Step 2 of 7 - Investing in Tax Liens & Deeds

  1. What state do you want to invest in?

    After you have determined whether you want to invest in tax lien certificates or tax deeds, you need to decide what state (or area) you will start investing in. If you want to begin investing in tax lien certificates and you currently reside in a tax lien state, I always recommend you start as close to home as possible. You want to become an expert at this business in one area before moving on to multiple areas. Start in the county you live in or a county that is within driving distance. This way you can begin in an area that you are familiar with. Call up your local County Treasurer or Tax Collector and ask a few questions, they should be eager to assist you since you will be helping them collect some of the monies they are owed in delinquent property taxes. Here is a sample script of what to say when sending an email or calling a County Official (always do your best to get the tax collector or the assistant to help you)….

“Hello, my name is Michael, and I would like to help out your County collect some of the delinquent taxes you are owed by attending your county tax sale. I’m new to the business so if you could please answer a couple questions for me that would be a big help. Does your County have a sale that I can purchase tax lien certificates or can I only purchase the deed to a property? Could you briefly explain the interest rates, redemption periods, and the bidding process? Does your County have tax lien certificates or tax deed properties that I can purchase after the sale? When I do my research on the title to the property, can I do this online in your County or do I have to physically go to the public records? Also, is there anything else that I should know or be aware of in regards to your tax sales? I really appreciate you taking the time to answer my questions. Thank you for your help and have a nice day.”

These are the 5 questions you should always ask the person in charge of collecting the property taxes within a County. Of course this is just a sample I use, you can ask any questions you’d like I just use this as a guideline when I first make contact with an official. If you can build a friendship with people who work within the County offices, you will have an advantage over all the other investors.

What if I want to invest in tax lien certificates and I live in a state that only sells tax deeds? Well, there are a few things to consider. Why is it that you only want to invest in tax liens? Your answer may be that since you are new to the business you feel more comfortable just buying the delinquent tax lien rather than purchasing the entire property. I can completely understand this, most people prefer to start with tax liens. Your answer also may be that you want to start investing with a small amount of money, and you simply don’t have enough set aside to purchase a deed to the property. I can understand this scenario as well. If you live in California, which only sells the deed to a property with the starting bid being 5 years of delinquent property taxes, it is going to be quite difficult to find a property that you can purchase for just a few thousand, or even just a few tens’ of thousands. So what are you to do?

If you do have enough money set aside to go ahead and bid on the deed to a property, you may want to consider staying within your state and go to a tax deed sale. You can acquire more money faster by purchasing a property at a tax sale and then flipping it to someone else. If you are new to the tax lien & deed business, then always get the state statutes (laws) and read over the sections on public land. The general rule can be found in the property code of every state and the UCC (Uniform Commercial Code) which covers commercial transactions. Also, read over the rules & regulations for each individual county sale. The rules in one county may be completely different than another county in the same state.

If you don’t have the monies set aside to purchase a property, or if you simply don’t want to, then you will need to decide which tax lien state to start with. I would get out a map of the United States and see if there are any tax lien states that are within driving distance to the North, South, East, or West. If there are, then start there. If there are no lien states close to you, then just choose a state. Maybe you have family or friends in a tax lien state, maybe you take an annual trip or vacation to a particular state, an upcoming business trip may have you going to a tax lien state, or you may want to choose a tax lien state that is among the highest in the interest that the county will pay you back. This you will have to make a decision on your own.