Real Estate Professional · Shalimar, FL · Member since 2009 · 117 posts · 6 votes
If this has been asked before, I apologize, but I couldn't find anything when I did a search.
Is anyone using a money partner to invest in Tax Liens? Not Tax Deeds, where you hope to foreclose and get title to the property, but Tax Liens. The first goal is to make a good return on the money, and if it doesn't get redeemed and we have to foreclose, that'll just be gravy.
If you do this with a partner, what is your arrangement with them as far as splitting the interest?
Specialist · Phoenix, AZ · Member since 2011 · 698 posts · 629 votes
13y
Lynn Henley I have never solicited for partners in tax lien investing. That places you into the SEC rules for Registered Investment Adviser.
I have had people approach me about managing some money in a partnership in lien investing. (Some even here on BP have contacted me). You can do a private partnership arrangement, but I strongly recommend you know your partners - and they know you.
Get a legal agreement set up and be honest and forthright in all your dealings. The biggest pain is keeping track of the lien investments. Most counties hold the liens on their computers only - there is no actual paper lien. It's tough to keep track of and do reporting for your partners. And look into the accounting/IRS side of things also.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
13y
Lynn Henley I invest with "Money Partners" in tax liens. I do the research and we together decide our bidding strategies. When the property redeems they get they interest. However if we are able to foreclose, I get the majority of the back end profit.
Everyone in this joint venture is actively participates. However I do the bulk of the up front research. What I bring to the table is my knowledge of tax liens and the Real estate market we are investing in. I have already looked at 2000+ tax lien properties this year.
For my investors they are getting a nominally 18% return and on 5 we have foreclosed on and settled so far this year an extra 15% from the back end profit. So as you can see I am offering a lot to the other partners.
One thing to consider which Jerry K. brought up is SEC regulations. In addition to "investment adviser" issue, you need to make sure you are not creating a "security" with your investors.