In this interview, Ted will show you how to invest in real estate with little money via a safe, high-yielding investment.
You may watch the video above, or if you prefer, read the transcript below.
In How to Invest in Real Estate With Little Money, the topics we’ll be discussing are:
- How to Get into Real Estate Without a Lot of Money
- Tax Lien Certificates Are Secured by Real Estate
- Invest in Property by Just Paying the Back Taxes
- Learn More About Tax Delinquent Property Investing
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.
How to Get into Real Estate Without a Lot of Money
Do you need a lot of money to invest in real estate? Surprisingly, no, you can get started in real estate investing if you don’t have a lot of money. Here’s how to invest in real estate with little money.
You can start out small by purchasing tax lien certificates, which sell for a wide range of amounts, like $50, $500, or $2,000. A tax lien certificate gives you a position in that property. You own the property tax lien on it, and you’ll either get paid a high rate of interest or you’ll get the property.
You can do this with little money. However, be mindful that if you invest a small amount, you will earn a small amount. For example, Florida pays up to 18% interest on a tax lien certificate. If you purchase a $2,000 certificate and earn 18% on it, that’s not a large sum.
Tax Lien Certificates Are Secured by Real Estate
Tax lien certificates are a low-risk investment. You invest with the government, and you get a check back from the government. You either get paid, or you get the property because tax lien certificates are secured by real estate.
Here’s how it works. When you purchase a tax lien certificate, you’re paying someone else’s property taxes. You’re buying the tax lien from the county, and now you own that lien against the property.
The tax delinquent property owner must either pay the back taxes plus interest, which the county will pay to you, and if the property owner doesn’t pay, then you get the property.
Invest in Property by Just Paying the Back Taxes
The county will ensure that you get the property if the property owner doesn’t redeem the tax lien certificate. This means that you can acquire a property by just paying the back taxes.
Depending on the state, property taxes may only be 2% or 3% of the property’s value. Therefore, if the property owner doesn’t pay, you could end up with a property that you purchased for mere pennies on the dollar of the assessed value.
Learn More About Tax Delinquent Property Investing
If you want to learn more about how to invest in real estate with little money, view more of Ted’s free videos.
Ted is the authority on the subject and has been teaching tax delinquent property investing for over 25 years.
If you want to have a free auction list of tax defaulted properties that are currently for sale, go to TedThomas.com/freegift.
We hope you enjoyed “How to Invest in Real Estate With Little Money”
Tax lien certificates are sold in amounts that suit every budget. Whether you have $50, $500, or $50,000, there is a tax lien certificate for you. This is a safe investment that pays high rates of interest, and if you don’t get paid, you get the property.
We are here to help, and if you’d like to know more, Click here to get started today!
Read the Video Transcript:
Invest in Real Estate With Little Money
Randy: Hey Ted, it’s good to see you again. You’re the authority on tax liens and tax auctions and such. A question that folks have had is about how to invest in real estate with little money. Do you need a lot of money to start doing this? And what’s the best way to get in to start doing it if you just have a little money?
Ted: Let me start out by telling you this. You can get in for just very small dollars. The challenge is that if you come in with small dollars, you’re only going to make small dollars. Let me explain that to you a little bit. If you get started, and you want to test to see if this works, well, then I’d say this is the perfect thing. Start out with small dollars, $500, $2,000, or whatever it is, and buy a tax lien certificate. You don’t need a bunch of money.
Ted (cont’d): When you do that, you’re going to buy a piece of paper from the government, just a piece of paper, okay? That piece of paper means that now you have a position in that property. So you are either going to get paid, or you’re going to get the property. Only two things can happen with a tax certificate. You get paid, or you get a property.
Ted (cont’d): Let’s say you put $2,000 in, and you bought one in Florida. Florida pays up to 18%. So let’s say you made 18%. The people come in and pay after one year, and you made 18%. Now you know it works. So that’s the place to start, but 18% on a $2,000 investment is not very much money. You’re not going to retire on that.
Ted (cont’d): So let’s give it some thought. If you really want to be an investor, you’re going to have money in an IRA account. Maybe it’s in a Roth IRA, or maybe it’s in a savings account. Maybe you’re borrowing from your family to do it. Now you want to buy multiple tax liens. Let’s not buy the one that costs $2,000. Let’s buy one that costs $10,000.
Ted (cont’d): Now you’re buying a bigger property, and it’s got a bigger tax. Let’s say it’s $10,000, and you make 18%. Well, now you made $1,800. Now you’re starting to get it. The point is you can start as a little guy if you want, but people that buy tax liens buy multiple of them. The average guy that does is going to invest $30,000, $50,000, or even $100,000.
Ted (cont’d): It’s a very conservative investment because you can’t buy them from me. You can’t buy them from Randy. You have to go and buy them directly from the government. I’m going to teach you how to do that online. So you can sit at home and do it, but you’re going to invest with the government.
Ted (cont’d): You’re going to get a check back from the government. If you don’t get paid, the property is yours. So it’s a simple investment. One of two things are going to happen, you’re either going to get paid, or you’re going end up in with the property
Randy: That was the question. Just to clarify, when I get a tax lien, I’m not the owner of the property. I’m just an investor, right? Can you explain, how do I become the owner of that property then? What would happen?
Ted: Well, what happened is you raised your hand, and you said I’ll pay someone else’s taxes. Anybody that lends money, whether it’s a bank or a person, is going to make you sign a promissory note. You’re going to want collateral.
Ted (cont’d): If you go to the bank and say you want to buy a house, they say, oh, we’ll be happy to. Give us the deed to the house or the ability to get the deed to the house, and we’ll lend you all the money you want. And if you don’t pay us, we get the house.
Ted (cont’d): So the tax man does the same thing. The government doesn’t have extra money lying around. They spend all the money that comes in. They don’t even have money. So what they do is they say, folks, we need money to pay the sheriff, to pay the police, to pay the fire department. You get all that. They’ve got to pay for those things.
Ted (cont’d): What they say is we’ve got these people who didn’t pay the tax. So if you’ll come in and pay someone’s tax, we’ll give you this piece of paper. And the piece of paper says if you don’t get paid, you get the property. This investment is secured by that property, so this is a secure investment.
Ted (cont’d): If you don’t get paid, the county is going to make sure you end up with that property. Well, you just bought a property for only the back taxes which might be 2% or 3% or 5%. You bought a property for pennies. I’ve had people buy houses for $10,000 that were worth $180,000 because they paid the tax.
Ted (cont’d): Who knows what happened to the owners? They died. They moved away. I don’t know what happened to those people. You’re not going to believe this, but some people are so rich that they forget they own the property.
Randy: I’d like to be one of those people.
Ted: It happens all the time. Florida and Michigan have the same problem. In Florida, they come here in the winter. Oh, they’ve got to have a house. So they buy a house and they go back to Michigan. What if they pass away?
Randy: Oh yeah.
Ted: Nobody hears. Well, the government is going to say, you didn’t pay the tax. They take the house. Michigan is the same way.
Randy: This sounds like this is a pretty powerful investment opportunity. How long does it take to learn something like this?
Ted: Well, if you want to get complicated and really be a pro, it would take you a little over a year. The average person takes a couple of months to learn it. They come to one of our classes, and then we teach them online how to do it.
Ted (cont’d): 90% of the people are just guessing when they go to these auctions. Go to an auction, and you’ll see 200 people there. Only 10% of them know what they’re doing. 20% max, and the rest of them are just, ah, it’s an auction. They buy, and they don’t know what they bought.
Ted (cont’d): You’ll hear them say it at the auction. They’ll say, “Okay, Gladys, let’s go see what we bought.” I don’t have that kind of money. I’m a conservative guy. I’m not going to spend my money like that. I wouldn’t do that.
Randy: You’ve been doing this for a long time, so you know what you’re doing. 30 years. You can have 30 years of experience coming from Ted. Hey, if somebody’s listening, Ted, and they want to learn a little bit more, what’s the next best step for them to do?
Ted (cont’d): You want to get to know this stuff. There are tons of classes there already on video. I produce a lot of videos. Why do I do that? Because it’s the fastest way to learn. You can watch it again and again, and you’ll get it, I guarantee you.
Randy: People should definitely check it out, because there’s so much to see there. There are a lot of videos of Ted sharing some of his insights about getting into this, what to expect and what it takes. You can learn from the authority, so be sure to 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.