This is one of Kirk's favorite asset classes. Learn why he loves investing in tax liens and you should too.
This week we interview an industry insider, Joanne Musa, about why investing in tax liens is a secret way to wealth. We discuss where you can find the best tax liens, the best states to consider, the risks and rewards, what you need to know to be successful, and why some of the largest Wall Street banks don't want you to know about it.
Is Investing In Tax Liens Right For You?
By Joanne Musa, the Tax Lien Lady®
Investing in tax liens used to be something that only the wealthy knew about and took advantage of. For decades it was a little known, high yielding investment vehicle. All of this has changed in the past couple of decades as more and more people have become aware of the high yields and minimal risk of investing in tax lien certificates. Many have been told about the benefits of investing in tax lien certificates but are not sure if it’s really something that they can do.
Tax lien certificates are an attractive investment for the person just starting out with little to invest because you don’t need thousands of dollars to get started, and you don’t have to pay any brokerage fees. There are drawbacks, however. You almost need to be an expert to invest profitably. This is something that you need to be able to devote some time to. It’s not like you can call your broker and tell him to buy some tax liens for your portfolio.
Tax lien certificates are sold at tax sales that are conducted by a county or municipal official. These sales are usually held as auctions in most states are only once a year. There are a few states with counties that hold tax sales quarterly or even once a month. To invest successfully you need to find out when and where these tax sales are held, research the properties in the sale, and in many states physically attend the auction to bid on properties.
What Happens When You Purchase A Tax Lien?
Successful bidders are issued a document, either a tax sale certificate or tax deed. Sometimes the document needs to be recorded with the county clerk (in some states you do not need to record the lien). You are also responsible for maintaining accurate records and submitting the proper documents to safeguard your investment. Some states like Florida and Arizona that have online auction do not issue tax lien certificates,
keep them on file in the county treasurer’s or county tax collector’s office.
If you have the time to spend investigating properties and you enjoy the challenge of learning something new, then perhaps investing in tax lien certificates could be a good way for you to grow your wealth without the typical risks of the stock market or conventional real estate investing. If, however, you don’t have the time to spend researching properties and finding out about tax sales, then this is probably not the right investment vehicle for you.
Another thing you want to consider is your location. Some states do not sell tax liens, and if you do not live in a state that has tax lien sales, you may have to spend a considerable amount of money traveling to tax sales in order to buy tax lien certificates. Although some counties have online auctions or sell tax liens through the mail, you still need to research the tax sale properties before you place a bid. If you don’t, you could end up buying a tax lien certificate on a worthless piece of property and losing money.
How To Get Started
The first thing you need to do is find out where and when the tax sale is held and get all the information you can about the tax sale. You’ll need to get the list of properties being sold in the tax sale. You also need to know the rules and procedures for the tax sale. This is sometimes published online on the tax collectors or county treasurer’s web site. The rules and procedures for the sale are quite different for each state, and sometimes even for each county within a state. Not knowing the rules and procedures, or not following them, can cost you!
You will have to do some research on the parcels that are in the tax sale to determine which ones to bid on. You can check the tax records to find out as much information about each property as you can. There are websites like Zillow.com and Trulia.com that you can check to estimate the market value and get an idea of the neighborhood for each property that you plan to bid on. For tax deeds you will want to do some type of title search to check for liens or judgments that might survive the tax sale. For vacant land (both liens and deeds) you’ll want to check any zoning laws to make sure that the property is buildable.
Your next step is to prepare for bidding at the tax sale. You’ll need to complete a w-9 form for tax lien and redeemable deed sales, so either have one completed and bring it with you to the sale, or have your tax ID number (social security, ITIN, or EIN #) ready. Depending on which type of tax sale (deed, lien, or redeemable deed sale) that you’re going to, you may also need to fill out a bidder information form, or an affidavit stating that you don’t owe any property tax in that taxing district.
Once you’ve done all your homework, you’re prepared to bid at the tax sale! If you need help with the steps to follow to get ready for first tax sale, or you want more information on what a tax lien is, or the difference between a tax lien, a tax deed, and a redeemable tax deed, you can get a free report on the 7 Steps to Building Your Profitable Tax Lien Portfolio..
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Today's Guest: Joanne Musa
The problem: You want to get higher return on your money than you can in money market account or bank CD, but you don’t want to risk your savings in speculative investments, and you don’t have time for real estate investing. You want to do something with your money, but you don’t know what, so it’s just sitting in a non-performing account making next to nothing. Or maybe you have invested in speculation and lost some of your retirement funds. That's the bad news.
But what if there was a way you could invest your money for high returns without shelling out a huge percentage of interest earned for fees, and you could do it without unnecessary risk and without tenants, toilets, termites, or negotiating deals? Here’s the good news! There is a way for you to invest your money safely for high returns... and the Tax Lien Lady, Joanne Musa, can show you how.
In the last 10 years, Joanne Musa, known online as The Tax Lien Lady, has helped thousands of investors around the world to buy profitable tax liens and tax deeds with her step-by-step system.
Best of all, her easy-to-implement training programs have now helped people from all walks of life take control of their financial situation and their retirement.
Fasten your seatbelt because you are about to learn how to use a strategy for investing that has been carefully guarded by wealthy investors for decades!
Please help me welcome Joanne Musa, the Tax Lien Lady.
Joanne's Online Presence: