In this interview, Ted reveals how to get started in real estate investing even if you don’t have a lot of money. Find out how to purchase properties for pennies on the dollar. Or if you prefer passive investing, you can earn high yields in a low-risk investment that’s secured by real estate.
You may watch the video above, or if you prefer, read the transcript below.
In How to Get Started in Real Estate Investing, the topics we’ll be discussing are:
- The Best Way to Start Investing in Real Estate
- Passive Investing in Real Estate With Tax Liens
- Real Estate Investors Make Big Profits Buying Tax Deeds
- Finding Investment Property on a Tax Delinquent Property List
- Learn How to Invest in Real Estate from the Experts
Want to learn how to get started in real estate investing? Would you like to buy mortgage-free homes for pennies on the dollar? Or earn double-digit interest rates secured by real estate? Then you don’t want to miss this FREE Auction List offer.
The Best Way to Start Investing in Real Estate
A little-known but highly lucrative way to invest in real estate is via tax delinquent property investing, which offers something for everyone and doesn’t require a lot of money to get started.
Tax delinquent property investing can be can be divided into 2 main categories:
- Tax Liens
- Tax Deeds
Approximately half of the states sell tax liens and approximately half sell tax deeds, and Ted can show you how to get started in real estate investing with tax liens and tax deeds.
Passive Investing in Real Estate With Tax Liens
A tax lien certificate is a high-yield, low-risk, passive investment that’s secured by real estate. When you purchase a tax lien, you’re paying someone else’s property taxes. You’re not buying the property outright. What you are doing is purchasing the tax lien against the property from the local county government.
Tax lien certificates are sold at public auctions where investors bid on the interest rate. The maximum rate of interest that you can receive varies per state. For example, in Florida, you could earn up to 18%, while Illinois pays as high as 36%.
The amount of a tax lien could be $50, $500, or $50,000, depending on the property and the amount of back taxes owed.
This is a passive investment because no work is involved, You purchase the tax lien certificate by paying the back taxes, and then you wait for the certificate to be redeemed to receive your money back plus the interest. 95% to 97% of tax lien certificates will be redeemed. If the certificate is not redeemed, then you will receive the property mortgage-free.
Real Estate Investors Make Big Profits Buying Tax Deeds
If you want to know how to get started in real estate investing for massive profits, tax deed investing generates quick cash flow.
In tax deed states, like New York and California, the county seizes the tax defaulted property and sells it at a public auction to the highest bidder. Auctions can be online, offline, or both simultaneously.
The bidding begins at the back taxes, which are only a fraction of the value of the property.
The profit potential is high with tax deed investing because properties can be purchased mortgage-free at 60%, 70%, or 80% or more discounts. You are are not waiting for a certificate to redeem; at a tax deed auction, you are purchasing the property outright.
Finding Investment Property on a Tax Delinquent Property List
Counties announce tax defaulted property auctions on the county’s website and in local newspapers. Counties will also publish tax delinquent property lists of the real estate being sold at the auction.
A list from a county with a smaller population may have a couple of dozen properties for sale, while a list from a larger county could have hundreds or even more than a thousand.
For example, a county like Los Angeles could have 1,500 or more properties for sale.
Learn How to Invest in Real Estate from the Experts
If you want to learn how to get started in real estate investing with tax liens and tax deeds, Ted Thomas offers home study courses, workshops both online and offline, and personal coaching.
Ted also provides hundreds of free videos and podcasts in the Media Library on this site.
While you’re here be sure to take advantage of the free auction list that Ted is offering. Check it out, TedThomas.com/freegift.
We hope you enjoyed “How to Get Started in Real Estate Investing”
Whether you have a little money or a lot or prefer passive investing to taking on a more active role, tax lien and tax deed investing offer something for everyone.
We are here to help, and if you’d like to know more, Click here to get started today!
Read the Video Transcript:
Get Started in Real Estate Investing
Randy: We’re back with Ted Thomas, who is the authority on tax lien certificates and tax auctions. Ted, the question for the day, or at least the question for right now is how to get started in real estate investing with tax defaulted property? I mean, do I need a million dollars to get in on this?
Ted: No, though, you want to end up with a million dollars. That’s what you want to do.
Randy: Well, yeah, we all do.
Ted: You don’t need that to start. You can buy tax lien certificates for $50, $500, or $50,000. You see, if the property is just a little sliver of land, the tax on the property would be 50 bucks. But if it’s a big ranch, it’s going to be thousands of dollars for the property tax.
Ted (cont’d): Whatever the tax is, when you raise your hand to buy the tax lien, remember that what you’re doing is paying someone else’s taxes. So, that person hasn’t paid their tax. When they don’t pay the tax, you’re going to go pay it.
Ted (cont’d): When you buy a tax lien, you’re basically buying a piece of paper. You take it home, put it on your desk, and then you sit on your rusty dusty because it’s a passive investment. You don’t do any work. That’s what a tax lien certificate is.
Ted (cont’d): You can buy small. Now, look, if you bought one for 500 bucks, and it paid 20%, what are you going to make? It’s just really small dollars. But if you buy them for $10,000, $20,000, numbers like that, then of course, you’re going to get a nice, decent return. Because each of the states have a different rate of return.
Randy: And that’s kind of a deal you’re making with the state? And the state likes it because they’re getting their tax money to pay the local police force and all that, correct?
Ted: Right. The government just wants their money. So what they do is they give you this certificate, and when you have this certificate in your hand or on your desk, you just sit on it. You don’t do anything.
Ted (cont’d): When the people come in and pay, then the county will call you up. Actually, they don’t even call you anymore. What they do is send you an email or a text, whichever you want, and they say, “Send your certificate in, and we’ll send you money.”
Ted (cont’d): If you do a few of them, then they won’t even do that. They’ll just send you a text and say, “We just deposited X dollars in your account.” Then you hear ding, and you look and say, “Wow, 700 bucks just went in my account.”
Randy: That’s not bad, but let’s talk about the big bucks. For big bucks, is tax deeds the way to go then?
Ted: Well, the real action for the investor types is tax deeds. Half of the states sell tax liens. They’re very benevolent states where they sell tax certificates. If they sell the tax certificate, they’re not kicking the people out. The people stay in the house, and they get a chance to come back, pay later and redeem the certificate.
Ted (cont’d): With tax deeds, now, these states don’t mess around. This is serious. New York, California, in those states, if you don’t pay your tax, they’re going to confiscate. That means they’re going to seize. They’re going to pick your house up and take it away, literally. Okay, they’re not going to literally do that, but in the eyes of the law, they take it away from you.
Ted: So now they own the property, but they don’t want the property. They don’t want it at all. What they do with that property is simply put it on a list and say, “We’re going to sell this property.” I’ll show you a list right now.
Ted (cont’d): I’m going to open it up so you can see the pictures and stuff. They’re going to sell any one of these properties on the list, and they’re going to sell it for just the back taxes. You’ll say, “Now wait a minute. This is a $400,000 house, and they’re going to sell it for $20,000 back taxes.”
Ted: Well, yeah. They’re going to sell it. All the county wants is the tax. These properties are sold by the hundreds. For a place like Los Angeles, if I show you the list, you’ll fall over backwards. I don’t want you to do that, so I have to forewarn you because they’ll have 1,500 or 1,700 properties. I’ll show you. Hold onto your chair.
Randy: Yeah, I’m ready.
Ted: Let me see you hold onto your chair.
Randy: Hang on. I’ve got the table here just in case.
Ted: You got the table? Okay, this is a tax defaulted list from Los Angeles, California. Look at this list.
Randy: Oh my gosh. So all those properties, I could get for almost a song?
Ted: Well, here’s the deal. They’re going to put it up for an auction, and the starting bid is going to be the back taxes. Savvy investors that learn how to research online and know how to check properties out, they want to buy it as close to the back taxes.
Ted (cont’d): Let’s say it was a $200,000 house, and you could buy it for 10 cents on the dollar. That means you would have spent 20,000 bucks. You get the idea. But other bidders are going to show up.
Ted (cont’d): Some of the other bidders are going to bid high. Some of them don’t go look at it, or whatever. It’s always an auction. So the houses could sell, but they rarely sell for more than 50 cents on the dollar or something like that.
Randy: Wow. I know you teach classes on how to get started in real estate investing. Do you do any personal coaching?
Ted: I’ve been personally coaching people for over 30 years. What’s happened is, my students have come along, and now they’re doing deals. So they have more time to talk to the people.
Ted (cont’d): We have four full-time coaches that are going all the time, and we do coaching classes. As a matter of fact, we even give classes away once a week so people can see what it’s like. It’s very impressive. I’ve been teaching people how to get started in real estate investing for 30 years.
Randy: Well, that’s great. Hey, I know your website’s got a little free gift attached to it. If you’re not there already, you want to go to TedThomas.com/freegift. Ted, what’s that about?
Ted: Well, the “free” is this. People who don’t know a lot about this should go to the free gift, and they’ll find out that they can get a free auction list, or if they want to, attend one of our all-day workshops.
Ted (cont’d): Now, we don’t give the workshops away. Those are not free, but you can go to an all-day workshop and learn about how to get started in real estate investing with tax liens and deeds. The website has a ton of free videos and stuff like that, so you don’t have to buy anything. You can just go there and see free stuff. Then if you want to come to a workshop, every month I do a one-day, and that one-day is all day.
Ted (cont’d): There will be anywhere from 100 to 250 people on there from all over the world, not just the United States. I have clients in Singapore. I have them watching in Australia; they’re up in the middle of the night watching this stuff, all the provinces in Canada, Mexico City, you name it.
Ted (cont’d): They’re all over the world. Because if you know how to use the internet, and we’ll teach you if you don’t, you can do it online. Anywhere you have an American bank account, you can do it.
Randy: Yeah, and like Ted said, when you go to the website, there’s a whole bunch of other videos on how to get started in real estate investing. A lot of great information from Ted here, so absolutely check it out. Take advantage of your free auction list. Get involved in this, and you can learn from the best. So, check it out, TedThomas.com/freegift.
Ted Thomas is America’s Leading Authority on Tax Lien Certificates and Tax Deed Auctions, as well as a publisher and author of more than 30 books. His guidebooks on Real Estate have sold in four corners of the world. He has been teaching people just like you for over 30 years how to buy houses in good neighborhoods for pennies on the dollar. He teaches how to create wealth with minimum risk and easy-to-learn methods.