Trying to figure out what to do?
Investor · Coppell, TX · Member since 2008 · 2k+ posts · 646 votes
I am 59 years old and a college graduate. I had a severe stroke and a brain anurism about 41/2 years ago. I am thinking about buying tax liens and past due tax deeds on a part time basis because I am still recovering. I have been in construction management since I graduated college, so what do you think? What should I do. I have some access to retirement funds because my wife still works and has been saving for 25 years. She is a computer programmer and is 55 years old. What do you think?
Well, I think I'm qualified to respond on a number of levels.
In 2009 I had heart attack, emergency heart surgery to repair a ruptured aorta, massive stroke, coma, paralysis, etc. I fact, I was still in the coma 6 years ago today.
However, it was the cognitive damage that was most distressing, not the paralysis (have both to some extent to this day). Probably why I exhibit so much contempt for those posters who piss and moan about their "problems."
Since real estate involves so much to understand, cognitive skills are essential. Having an understanding of the foundation and essentials of RE is critical. If you are familiar with the collateral, valuation, title research and documentation, you are well in your way.
Legal aspects of tax liens (and affect on title and subordinate lien positions) is quite involved and will vary state by state.
If you decide to go forward, I would specialize in a tight geographic area with a particular state and focus your efforts on being an expert on these counties.
Energy level is a whole other topic. Personally, I employ strategies that work well given my own limits and adhering them, despite others not always understanding. The definition of maturity is learning how to say "no" is one word.
I don't know your personal financial situation, so you want to assess your own tolerance for risk and hassle factors in deals.
Also, I've learned to become a capital guy to my industry and my competition, in particular. Because I'm a good marketer and have retained much influence with the CA probate legal community, I've been able to leverage the relationships and refer a substantial percentage of my leads to my competition, including deals that I fund but don't want to work for one reason or another.
Lastly, don't let others define your limits for you. Only you can decide what is a good use of your time, money, brainpower and energy!
Michael,
That is a tough question to answer due to your health and unknown financial situation. If you have money set aside that you can invest and if lost, you will still be ok, then I say get into something you can do that won't cause much stress. I haven't personally persued tax liens because of all the things that go along with it. I'd possibly suggest investing in REIT's instead. This should give you a more structured return on your investments with less time/energy involved.
Thank you for what you said. My wife has been saving for about 25 years.
@Michael Lee you may want to repost this in the Tax lien category... you posted this in MHP category. you will probably get better feedback
Thank you for your advice!
Jay has a point. I suggest you join your local REIA and find locals who buy the same type of liens you'd be. Learn from them. I also suggest you check out at least one of the national lien teachers and buy training that attracts you. The more REI I do, the more I've come to believe you have to jump start your success by networking with folks doing the same thing (REIAs and BP and else where), hire mentors and coaches, buy training systems. I started when I was older and could not have done 35 SFRs in 5 years had I gone the path of learning on the job, vs mentors, REIAs, buying training to shorten the process.
Good luck. BTW one of the tactics that really ramped up our progress was my wife retiring teaching and moving her 403b to a SD-IRA and buying a bunch of rentals in her IRA. I have read of crafty people changing jobs strategically just to get at the 401k cash to move into a SD-IRA to buy houses vs being stuck in the stock market. I mention strategic job change in regards to your wife still working. Just one trick to get a larger exposure to real estate passive income.
Today, since we self manage 14 or so (taxable) rentals, we are entitled to have a solo-401k. Any type of self employment, managing your own taxable rentals qualifies (where rentals in an SD_IRA does not), you to have your own solo 401k. We will move our SD-IRAs to solo 401k, a MUCH better situation than working through a SD-IRA custodian. You have to live through buying, rehabbing, managing rentals through a custodian to realize the serious pain that is. A solo-401k gives you check book control, no custodian and a lower IRS penalty foot print should you have your retirment account audited.
Thank you for what you said. I was just getting ready to open a self directed IRA. But now I will do some more learning on that.
@Michael Lee i have moved your post to the tax liens forum as Jay suggested.
It is tough to say what is the best strategy for any one person. Your goals, resources, and personal skills all factor in to the decision.
The free ultimate beginners guide under the learn tab above will give you an overview of real estate investing and may help you decide.
I do tax liens in a big way. I do quite well with them but I must cation you that they are not without risk as many gurus pitching courses would imply. You have to know that the property is valuable enough to be security for your investment. Going by assessed value (the tax value) is not necessarily a good indicator.
Also you need to know the rules which vary by area. In my state tax liens expire worthless after 2 years if you have not started foreclosure. If you didn't know that you could lose a lot of money.
Thank you for saying that!
Once your spouse can transfer her employer retirement plan to an IRA, she will be able to invest her retirement funds in tax liens.
Thanks! Luckily my wife used to work for Southwest Airlines and she saved over a 100K there that is now in a local bank.
You have very good advice from all the gentleman above already.
With your construction background & 25% interest in TX. I do think investing in TX tax deed will be a good move for you; as You can collect rent(income) from day 1 during the redemption period.
Like @Ned Carey suggested. Know the state statue regarding tax sale is extremely important. Also make sure you MUST drive & check out the property before bidding.
Tax lien in other states can be a very slow process, but if you are patient & good with tracking process; it can be very rewarding when you can foreclose on the property.
@Richard D & @Roy Oliphant are two BP members that knows TX tax sale well. Connect with them & may be they can provide you with more local info.
Thank you for your input. I listened to CD material that was done by experienced people about tax liens.
Thank you for the return! I listened to 7 CD'S and I have learned a lot about doing research. Thanks!
Hello! I am so sorry that I am so far behind your original statement made but I just now learned that this even existed. I appreciate your comment and think I understand it. I only hope that you give me a chance to combine with you on construction or real estate. Best wishes!