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Tax Liens & Mortgage Notes

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Edward Li
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TAX liens investment from abroad

Edward Li
Posted May 31 2022, 22:02

Hi BiggerPockets!

It's my first post here, glad to be here! 

I am in China now but going to locate in Australia in the coming months and recently I have been focusing on tax liens. There is one guy named Huang Yongming pitching it and trying to selling his video and Robert Kiyosaki also mentioned this safe and lucrative way of investment. Is anyone else interested in investing in Tax Liens outside of USA?

Cheers!

Edward

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Ned Carey
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Ned Carey
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ModeratorReplied Jun 1 2022, 10:52

@Edward Li 
      "There is one guy named Huang Yongming pitching it"


There are hundreds of guys pitching this. It is nothing new, nor is it as easy or risk free as they imply

      "Robert Kiyosaki also mentioned this safe and lucrative way of investment"

Right now I would consider tax liens as anything BUT safe. Due to competition, the risk reward ratio is over the top right now. Right now anything of significant vale is going for interest rates of 2-4%. Not so good in a risking interest rate environment. The real problem is if an onwer does not redeem the prices being bid  may be to high to recoup your investment. 

Now of course there is still money to be made now. I just want you to have realistic expectations. thre is a lot of information here on how to do it. Three key points

1) Know the rules and how they affect your return

2) Know what you are bidding on. It can be difficult to interpret tax ID numbers and you might be bidding on a worthless lot.

3) Know the true as is value of what you are bidding on. Tax assessments of Zillow are not good enough to rely on. 

Good luck.

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Edward Li
Replied Jun 2 2022, 00:30

Thanks a lot for your ideas, mate! 

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Bruce Lynn#2 Real Estate Agent Contributor
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Bruce Lynn#2 Real Estate Agent Contributor
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Replied Jun 2 2022, 01:15

It's not impossible, but not easy either.

I'd read the book The 16% solution, before you pay for any course.

The problem with most courses as they are a very general overview of many different places, and not really specific enough to give you the expertise you need to be successful in the location you want to target.   While there are some general ideas, rules, concepts....I find that tax sales are very very local.   You have to learn the local rules and procedures.   My thought also is that it is very difficult to do long distance and online.

Last month at a sale where probably 10 bidders were bidding up cheap lots ....I think they had no idea what they were bidding on....they were in the flood zone, city swears they will never put water or sewer to them, and they are too small for wells or septic unless you put a bunch of them together.   Small Texas town where no one is building anyway.   I guess if you want to try to garden on them and haul in water, that might be an option. Or there are some other small options, maybe if you live nearby and want to park a semi overnight on it, something like that, might be useful, but for the most part, most people would think they are junk lots.   Some people bidding had never seen them, didn't know the size, didn't know what they would do with them, just thought they were cheap, so why not bid?

In many of these cases you are buying a liability, not an asset....you will need to mow and maintain the lot, pay taxes, pay insurance.

I always so go look at everything you buy, before you buy it.   Google Street View and Sat View will help you eliminate properties, but don't always help you on what to buy.   Some will have hazards you will need to clean up, junk to haul off that costs more than the lot, etc.   You may get lucky now and then, but you will also get unlucky now and then, so know and be an expert on what you buy, and your exit strategy.

While there is money to be made, it is not easy money in my opinion...it is work and there is risk....plenty of risk.

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Edward Li
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Edward Li
Replied Sep 11 2022, 19:24
Quote from @Bruce Lynn:

It's not impossible, but not easy either.

I'd read the book The 16% solution, before you pay for any course.

The problem with most courses as they are a very general overview of many different places, and not really specific enough to give you the expertise you need to be successful in the location you want to target.   While there are some general ideas, rules, concepts....I find that tax sales are very very local.   You have to learn the local rules and procedures.   My thought also is that it is very difficult to do long distance and online.

Last month at a sale where probably 10 bidders were bidding up cheap lots ....I think they had no idea what they were bidding on....they were in the flood zone, city swears they will never put water or sewer to them, and they are too small for wells or septic unless you put a bunch of them together.   Small Texas town where no one is building anyway.   I guess if you want to try to garden on them and haul in water, that might be an option. Or there are some other small options, maybe if you live nearby and want to park a semi overnight on it, something like that, might be useful, but for the most part, most people would think they are junk lots.   Some people bidding had never seen them, didn't know the size, didn't know what they would do with them, just thought they were cheap, so why not bid?

In many of these cases you are buying a liability, not an asset....you will need to mow and maintain the lot, pay taxes, pay insurance.

I always so go look at everything you buy, before you buy it.   Google Street View and Sat View will help you eliminate properties, but don't always help you on what to buy.   Some will have hazards you will need to clean up, junk to haul off that costs more than the lot, etc.   You may get lucky now and then, but you will also get unlucky now and then, so know and be an expert on what you buy, and your exit strategy.

While there is money to be made, it is not easy money in my opinion...it is work and there is risk....plenty of risk.


 Thanks a lot Bruce!!! Yes I agree that we need to be expert on what we buy. We cannot bid for anything that we are not familiar with. otherwise we are not investors but gamblers. Thanks again!

Edward

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Chris Seveney
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Replied Sep 12 2022, 15:41

@Edward Li

Personally for the types of returns you will get with the time to learn up on tax liens, you would be better off investing passively in a fund.

Tax liens are very competitive as hedge funds are buying them up for single digit returns.

Just my 2 cents