tax lien investing 101 - how to invest in tax deeds and tax lien certificates

TAX LIEN INVESTING BASICS

BY TED THOMAS

Enroll Now To FREE 4-Day Tax Lien Certificate and Tax Deed Training System www.tedthomas.com/success

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http://www.tedthomas.com/success


TABLE OF CONTENT WHAT IS A TAX LIEN?........................................................................3 WHAT EXACTLY ARE TAX LIEN CERTIFICATES AND TAX DEEDS?................................................................................................5 GUIDE TO BUYING TAX LIENS…………………………………………7 A GUIDE TO PURCHASING TAX LIENS ONLINE……………………8 WHAT EXACTLY IS A TAX DEED SALE?.........................................10 WHAT IS A DELINQUENT TAX DEED AUCTION SALE?.................12 HOW TAX DEED INVESTING IS DIFFERENT THAN BUYING TAX LIENS……………………………………………………………………….13 THE ESSENTIAL LIST OF TAX LIEN CERTIFICATE STATES……15 COMPLETE LIST OF TAX DEED STATES…………………………...17 ABOUT TED THOMAS…………………………………………………...18 YOUR NEXT STEPS……………………………………………………...21


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WHAT IS A TAX LIEN?

The simple answer to what tax liens are is: it’s an obligation a delinquent tax payer has to the local government (typically a county or other local municipality) to pay past due taxes on property. These tax liens are offered for sale to investors, typically at a government tax lien certificate auction, by law the local government must collect the money needed to provide local government services from each property owner. For the investor this system provides a safe, secure and predictable investment in government issued tax lien certificates with maximum annual interest rates, set by the state government, which can be 18% or more annually.

When investing in tax lien certificates you are making an investment secured by the real estate on which the taxes are due. If the delinquent taxes are not paid you can get possession of the property for only the past due taxes and fees… basically for pennies on the dollar! That means that if you bought a tax lien certificate and the property taxes are not paid, you could end up owning the property for just the back taxes and fees owed the local government.

So, what is a tax lien? It is considered by many as the safest investment you can make. Here are some unique features about tax lien investing that benefit the investor in tax lien certificates:

1. Tax liens are sold in about half of all the states in the USA; the other half sell tax deeds.

2. The laws and regulations regarding the sale of tax lien certificates are defined by state law and the sales process is administered by local government.


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3. State laws set the maximum interest rate a tax lien certificate may pay, which can be 18% annually or more, depending upon the state law.

4. There are no commissions payable to brokers when buying tax lien certificates or when they are paid off (redeemed) by the delinquent tax payer… no extra fees paid to a middleman, the investor gets back all the investment and all the interest.

5. About 95% of all tax lien certificates are paid off within three years of being issued.

6. Tax lien certificates are secured by real estate. That means if that tax lien certificate is not paid off you can own the property for only the cost of the unpaid property taxes and fees after a foreclosure process.

When thinking about the question: “What is a tax lien?” investors in tax lien certificates take two approaches:

1. Obtain a high interest rate passive investment, where the tax lien investor gets all the original investment returned plus a high rate of interest when the tax lien is paid off, or

2. A strategy of investing in tax liens with a likelihood of not being paid off, resulting in the tax lien certificate buyer owning the property for pennies on the dollar value of the property.

Traditionally most tax lien certificates and tax deeds sales were held at a public auction. Today many of these government auctions of tax lien certificates and tax deeds are done on-line. Investors can buy tax lien certificates from almost anywhere in the world using the internet.

After over 20 years of instructing others on the secrets to successfully investing in government auctioned tax lien certificates and tax deeds, Ted Thomas has presented at hundreds of wealth building seminars, held over a hundred workshops and amassed thousands of hours of recorded material that he has edited into a comprehensive learning system. This system includes


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presentations from Ted Thomas and many other experts with first-hand personal experience investing in tax liens and tax deeds. In this video Ted helps answer the question: “What is a tax lien?”

WHAT EXACTLY ARE TAX LIEN CERTIFICATES AND TAX DEEDS

To answer the question: “What are tax lien certificates?” the first step is to explain a tax lien. Local governments (county, city, township, town, parish) receive most of their operating funds from property taxes. When property taxes go unpaid the local government’s method to enforce payment of those taxes is to place a tax lien on the property. A tax lien is the legal documentation defining a debt the property owner has to pay the government past due property taxes. So the local government has the money it needs to operate it sells those tax liens in the form of tax lien certificates to investors. Tax lien certificate investors are rewarded for their investment with an interest rate defined in state law that can pay interest rates of 16%, 18% 36%. They are most often purchased at annual government auctions, but can sometimes be purchased from local governments without an auction. What are tax lien certificates and some of the advantages of investing in them? Investing in tax lien


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certificates is one of the safest, predictable and secure investments you can make. Here are some unique features about tax lien certificate investments that benefit the investor:

1. Tax lien certificates are sold in about half of the states in the USA; the other half sell tax deeds.

2. The laws and regulations regarding the sale of tax lien certificates are defined by state law and administered by local government.

3. State laws set the maximum interest rate a tax lien certificate may pay, which can pay interest rates of 16%, 18%, 36% annually, depending upon the state.

4. There are no commissions or brokers when buying tax lien certificates or when they are paid off by the delinquent tax payer… no extra fees paid to a middleman, you get back all your investment and all the interest by law.

5. About 95% of all tax lien certificates are paid off within three years of being issued.

6. Tax lien certificates are secured by real estate. That means if that tax lien certificate is not paid you can own and by law, take the property for only the cost of the unpaid property taxes and fees.


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GUIDE TO BUYING TAX LIENS

Looking to find out more about how to buy tax liens? Then you have come to the right place…

For over 200 years local governments (county, city, township, town, parish) have helped investors make money buying tax liens (officially a tax lien certificate). When an investor buys tax liens from the government the investor is making a loan to cover unpaid delinquent property taxes, this is money the local government needs to operate and pay county employees. State laws regulate the process to protect the investor and the property owner. Depending upon the state, interest rates on tax lien certificates can pay interest rates of 16%, 18%, 36% to reward those buying tax liens. To protect those buying tax liens from risk state laws regulate how the tax lien buyer gets ownership of the property if the delinquent taxes are not paid.

Many investors have learned how to make money buying tax liens from Ted Thomas. He offers training that will help first-time or seasoned investors find the most profitable tax liens to buy and avoid costly mistakes.

The most important recommendation to make money buying tax liens is:

Before buying any tax lien, research the property which is in default to make sure the property has a value greater than the value of the tax lien. Information should be verified; it is critical to determining the value of a property. Understanding and researching properties will almost guarantee you can make money buying tax liens.

For more advanced investors there are many techniques used to find and buy the highest yielding tax liens. If your investment strategy is to own property for pennies on the dollar there are numerous strategies, sophisticated investors use; for example, seek out properties with a sale price much higher than the cost of the tax lien and a lower likelihood of the taxes being paid, resulting in the investor owning the property for pennies on the dollar. One clue that a property’s taxes may not get paid off is if the owner lives in another country.


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A GUIDE TO PURCHASING TAX LIENS ONLINE

This guide to buying tax liens online explains the process used by most local government authorities to allow investors to buy tax liens online.

How to buy tax liens online is a relatively simple process; though the rules are set by each state that sells tax liens at auction, and those rules are administered by the local government (county, parish, township, city, town). Most tax liens are bought at government administered public auctions, where investors bid on and buy tax liens online.

In some cases tax liens are sold by the local government without an auction process, this is where investors can buy tax liens online without a bidding process, and meaning the investor buys the tax lien and receives the maximum interest rate allowed by law. Most local governments that sell tax liens will have a guide to buying tax liens online, and many have practice sites, where investors can learn the steps of how to buy tax liens online without having to put up any money.

Each state has an annual tax lien auction with the time of year for the auction set by state law. Anyone can buy at the auction or sale, even non-United States citizens; all you need is a tax identification number (social security number or a business tax identification number for most U.S. citizens, and an Individual Tax Identification Number for most foreign nationals). All investors can buy tax liens online from their home state or country.

The following is a basic step by step process to go about buying tax liens online: 1. The investor logs onto the online tax lien auction website and provides some basic information to register as an online tax lien bidder such as:


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a. Name of the person or other legal entity who will own the investment

b. Tax identification number of the investor

c. Bank account information for the transfer of funds electronically

d. The deposit amount the investor wishes to transfer is specified and transferred from the investors bank account (the deposit is typically a percentage of the total maximum value of tax liens the investor wishes to buy)

2. Next the investor researches each tax lien they are considering buying to ensure that the real estate backing the tax lien has sufficiently greater value than the tax lien. Most or all of the research you want to do can be found online.

3. The next step to buy tax liens online is to bid. That process typically involves selecting a tax lien and defining a percentage interest rate you are willing to accept as an annual interest rate on that tax lien. You can bid to buy more tax liens than your deposit will cover and the online system will stop buying tax liens in your name once your limit is reached.

4. After the online tax lien auction process is complete you will get a summary of what tax liens you bought and will either be required to electronically pay the balance of what is owed for your tax lien purchases, or get a refund of the unused portion of your deposit.


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5. Next wait until the delinquent tax payer pays the property taxes and you will receive all your original investment in each paid off tax lien plus interest electronically transferred into your bank account.

6. Should any of the tax liens you bought not get paid off by the delinquent taxpayer, you can get the property for just the cost of the back taxes and fees.

7. Tax lien certificates that are not sold during the auction are often available to investors to buy online shortly after the auction using a similar process as used during the auction, but in this case there is no bidding. The first buyer to make an offer to buy a tax lien online gets the lien at the maximum interest rate allowed by law.

Each local government agency offering the opportunity to buy tax liens online has a guide to buying tax liens online available on their website that explains the specific rules of the online tax lien auction in that jurisdiction.

There are the basics to buying tax lien certificates online. Some may profit buying tax liens with this simple guide, but the sophisticated investors use advanced strategies to find uniquely profitable investments less educated buyers of tax liens overlook.

WHAT EXACTLY IS A TAX DEED SALE? To answer the question: “What is a tax deed auction sale?” first it is helpful to know why tax deed sale/auction are held. Local governments (county, city, township, town, parish) receive the majority of their funding from property taxes. If those taxes are unpaid for an extended time the local governments must take action to collect delinquent taxes, one method is to make a demand for payment and if that payment is not forthcoming the government sells the property to the highest bidder at a tax deed sale/auction (tax defaulted property auction), in about half the states; the other half sell tax lien certificates. Simply put, a tax deed sale is the sale is an auction by the local government to collect delinquent property taxes.


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Tax deed sales are held by local governments throughout the year, as often as once a month in some local counties. The laws regulating a tax deed sale/auction are set by the state legislature and enforced at the local county/ municipality government level. The laws can be different from state to state, enforcement can vary within a state depending upon the county or municipal rules of the sale. There are many common features of a tax deed sale (tax defaulted property auction) that apply in each individual tax deed sale/ auction, but the rules can vary, so it is essential that you know the rules of each tax deed sale before bidding. Here are some features that that are common to most tax deed sales:

When buying at a tax deed sale the bidding starts at the back taxes due the local government and the price is bid up, as in a conventional auction.

Most liens on a property (mortgage, deed of trust, mechanic’s liens) are removed when the property is sold at a tax deed sale/auction; only government liens typically remain.

After a tax deed sale/auction, a few states have a period of redemption (one year or less), where the delinquent tax payer has one last chance to pay the taxes and restore their full ownership rights to the property, before the tax deed buyer can take possession of the property. Most states have no period of redemption, meaning as soon as the tax deed you’ve purchased is paid for with the local government, you own the property free and clear for the price you paid at the tax deed sale.


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WHAT IS A DELINQUENT TAX DEED AUCTION SALE?

Local governments (county, city, township, town, parish) receive most of their operating funds from property taxes. When property owners default and fail to pay property taxes the local government’s method to enforce payment of those taxes is to place a tax lien on the property or seize the property and sell it for the back taxes which are due. If the property taxes remain unpaid the government in about half the states in the United States sell tax lien certificates and the others sell tax deeds at a tax defaulted auction. There are two basic systems used in the United States for local governments to recover unpaid taxes at a delinquent tax sale:

1. In states that sell tax lien certificates the buyer of a tax lien certificate pays the government the amount of the past due taxes. When property taxes are paid, the tax lien certificate holder gets back all of the original investment plus a high interest rate from the government. In the occasional situation, where the tax lien certificate is not paid, it’s possible for the investor to get possession of the property, after a foreclosure process, for just the back taxes and fees owed to the government.

2. In states that sell tax deeds the investor is buying the property, usually at a significant discount from the full market value. Delinquent tax deed sales are most often held at a public auction, where anyone can buy, including foreign investors. Those who invest in tax lien certificates are often seeking a passive high interest return on their investment, while those, who invest in tax deeds are willing to buy and sell property and earn a much greater return on their investment at a delinquent tax deed sale auction.


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HOW TAX DEED INVESTING IS DIFFERENT THAN BUYING TAX LIENS

Tax deed investing was created by state legislatures over 200 years ago in the United States. A tax deed is a property deed issued by the local government (county, city, township, town, parish); it’s a transfer document for real estate, transferring a property, which is sold at auction for non-payment of back taxes. A tax deed investor typically buys a tax deed from that local government at auction for as low as the delinquent taxes, plus any premium that is bid during the auction process. In some unique cases investing in tax deeds can be done directly with the local government, after the auction process, for just the cost of the back taxes. In most states that sell tax deeds those investing in tax deeds get full ownership of the property following the sale, though in some states there is still some short period of time allowed for processing paperwork or giving the delinquent tax payer some final short time to redeem the property. In all cases the sale of property at a tax deed auction or sale is regulated by State law and administered at the local level. The end result is that when investing in tax deeds you get the property at a cost of the unpaid taxes and fees plus any additional amount that may be bid at auction. Tax deed investing may result in buying the tax deed well below market value, sometimes for just pennies on the dollar. Tax deed investing opportunities are available in about 50% of the states in the USA and tax liens are available in the other 50%. Investing in tax deeds is available to foreign investors, from Canada, Europe, anywhere in the world. The business of tax deed investing requires a little more involvement on the part of the investor than tax lien investments.


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In the case of tax deed investing you will own the property if you are the high bidder at a tax deed auction. Various strategies can be used when investing in tax deeds: for example;

1. A strategy of buying properties, usually residential homes that can be quickly sold for a profit. Those, who following that strategy attempt to buy below the current value of that property and sell for the current value.

2. A strategy of buying and renovating is used by some. In this strategy properties that need work are sought out and purchased. Someone knowledgeable in renovation and current market demands can make this a profitable business.

3. Some like to buy vacant land. This tax deed investment approach works well especially with land in a developed area.

4. Sometimes odd parcels or buildings get neglected by those investing in tax deeds, a clever and experienced tax deed investor is often able to buy such properties for only the back taxes.


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THE ESSENTIAL LIST OF TAX LIEN CERTIFICATE STATES

Tax lien certificates are sold in 21 states and Washington D.C. The list of tax lien certificate states is below and the map that follows shows the tax lien certificate states in gold.


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(Tax lien certificate states are in gold above.)

• Alabama • Arizona • Colorado • Florida • Illinois • Iowa • Indiana • Kentucky • Louisiana • Maryland • Massachusetts

• Mississippi • Montana • Nebraska • New Jersey • New York • Ohio • South Carolina • Vermont • Washington DC • West Virginia • Wyoming

States not on the list of tax lien certificate states sell tax deeds. The rules for the sale of tax lien certificates are defined by state law, and procedures for the sale are administered by local governments. The list of tax lien certificate states above have annual public auctions, where the local governments (counties) within that state sell tax lien certificates secured by real estate on which the property taxes have not been paid.


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http://www.tedthomas.com/tax-deeds/

http://www.tedthomas.com/wp-content/uploads/2011/08/List_Of_Tax_Lien_States.png

This gives the tax lien certificate investor a government administered investment often at a high interest rate well above rates offered by banks and other institutions. If the property owner fails to pay the taxes the tax lien certificate investor can get ownership of the property for pennies on the dollar, often paying only the back accumulated taxes.

COMPLETE LIST OF TAX DEED STATES

Tax deeds are sold in 31 states. The map that follows shows the tax deed states in green, which are

• Alaska • Arkansas • California • Connecticut • Delaware • Florida • Georgia • Hawaii • Idaho • Kansas • Maine

• Michigan • Missouri • Nevada • New Hampshire • New Mexico • New York • North Carolina • North Dakota • Ohio • Oklahoma • Oregon

• Pennsylvania • Rhode Island • South Dakota • Tennessee • Texas • Utah • Virginia • Washington • Wisconsin


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http://www.tedthomas.com/wp-content/uploads/2014/06/List_Of_Tax_Deed_States.png

States not on the list of tax deed states sell tax lien certificates. The rules for the sale of tax deeds (tax defaulted real estate) are defined by state law, and procedures for the sale are administered by local governments. The list of tax deed states above have public auctions throughout the year, where the local governments within that state sell tax deeds, some states have monthly auctions. The tax deed investor is buying real estate with a starting bid of the back taxes and fees owed the local government, sometimes for 5% or less of the appraised value, giving the tax deed investor a deed to property well below its resale value, or the assessed tax value.

ABOUT TED THOMAS

Ted Thomas is a Florida based educator, publisher and author. Thomas is publisher and author of more than 30 books. His guidebooks on Real Estate have sold in four counties of the world.

In the recent past, over 75,000 clients have carefully evaluated Ted Thomas’ QuickStart Introduction In Secured Tax Lien Certificates and have chosen to become associated with the market leader. Thomas’ Home Study Materials are international best sellers and draw clients from Europe and South America. Ted has developed in-depth training programs that show you step-by-step how to profit from tax lien certificates and tax deeds. He is a the pioneer in teaching this material and has been doing it for over 20 years. Thanks to Ted’s dedication to


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http://tedthomas.com/

educating people about this low risk high yield investment strategy, the secret is getting out. In-fact, more and more people are popping up on the internet teaching this material.

Did you Know… Ted Thomas’ organization is the single largest “SOURCE” of Tax Lien & Tax Deed Information Products in the world… To help you… We are knowledge brokers and we provide financial solutions in may forms.

For example: Guidebooks and Manual, Directories, Newsletters, Audio Home Study Courses, Video Learning Systems, plus Live Weekly Teleconference Sessions, Workshops, Seminars and Coaching.

In Summary Ted Thomas is the single largest “SOURCE” of the Tax Lien & Deed Information Products in the World!

Ted Thomas is a specialist at teaching Advanced Tax Lien Certificate and the Tax Defaulted Auction processes and concepts to investors and professionals. Industry insiders consider Thomas to be America’s Tax Lien and Tax Deed Authority. In the past two decades he has pioneered many new techniques and strategies for Investors and Professionals.

What Investors say about Ted Thomas

“With Ted’s home study materials I learned how to do this

online. In just 5 weeks after I started I made myself thousands

of dollars using your online process sitting in Alberta Canada.

The first purchase in the states was valued at $57,000; I only

invested $7,000 at the Tax Defaulted auction. This training is

unbelievable it’s so easy!.”

~ JP Cloutier


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“After studying a few weeks I purchased a commercial property

at a tax auction in downtown Portland, Oregon. I quickly sold

that property and generated over $20,000 in profit, it only took

me weeks!”

~ Percy Folkard

I made 80% (ROI) Return On Investment my first year. I bought

this property for $11,000 and I am renting it out for $750 per

month, someone has already offered me $40,000 but I know in

3-4 years this house will be worth $80,000!

~ Caryn McKinney

“It’s the safest investment I’ve seen earning a better rate than

the banks are offering.”

In Florida, Marilyn purchased 48 tax lien certificates with returns

between 8% – 18%

~ Marilyn Martens

“My friends are making $1,000s using this

simple government sponsored program.”

Karen at auction paid $17,600 for this

property…assessed valued $48,000!

~ Karen Lewis


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YOUR NEXT STEPS

Want to discover simple 3-step process Ted’s students use to purchase property for pennies on the dollar. Join the free video training here www.tedthomas.com/success


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