Get valuable insight into how to purchase tax lien properties from Ted Thomas and Bill Williams as they discuss a recent auction Bill attended in Florida. Bill will relay a lot of details and nuts and bolts information about how these auctions work and how to purchase auction property.
Bill’s been doing this for 20 years, and Ted for 30 years. With 50 years of experience between them, they know all the ins and outs, tips, tricks, and strategies on how to purchase tax lien properties.
Bill will provide specific examples of tax lien certificates he purchased, and also share an amazing success story of a student he coached.
Anyone can do this with knowledge of how to purchase tax lien properties. This truly is a business of abundance, and Bill and Ted will show you why.
Getting Started in Tax Auctions
Narrator:
Welcome to Imagine Wealth Without Risk, the podcast that guides you to fulfilling your dreams through guaranteed secure investing. Here’s your host, Ted Thomas.
Ted Thomas:
Hi everyone. This is Ted Thomas, and this podcast is all about imagine wealth without risk. Now, this is all about making less risk and making more money, and that’s what everybody wants. So we’re going to talk about safe, secure, tax lien certificates, and tax deeds on this podcast.
My guest today is Bill Williams and he’s just had a recent experience that I want you guys to know about, because he’s had a lot of experience buying tax lien certificates, especially the past few years. Now, I don’t want to steal his thunder, but Bill, are you on there okay?
Bill Williams:
I am.
Ted Thomas:
Oh good. Well, welcome aboard and glad to have you again. And let’s just start right out with you asking questions. I’m going to ask you questions about the auction. So you went, and were in a big auction, a small auction? What was it like?
Bill Williams:
Well, I went in my home county and the auction, the initial list was somewhere around 15,000 properties were having tax lien certificates sold on them. And after redemptions, there were probably over 10,000 that went to auction.
Ted Thomas:
10,000. Wow, that was a lot to choose from. That was pretty good then, right?
Bill Williams:
It was. I’ve been on quite a few of those 10,000 too.
Ted Thomas:
Well, take me through that whole process, if you will. And I’ll try not to interrupt, because this is so interesting for the reader. Well, let me do a quick reminder, for those of you that might’ve just come here, a tax lien certificate is a result of someone not paying their tax. In other words, a property owner does not pay their tax.
Some of the states are very benevolent, like Florida, and Bill and I are talking from Florida today. A state like Florida is benevolent and they say, oh, look, we’re not going to take your house away; we’re going to issue a tax certificate. So anybody can buy one of those.
What you’re actually buying a piece of paper, but it has an interest rate attached to it. So I’m going to let Bill run with it, and then we’ll make some discussions as we go, because I don’t want him to miss anything. This is so good and so important for all of you to learn.
How to Purchase Tax Lien Properties in Florida
Bill Williams:
Well, Florida is a state that holds almost every county, if not every county, holds their tax lien certificate auction online. So you can do 100% of everything you need to do to buy a tax lien certificate online. That includes registering for the auction.
To register for the auction you have to provide your contact information, your banking information, and you have to provide a deposit. The deposit is a total of 10% of what you are planning to bid, your maximum bid. So if my maximum bid is $50,000, I have to put a $5,000 deposit down.
So in advance of the auction, I did that. I put $5,000 down and registered. Then I went through the list, and the list was, as I said, it was not a full 15,000 properties, it was less. And I went through the properties and selected those that I was interested in placing a bid on.
Now, you might say, well, 10,000 properties, that’s impossible. How can I go through 10,000 properties and bid on that many?
Those of you who’ve listened to Ted’s training, when you’re buying a property, if you’re buying a tax deed or a tax lien certificate with the intent of getting the deed, you’re supposed to go look at the property. But in Florida, you’re not getting the property if the tax lien certificate is not paid. You are just buying the loan, the debt on the property. So-
Ted Thomas:
Okay, I got it. So you just buy a debt certificate, like buying a bond, or something like that.
Bill Williams:
Very similar to a government bond, except instead of being backed by the government so much, it’s backed by the property and forced by the government.
So if the property … and just as a quick side note, if the property doesn’t get paid in Florida, I, as the tax lien certificate holder, after two years, I can go to the county and say, I want to bring this property to a tax deed sale where they sell the property, and then I get my money back.
Ted Thomas:
Wow. This is almost like having a partnership with the government.
Bill Williams:
And they do all the work.
How to Purchase Tax Lien Properties – Choosing What to Buy
Bill Williams:
Now, back to the tax lien certificates. In Florida, the auctions in, as far as I know every county, are held by a private auction company, which does an excellent job of managing that auction effort. You can sort on different criteria and decide which properties you want to look at and bid on.
So you’re not looking at … 10,000 is overwhelming. I didn’t look at 10,000 properties. I use this search and sort program they have to limit the number of properties I look at that met my criteria. For example, if a property was worth $1000, I said, I don’t want to deal with this because the value is too low to make it a worthwhile investment.
Ted Thomas:
Oh, sure. Because if you got it, you wouldn’t want a $1,000 property.
Bill Williams:
Right. Because my cost of dealing with a $1,000 property would exceed its value. So I eliminated very low value properties. I also eliminated properties I couldn’t afford. If the taxes due on the property was $56,000, I just told them my limit was $50,000.
Ted Thomas:
Did they have properties with 56,000 in tax?
Bill Williams:
Yup.
Ted Thomas:
What would that be? Is that a hotel or something?
Bill Williams:
Oh yeah. A hotel, a mall. Surprisingly, some of these corporations, for whatever reason, don’t pay their taxes on time. So I went through and pared the list down to the properties I was interested in bidding on.
Some of them, I could do an automated bid and on others I actually did some more research and did a more detailed search on that property to determine if I wanted to bid on it, and what interest rate I want to bid on it. So I don’t want-
How to Purchase Tax Lien Properties Online
Ted Thomas:
This is not an auctioneer now, standing up there reading a three by five card, like I used to go to. At the auction they’d read off a number, and you had to raise your hand. You’re not doing that.
Bill Williams:
No. No. As a matter of fact, to go back to that subject again, 20 years ago, and it was 20 years ago last month, that you brought me to my first auction, and we sat in the audience and they auctioned those properties one at a time. Can you imagine 10,000 properties. 10,000 liens being auctioned one at a time. It took days to do this.
Ted Thomas:
In Cook County, it used to take 35 days just to do the auction.
Bill Williams:
Unbelievable.
Ted Thomas:
Yeah. It was 100,000 certificates, and it took them 35 days. Someone had to read all day long.
Bill Williams:
Well, I don’t remember how many days. I think it was more than two, at least three, the very first auction I went to with you.
Ted Thomas:
Exactly.
Bill Williams:
At this auction, same county, took two days and they auctioned several thousand to maybe 3,000 or so certificates off in each block. They did nine blocks over a two day period, separated by two hours.
So we’d submit our bids, and then they would process all those bids, and of course, limit each bidder to whatever deposit they had put down or whatever their bid limit was.
Then they’d award the bids to that block of bidders who bid on that particular block, and then they’d move on to the next block. So every two hours, a new block of tax lien certificates would close out and a new block would be-
Ted Thomas:
Okay. So take us back to that criteria, you were saying that you can select a criteria of what you want because you had 50,000. Is that what you had?
How to Purchase Tax Lien Properties for High ROI
Bill Williams:
I had 50,000 to invest. Well, one set that many people use is they’re looking for properties that are … and I was too, likely to redeem. Because I was looking for an interest rate return. I was looking for, not to own the property in this case, I was looking to get a return on my investment (ROI).
Ted Thomas:
So redeem means that the people are going to come in and pay the taxes, and you’re going to get paid. That’s what you wanted.
Bill Williams:
Right. So what I did was … well, let me take an example from last year, just because this is my-
Ted Thomas:
Is this last year too?
An Example of How to Purchase Tax Lien Properties for High ROI
Bill Williams:
I did this a year ago. One of the certificates that I was the winning bidder on last year, and I was very pleased with this, was a certificate, I’m going to use round numbers here, that was worth $10,000. So this was a very nice residential home that, for whatever reason, they did not pay their taxes.
That certificate went for sale, I paid $10,000, and all I had to do was then, after I was the winning bidder, was electronically transfer the money that I had bid above my deposit.
So I had to, at that time, put a deposit down just like this year. I had to pay an additional, roughly, $20,000 to get the certificates I had purchased last year. Then this particular certificate, I did one quarter percent on. All right. Why would anybody do that?
Ted Thomas:
How does that work out?
Bill Williams:
In Florida, there’s a rule that the minimum return on investment, if you bid a quarter percent or more, you can get up to 18% in Florida. But if you bid a quarter percent or more, the minimum return you get is 5%.
So I bid a quarter percent on this $10,000 certificate, and then about two and a half months later, I get an email that says that certificate has redeemed and the money has been transferred to your account.
I didn’t have to do anything. I didn’t even get, like you used to get, a piece of paper. I just got an email that said the money was transferred to my account.
Ted Thomas:
Well, this sounds all good now. But hold on a second, because I’m not sure everybody’s going to get it.
Okay, so there was a certificate for $10,000, and normally you could just raise your hand online or something and bid, and the maximum on that certificate would be 18%, but it kept getting bid down or you just bidded down to a quarter percent. Is that what you did?
Bill Williams:
Right. Yes.
Ted Thomas:
So a quarter percent. And you bidded a quarter percent because you knew what?
Bill Williams:
I knew the minimum return was 5%. Not interest rate, a 5% minimum return. Which meant, in my case, that certificate redeemed in two and a half months, and I got 5% return or $500 on my $10,000 investment in two and a half months.
Annualize that, and that’s 5% return on investment. Where can you get 25% return on your investment in two and a half months, annualized?
Ted Thomas:
Nowhere. Now, does everybody know to do that or is it commonplace or what?
How to Purchase Tax Liens on Homesteaded Property
Bill Williams:
Yes. In Florida, the educated investor absolutely knows that. Because if you follow the kinds of properties now that we were going back to the criteria I put in to find those properties, that particular property was a high value homesteaded property. Homesteaded means that the owner lives on the property.
Those kinds of properties almost never go to a tax deed sale. Meaning they almost all redeem, all. Almost all pay off plus interest or the penalty before they would ever go to a tax deed sale. So this is a very passive investment.
The investor, just like me, had to do nothing but select the property, be the winning bidder, pay for the property, and then just sit and wait for my money to come in.
Ted Thomas:
And how much money did you actually invest?
Bill Williams:
That year I invested a little over $23,000.
Ted Thomas:
I see. But what about on this one that you paid a quarter percent, how much money did you invest?
Bill Williams:
That was a $10,000 investment. Actually, it was $9,600-
Ted Thomas:
So $10,000, but you made $500 in two months.
How to Purchase Tax Lien Properties When the Bidding Is Competitive
Bill Williams:
Correct. Yes. Now, there is competitive bidding on that, and there were multiple bidders who bid a quarter percent. What happens there is there’s a computer random selection that pick the winner out of all the bidders. Fortunately, I was the winning bidder on that one. I was the one selected.
Ted Thomas:
Nice. So you put maybe 20% of your portfolio right away, just in that one bid.
Bill Williams:
That’s right.
Abundant Opportunities Are Available to Purchase Tax Lien Properties
Ted Thomas:
Nice. Now, is there enough of these for everybody?
Bill Williams:
Well, like I said, there were 10,000. This year worked a little bit differently.
Ted Thomas:
Yeah? What happened this year?
Bill Williams:
My results, rather. The system worked the same, but my results were a little different. This year, my maximum was $50,000 and I bid on … by some of it automatic bidding and some of them individual bidding. Like I described, I would dig down a little deeper on some of them. I bid on, roughly, 5,000 certificates. I was-
Ted Thomas:
Half of that was available?
Bill Williams:
Pretty much. Yes. I was the winning bidder on, I think, 71 of those certificates. So I got quite a few. My average interest rate on those 71 certificates was 12%.
Ted Thomas:
Not bad.
Bill Williams:
So I got well above that quarter percent that I got last year.
Ted Thomas:
Right.
Bill Williams:
Well, see, none of them have redeemed yet. The auction, I just paid for them last week, so it’s quick for any of them to have redeemed. But I want them to redeem quickly because then I get all my money back and I can buy another one.
The Pros & Cons of Purchasing Tax Lien Properties
Ted Thomas:
So you’re pretty happy with that. What are some of the takeaways that you might want to tell people?
Bill Williams:
Well, one of the things that has happened is everything in most states, for tax lien certificates, most of the auctions are now online, which helps the investor a lot because it is very easy to research these properties online. And of course, it’s very easy to bid. That is the good part. On the negative side, there’s a lot of competition now because it’s so easy to do.
So there are techniques, and there are, like I said, this filtering technique to help you select the properties that you’d be most interested in bidding on.
Other more sophisticated techniques that are a little bit more complex to get into, and that we should get into this time, that allow you to have an edge over the … or in my case, I think there were just under 100 bidders at the auction, but you would see more than 100 bids on a particular property.
What is happening is, a bidder can register with the same primary bidder name and number, but sub-bidders under him or her.
Ted Thomas:
Oh, well, that’s a little complex.
Bill Williams:
Yeah.
Learning How to Purchase Tax Lien Properties
Ted Thomas:
So tell me some of the other takeaways that you might’ve had. Can anybody do this? Take six months to learn how to do it or a week or two, or what do you think?
Bill Williams:
Well, it takes you no time to really go through the website and learn how to bid and make your deposit and register and all that. The trick is, and what has taken me a little bit of time to learn is how to select the best properties to bid on.
As an example, like I said, I got $32,000 worth of liens, and was the winning bidder on 71 of them with an average interest rate of 12%. And that’s in a market where almost every … I shouldn’t say almost every, the majority of the liens that were sold at this auction went for a quarter percent.
So I knew something the average investor did not know that allowed me to get an average interest rate of 12%, where almost everybody else was getting a quarter percent. Not that that’s bad, because as I described, if it redeems quickly-
Ted Thomas:
That’s probably why you’re the coach too, because you know a little bit more than the average guy. Right?
Bill Williams:
Well, I hope so because I got to show everybody else.
Ted Thomas:
You’re pretty humble, you don’t have to be that humble. It’s okay. People like to associate with people that know what the hell they’re doing, and that’s why we’re doing all this. What other messages would you like to pass on?
Bill Williams:
Well, the biggest thing I think that I learned was that the first time I went to an auction, I really didn’t know how it worked. After we had known each other for about a year, you literally took me to an auction.
I had somebody figuratively hold my hand … for anybody who wants to know, we’ve never held hands, and show me the ropes and show me how it worked. Actually the first time I went to an auction, I was very nervous. This is 20 years ago.
Ted Thomas:
Everybody is. It’s amazing because you’re spending money, and you’re not sure yourself.
Bill Williams:
Yep. And I only invested $670 or something the very first tax lien certificate.
Ted Thomas:
Yeah. And now you show up with 50 grand. That’s a big change in a few years.
Bill Williams:
And there are no butterflies anymore.
How to Purchase Tax Lien Properties Working Few Hours
Ted Thomas:
Let me see if I can figure this out. You invested about $30,000, and it looks like you’re going to make about 12% on that. So there’s a good chance you could make $3,000 or so this year for sitting in your office. How many hours did you work to do that?
Bill Williams:
It probably took 20 hours or so to go through it. But I went through in excruciating detail because I was going for those 12%.
Ted Thomas:
Because engineers do that, right?
Bill Williams:
Yeah.
Ted Thomas:
Excruciating detail. I mean, could the average guy make three to five grand a year doing this?
Bill Williams:
Well, with the right selection, the right knowledge, absolutely.
How to Purchase Tax Lien Properties From Home
Ted Thomas:
Yeah. And not have to go to a lot of auctions. They could stay home and do it, right?
Bill Williams:
Yep. It’s a very, very safe, passive investment.
Ted Thomas:
Can I put a senior citizen in front of a computer for 10 hours with one of my assistants and turn them loose and they’re going to be able to do it?
Bill Williams:
I did that with my sister a few years ago. Probably eight years ago now. She had some retirement money she wanted to invest and I did precisely that.
We got her a tax lien certificate that I think paid 17%, and it was as simple as I described. We just were very selective about looking for ones that not everybody was bidding on. So this was not one that was getting bid down to a quarter percent, we got a 17% certificate, and she held that for about a year and made 17%.
How to Purchase Tax Lien Properties & Tax Deeds
Ted Thomas:
I had a question about one of your former students, which I always enjoyed because I saw a picture afterwards. But you also teach people how to buy tax deed properties too, right?
Bill Williams:
Yes, absolutely. There’s a little more involvement, but a lot more profit.
Ted Thomas:
One of the pictures I can’t forget is this girl with her arms straight up in the air like this, standing on a vacant lot. Her name was Josie, and she was from Quebec City in Canada. Can you tell me that story?
Bill Williams:
Yeah. She went to one of your buying tours in Texas and went to a county outside of Dallas. She didn’t go to the big city where there were a lot of bidders and a lot of competition, she went just outside the city, and she found a building lot in a developing neighborhood.
Ted Thomas:
Nice.
Bill Williams:
A nice developing neighborhood that had an average selling price in the $76,000 range. That particular property sold at auction for $42,000.
In Texas, the rule is that on a property like that, if it is not paid, if the property taxes are not paid by the delinquent property tax owner within six months after that tax certificate is sold, that tax deed certificate is sold, then the buyer of that certificate, in this case Josie, would get the full rights and deed to that property.
So after six months, she got the deed to the property, full ownership, and she listed that property with a real estate agent and sold it for about a $30,000 profit.
Ted Thomas:
$30,000, are you kidding?
Bill Williams:
That was in, roughly between the time she bought it and the time she sold it, I think it was under nine months.
Ted Thomas:
Wow, I bet she was a happy camper. That’s why she was on that. I saw this woman standing on a muddy lot with her hands up like she had done a touchdown. I thought, wow, she’s a happy camper. So that’s why, huh?
Bill Williams:
Yup. As a matter of fact, I found out she had sold it when we were at one of your workshops. She called me on my cell phone, and she was all excited she was about to close the deal on that property. It all worked out very well for her.
Takeaway
In How to Purchase Tax Lien Properties, Bill Williams discusses a tax auction he recently attended in Florida that had 10,000 tax lien certificates available.
Bill explains how to purchase tax lien properties online and how he uses tools to sort through the properties quickly to find ones that meet his criteria. He goes into specific details about how to purchase tax lien properties for the greatest return on investment, explains the bidding process, the auction rules, and minimum down payment.
Bill also discusses his purchases, how much profit he made, and the small number of hours he worked to get these great returns. Among his examples, Bill shares the story of Josie, a student of Ted’s, who had a massive win at a tax auction in Texas that resulted in a $30,000 profit.
Knowing how to purchase tax lien properties can be very lucrative if you know the rules and do your homework. Ted can show you how and will even make it easy for you to get started.
If you liked How to Purchase Tax Lien Properties with Bill Williams, and you’d like to learn more, Ted has a FREE gift for you to get you on the fast track. It’s Ted’s master course called “Safe Haven,” valued at $197, but costs nothing for you.
Safe Haven is 2 streaming videos and a PDF, and it will teach you about tax lien certificates & tax deeds. So if you’d like to learn how to purchase tax lien properties and tax defaulted property, act now and get your FREE Safe Haven course today.
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