Smart Strategies for Buying Tax Liens
Smart tax lien buying strategies can earn you top dollars, and Ted will show you what to do (and what not to do). Watch the video above or read the summary below:
I’m Ted Thomas, and I’m going to talk about tax lien buying strategies and give you some inside tips, which I’m sure you’ll enjoy. I’m also going to tell you about some things to avoid. I’ll show you how to make some money, and that’s actually what you really want to know about.
The topics I’m going to cover are:
- How Much Do Tax Liens Pay in Interest?
- About Half of the Counties Sell Tax Liens
- Tax Delinquent Properties Come Mortgage-Free
- Tax Lien Certificates Are a Powerful Investment
- Get Paid Government Checks When You Buy Tax Liens
- Buy Tax Deeds to Get Properties for Cents on the Dollar
- Common Mistakes That Tax Lien Buyers Make
- Buy Tax Liens Online From Anywhere in the World
- Tax Lien Investing Is a Business of Abundance
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How Much Do Tax Liens Pay in Interest?
So let’s get started with tax lien buying strategies. If you’re a first-time investor in tax-lien certificates, I’m here to tell you, it probably sounds like it’s too good to be true, but local governments pay 16%, 18%, 24%, all the way up to 36% interest on a tax-lien certificate.
So this is a powerful way to make money.
Some people say, “Wait a minute, this must be an infomercial.”
No, it’s not. This is a government program that’s administered, and it’s been mandated by the government. It’s been around for 200 years, and I’m going to give you a little background on that.
So just kind of open up your mind, just get this information fall in, and you’re going to find out about an investment. It sounds like it’s too good to be true, but I’m here to tell you, tax lien buying has been going on for 200 years. I’ve been teaching it for over 25 years.
Some people like the stock market; I’m not negative there. I’m not negative on mutual funds, or whatever it is you like to do. That’s fine.
However, tax lien buying is an alternative where you could invest with the government, and you could get a check back from the government. You could earn 16%, 18%, 24%, up to 36%.
I’ve never seen a tax lien that paid less than 8%, and actually, they did away with that. The lowest one that I know of in the country today is in New York State out in Long Island, and Suffolk and Nassau counties only pay 12%.
But in Chicago, Illinois, you could earn 36%. So you’re kind of getting the idea.
About Half of the Counties Sell Tax Liens
Tax lien buying is a powerful way for you to make money, and anybody can do it. You can get started for $50, if you want, or you can do $500,000. It’s going to depend upon the auction, and what you want to invest.
Let me explain what’s happening here.
In all of the States in the United States, there are about 3,000 counties. Approximately half of those counties will sell tax-lien certificates. That just means they’re going to sell you a piece of paper.
If you buy a tax-lien certificate, the property owner stays in possession of the property, however, they’re going to owe you whatever you paid, plus the high interest for that state.
Imagine this, you buy a tax-lien certificate directly from the government. You’ve invested with the government. Now you’re going to get your check back, but what if that local government paid 24%, like they do in Iowa? You could get a 24% return.
Tax Delinquent Properties Come Mortgage-Free
Tax deeds are sold because the government went out and confiscated the property. Then what they do is they sell it without a mortgage to the highest bidder.
If you buy a tax lien certificate, or a tax deed, either one, they come without a mortgage. So wouldn’t you like to own properties mortgage-free?
Tax Lien Certificates Are a Powerful Investment
I told you about these rates. The rates are phenomenal. Most of the rates are annualized. That simply means, like in Florida, where they pay 18%, you earn a percent and a half every month that the certificate is outstanding.
Think about that. If it was outstanding for six months, you’d earn 9%. Now compare that with a local bank paying less than 1%. So this is a powerful investment.
What you want to know, when you’re making an investment is are you going to get your money back? You’re looking for ROI, return on investment.
Well, the beauty and the brilliance of tax lien buying is that your investment is government-backed.
Get Paid Government Checks When You Buy Tax Liens
When you buy a tax-lien certificate, you invest directly with the government. That means your money is protected by the property tax code, and you’re going to get a check back from the government with that huge interest rate attached to it.
These are powerful, powerful certificates.
Why is the government selling these certificates? Kind of hang in with me for a minute here, and you’ll see that the local government has a problem, because they’ve got a lot of bills to pay.
If the property owners don’t pay property tax, how are they going to pay for the police, the fire departments? How are they going to pay the county employees? How are they going to pay for the schools and the libraries? They couldn’t pay for those things without the money from property tax.
So when property taxes are not paid, the county will take immediate action. They’ll either create a tax-lien certificate in about half the states.
Or, in the other half of the states, they’ll take action to actually confiscate and seize the property. In both cases, what the local government wants is money. Now why do they want the money?
Well, that’s the lubrication that keeps the roads being fixed. It keeps the teachers getting paid. It keeps the police departments in place. So employees of the government are getting paid; everybody gets paid if they can collect the property tax.
Unfortunately, everybody doesn’t have good luck in life. You and I have had some bad luck. Maybe we couldn’t pay all our bills. Well, one of the bills people don’t pay is property taxes.
Buy Tax Deeds to Get Properties for Cents on the Dollar
States will sell tax-lien certificates, which you and I can buy, or they’ll sell tax deeds. The latter means we can actually buy those properties for 10 and 20 cents on the dollar.
This has been around for 2 centuries. I didn’t invent it. I teach you, and I’ve been teaching people how to do this for a long, long time. It comes from the English back when they had an old wealth tax years ago.
I just say, this is like wealth without risk, because you invest with the government, and you get money back. So that’s a nice way to do it. Plus, the properties come with no mortgage.
It’s not unusual to bid at a tax deed auction, and there’s no mortgage on the property.
So think about this. What if it was a $200,000 property, and the minimum bid was $5,000. What if you got it for $5K or $10K, and it was worth $200K, and there was no mortgage?
Every one of us would like to have a property with no mortgage. Pretty powerful stuff.
Common Mistakes That Tax Lien Buyers Make
I want to make sure that you know how to avoid some of the mistakes. So let me tell you about the two biggest tax lien buying mistakes.
Most Common Mistake #1
Mistake number one is people don’t look at the property before they bid.
You don’t want to buy anything you haven’t looked at.
After all, you wouldn’t marry a woman, unless you had seen her. Same with you gals. You wouldn’t marry that guy, unless you had seen him. So don’t buy a real estate property you haven’t seen.
What if there was a hurricane? What if it burned down? All kinds of things happen. That is mistake number one. I want to make sure you avoid that.
Most Common Mistake #2
Mistake number two is you don’t want to buy any property if you haven’t already figured out what you’re going to do with it. I call that ‘exit strategy.’
If you don’t know what your exit strategy is, for goodness sake, don’t bid on the property, because you might bid too high and get above that actual exit strategy.
You want to give that a little bit of thought. Don’t do either of those things if you want to stay out of trouble.
Buy Tax Liens Online From Anywhere in the World
Here’s a question that comes up all the time. People say, “Can anyone in another country invest in tax liens?”
Well, if it’s an English-speaking country, I can pretty much tell you ‘yes,’ because they can get dollars there. I have clients in Canada, the United Kingdom, Singapore, Bangkok, and Australia.
Anywhere, where you can get a dollar account (because you have to buy in US dollars), you can do this business, and you can do tax lien buying online.
I have literally hundreds of clients throughout the world, including from Mexico City and Colombia. However, they’ve got bank accounts here, or they have a bank account where they can get dollars.
Can you do this from other parts of the world? The answer is absolutely yes. Because almost everything is online, and all the research can be done online. The purchasing can be done online, and the delivery can be done online. So this is your chance.
Tax Lien Investing Is a Business of Abundance
Another question is, “Ted, you said the program’s been around for 200 years. Does it still work today?”
Well, folks, let me say this. First of all, anything that’s been around for 200 years, it’s got to be pretty darn good. What do I mean by that? It’s going to be good for the government; it’s going to be good for you and me.
Every year, 2% or 3% of all taxpayers will default. They don’t want to default, but they get in the default situation. There are bankruptcies. They have a crisis at their homes. They have accidents. Sometimes they lose a job.
So every year there are going to be properties that go into tax default. I’ll tell you how many are going to default. I’m just going to pick one state that you’ll all be familiar with.
In the state of Florida, which has about 18 million people, I’m using round numbers, of course, currently, one million property owners didn’t pay their tax. So one million people did not pay the tax, and I’m only talking about one of the 50 states.
I hope you enjoyed this lesson on tax lien buying.
Tax liens pay extremely high interest rates, and they’re secured by real estate. You get paid, or you get the property mortgage-free.
You need to get in. If you don’t, you can’t make any money until you get in the game. Now is a great time to begin.
If you’re interested in tax deed and tax lien buying, I have a gift for you to get you started.
Take action today. If you want to make big money. I’ll show you how.
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.