Anyone out there have success in tax lien investing? Do I really need to wait a year or more to make a return? I'm looking to invest some money as I'll have a good chunk soon, teetering between tax liens and mobile homes. Any advice? My goal is to make some good cash flow so I can use it to invest more. Any help is appreciated. Thanks, peeps...
I put my money into a tax lien pool with comian investments and its been there for 2 years now. Its doing good but its 5 years to stay. Joanna Musa recommended them to me but now she has her own tax lien investment club http://www.taxlienlady.com.
It may be best to speak to a financial advisor that knows real estate who can best advise you on what to do. Ebere Okoye is the founder of The Wealth Building CPA and does taxes for NYREIA and many investors I know use her. She may be best to assit on good returns matching your personality and finances.
I am also new to this area and in the research phase. Here is a good article, though dated.
As I ran into other useful sites or articles, I will continue to post them here for everyone's benefit.
Before investing in any money in this niche industry, spend time researching the various state laws and decide on a geographic area to focus. I recommend the book by Larry Lofits, Profit by investing in Real Estate Tax Liens. The author is the best at not sugar-coating the risks and rewards of this type of investment. Personally I would not listen to tax lien "gurus" (there are hundreds of them) because usually they are just trying to sell you a product or service (they probably make more off that then actually investing). Once you have honed in on where you want to invest, Id also recommend attending a sale just to learn the process. Try to network with actual bidders and those who know what they are doing.
I have been investing in Tax Liens for about 8 years and am just now turning this into a full time business. How long it takes really depends on the investments you make, the capital
you have access to, and the time you have available to pursue.
Thanks for the tips, guys. I read the 16% solution, which is a good start to the process. I've also done extensive research on the gurus, and even navigated around a few state websites. There are liens out there, but the good ones are tough to nail down. i will keep looking....I came across some software a lawyer was selling for about 300 bucks. Thought about checking it out as it it much cheaper than these gurus. Any thoughts?
Yes I do significant business in tax liens. My model is to get the properties by foreclosing on the tax liens and wholesale them off. I don't make any money off the interest because it is borrowed money to start with.
How long it takes to get a return is an unknown in the tax lien business. That is one of the disadvantages. You may get someone to redeem after only a few weeks and get a few measly dollars interest. My first check this year I got $4.98 in interest. Or it may take 2 years or more so you are collecting the interest for a much longer period of time.
If you foreclose on a property it can take much longer than that to get your money back. But if you bid/bought well that could be much more profitable.
I really don't know what some software is going to do for you. I use an excel spreadsheet to evaluate and calculate my bids on liens.
Good luck - Ned
thanks for always responding. The software promises to give insight into the due diligence process, and also helps with assignment purchasing. As a newbie - I really don't know how to locate the good deals for tax liens. I have found sites with properties for sale, but most of them are under 2-300 bucks. I'm guessing there's no house with those - but if there is I'd love to find out how to know. Long and short I don't want to pay 1000 bucks for some program that won't teach me anything. Also considering a Rich Dad seminar coming up in the fall on tax liens. I'm sure it won't be cheap either....
Read the books on tax lien investing. They break down how it works by state. I believe tax liens can be a profitable way to invest without having to spend a lot of time. I don't personally invest in them in Florida because the returns can be very minimal. Depending upon capitol, I would consider doing 1st HML instead. Keep in mind you won't typically end up owning the RE, but you can potentially get very high returns. I recently had two that yielded well over 24%. My time invested for these was easily less than 5 hours, the loans were extremely LTV with hardly any risk, and the returns were pretty good. There are lost of avenues to invest in real estate without a ton of money, and without the hassles of broken toilets and having to replace roofs.
I personally wouldn't consider a rich dad seminar. I suspect much to expensive to be worth the cost. The number one piece of due diligence information you need is what is the property worth. No software is going to consistently give you an accurate number on that.
That said some states may require more due diligence than others and the software "may" provide useful info.
I'm starting to invest in tax liens. But I'm using the system and investing on the property instead of buying the tax lien certificates. I'll explain. You get a list of tax lien properties and call the owners that will have their house auctioned in a few weeks. They won't receive a penny unless they redeem the tax. That's where you come in. You buy his property for the tax lien amount plus some cash to the owner. You redeem the tax lien, and get the property for a fraction of it's price. Than you wholesale or fix and flip.
@Luis Noronha have you had any success with this? Are you doing title searches before you contact the owner? Have you run into existing mortgages that made it not worth the investment?
@Luis Noronha - when you buy one of the properties, are you checking to see that there is no mortgage/liens before you contact the owner?
@Syed Azam Thanks for posting this article! Really helped in my decision process. I've been looking for a way to jump into the real estate game and thought this might be a less expensive way. But seems to me now after my research, this is more risk and complication than I want. Great thread...thanks everyone!
Not to create more competition for myself in Georgia but it is a market offering tax deeds with one year redemption periods and a 20% for the first year. Pick one of the large counties and research delinquent tax sale through their tax commissioner's website. Not difficult but does require due diligence.
Tax lien investing can only be risky to those who don't research or build a team. This market in fact is the safest, as your investment is secured by a tangle asset normally worth far more than the capital. Either obtain a good interest or property, depending on the owner's ability to pay the debt. The term risk is not applied to the maturing of the asset, it is measured on the when in this investment. Don't run away too soon.
@Luis Noronha That can also be really risky. I've represented some banks (and investors) on both sides of this type of thing in Georgia. If you "redeeem," after making this side-purchase from the tax debtor, then you step into their shoes; if there is a large mortgage on the property, or other liens, those would not be cut off, and would still be owed against the property. Granted, you wouldn't have personal liability, but you wouldn't be able to sell the property without having those paid off. You'd be risking your acquisition cost if it turns out that the property isn't worth enough, or if there are liens that you don't know about. One benefit of tax liens/deed purchases is that they can be used to cut off almost any other lien. If you back-door your way into the tax debtor's shoes, you lose that benefit. That being said, a little title research for your "top 5" properties can protect against most of this.
@Sam Bagwell Maybe we should connect. I'm also from Gainesville, GA just starting out. I'll be at the meetup on 6/30 at the library in Gainesville, you should come out. I would love to speak with you.
@Bianca Harrison I didn't even know there was a meetup that day. What time is it? Feel free to private message me, and we'll swap contact info.
@Sam Bagwell I live in GA as well and would like more information on the TAX Lien process. I'm still a little fuzzy on some things. I won't be able to make the meetup group as I live in Ellenwood and it's quite a ways from me. Can we swap info as well?
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