to actually read the laws regarding tax liens, and even take a local lawyer or expert to lunch. So i would read the laws not just educational material. 

I read a book on tax liens and it had a couple of pages on Nebraska, but the actual statute that covers tax liens is like 70 pages. 

@Josh Carr You are just simply wrong.  The county gets 18% interest, but You as the certificate holder get the interest rate that was bid when the certificate was sold, and you Pay the accrued 18% interest on the other other certificates outstanding that You have to redeem, when you want to send Your certificate to the tax deed auction.  You collect no interest on the certificates you had to redeem between the time you paid them off and the time it takes to get to the auction.  The only certificates that will have an 18% rate are the certificates that no one wanted, and are available from the county.  You think maybe there is a reason why the bidders would bid the rate down to 2-4% on some properties, and pass up 18% on these properties?

Updated almost 3 years ago

To be clear, we were talking about Florida here.

@Josh Carr Wayne is correct. Many tax liens are bid down to .25% interest. The state guarantees 5% so in the event you get paid off in 4 months you get 5%. Same thing if you get paid off in 4 years..5%. Bidding starts at 18% and if you can get certs on quality properties that would be a home run. Just like buy and hold RE, flips, etc everyone and their dead uncle is buying. Same thing for tax deed sales. Every now and then you might see what appears to be a bargain at the tax deed sales but often these properties are dilapidated. If you hold the tax lien certificate, force a sale, and nobody bids, you own it. We recently had an investor that works with an agent in out office buy a tax deed sale property. It was full of defective drywall. They are now rehabbing with the HOPES of breaking even. No matter what your investment strategy, you need to do your due diligence. 

I BELIEVE Nebraska's interest rate accrued and earned on ANY past due amount i  14%,,,NOT THE 18% A FORE mentioned.  After a 2 or 3 year wait YOU have to run it thru an attorney and 'foreclose' the tax lein just like a lender a mortgage.  IF they dont fight you you get the deed then.  If they draw out the legal battle it can go on for a long time.  Also I am aware there are VERY tight time frames on when this tax lein CAN be forclosed....cant be sooner nor later or you are out.  Sounds to me like good,,,no great,,,,book keeping is quite necessary.  As well as all the dilapidated houses that need more work than they are worth are easy to get.  the City here condemns them as quickly as possible.  Something about being vacant for a year qualifies them as a special case to look at for the condemnation axe,,,and once its declared they dont back up.  Have seen them axe them for the darnest little thing.  Like one had a loose foundation block,,,gone,,,2 x 4  roof rafters(90% or more of craftsmans and earlier homes had them)  ,,,gone not enough width where the stool sets,,,gone,,,  Its bad and not getting better....  LOTS of things to know and twists can happen to either make this good or BAD!!!!  beware there are different rules in each county,,and general rules for each state!! 

@Juan Gomez lets just say I am very skeptical. I took a brief look at their website and saw the typical hype.

There is no competition in purchasing which makes it very easy. 

Um no not really. If you are buying on the secondary market, you have to buy from someone bid against competition to buy the liens in the first place. So competition and the secondary markets profit are both figured into the price you pay.  It is easy but at a cost.

@Juan Gomez and @Wayne Brooks.   I think the same things apply to wherever or whomever you are investing with.  Due diligence will help you to feel good about your investments whether you are doing it on your own or through a company like Tax Lien Buyers Club.  Once you know you like the return and are happy with your research then it's an easy thing to purchase from a secondary market.  When you are purchasing from the auction in Florida tax liens do get bid down starting at 18% and then whoever is willing to take the least amount of interest gets the tax lien.  Because they get bid down often times to below 5% but above 0% there is a guaranteed penalty rate of 5% which is per annum.  If the property owner pays their taxes back in a relatively short amount of time, three months or less, then this is profitable.  However, that is not something you can count on all of the time.  So, the secondary market gives you a set rate for your interest because the tax liens have already gone through the auction and have been purchased for you. You don't always get the full interest rate but you can get a much higher interest rate with no competition.  Nebraska is 14% providing you are not purchasing at an auction.  Anything after the auction will yield you 14% per annum and there is a three year redemption period for Nebraska. Anything after the auction in Florida will yield you 18% per annum.  Just because the tax lien is after the auction, or over the counter, it does not "always" mean that they are tax liens nobody wanted.  It simply means that there was not enough time provided at the auction to sell them all.  That is great for us!  That is the reason due diligence is so important!

@Josh Carr Since you are in the business of selling these certificates in the secondary market, I'll assume you know the process.  Therefore it would be apparent that you are not Mistaken in your representations, but are instead Misrepresenting the facts.  Florida certificates have a 5% minimum yield(assuming they were not a 0% bid) "for the life of the certificate", whether it's for one year or seven years, Not a per annum basis.  Left over certificates(the ones with 18%) Are the ones nobody bid on, not because there isn't time but because people Decided not to bid on them, for one reason or the other.  Could a "safe" certificate slip thru the cracks and not be bid on....sure, but the odds are extremely low....not a wise pool to fishing in.

@Wayne Brooks yes! 5% is the minimum guaranteed. If the cert is bid down to .25% interest and they hold it for five years they will receive 5%. If they only hold the cert for 3 months they get 5%. His post of 5% per anum is not correct. 

@ Ned Carey.  The price Tax Lien Buyers Club would sell to their clients is the current Redemptive Value of the tax lien, which is the same price the county would sell a lien to a client. TLBC does not mark up the price of a lien beyond the redemptive value, but there is a charge which is a small fee for municipal transfer fees and a small administration fee for the team to complete the transfer and get the client registered at the county.  

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