Tax lien questions

General Real Estate Investing
1

I posted this earlier in the foreclosures and tax sales forum but only got one reply. My sister and I are trying to get into real estate investing, and we are wondering if tax sales would be a good place to start. I just started a job in the offshore oil industry that keeps me on a boat for weeks on end. Our preliminary plan is to send most of the money I make to her and have her use the money to buy tax deeds. We plan to focus on texas, although we live in the st. louis area. Is this a good plan? Our main questions are:

  1. Is tax lien/tax deed investing a good way to get started in real estate investing?

  2. What’s the average rate of return for tax deed purchases in texas, making adjustments for fees, prices being driven up by bidding process, etc.? I have heard some people say that tax sales are a waste of time because the bidding is too competitive to make a decent return.

  3. What percentage of purchases result in the purchaser taking possession of the property?

  4. Can you borrow money from a bank to use to purchase tax deeds?

  5. What is your opinion of Darius Baranzadeh? I am considering purchasing some of his products.

Thanks for your help

2

I’m interested in tax liens/deeds as well. Curious to know
everyone’s opinion on this.

I would personally look at this as another way of growth for my
money, but I would probably wait until I have plenty of reserves
from wholesaling/ rehabbing. Being new to investing, I need
to use the money for books, and marketing.

3

So… does anyone have any answers?

4

I am interested in Tax Leins also. I saw a speaker talk about it at the Real Estate Expo last weekend, and it really seemed like an easy way to make money, and possibly end up with a deed – almost too good – which is why I was interested in hearing more about it.

When I posted about Tax Liens last week, this was the only reply I got. Hope it helps:

"The truth about real estate investing no matter what strategy you use or form of investing you may seek the only easy part of this game is loosing money.

You will find that the majority of property owners do redeem their tax lien but occasionally, the property owners don’t redeem their properties and this is the home run in this form of investing.

Any time during the period an investor holds a tax lien certificate, it is subject to redemption by the property owner, his agent, assignee, attorney or by any person having legal or equitable claim therein, including a purchaser of a certificate of a different year

What I like about this form of investing is that travel expense to buy a tax lien is an acquisition cost, the expense is normally tax deductible after the transaction is completed or should I say redeemed.

You will find that in a lot of cases you will need to obtain what is called a Judicial (Judgment) Deed to the property if it is not redeemed. In some cases, you must hold the tax lien certificate for a minimum period of time and in some jurisdictions you could be talking years from the date, the certificate was first offered for sale.

You must understand that you are not purchasing property. Instead, as an investor you are purchasing a tax lien (certificate of purchase) in the amount of all taxes due, interest charges and related fees. A certificate of purchase or CP is defined as a lien document signifying payment of delinquent secured property taxes by an “investor.” The lien against the property is sold in an open competitive bidding process based on the lowest interest rate to be received by the investor.

You need to treat this as if you are making an actual land purchase, you should inspect chain of title, being aware of all liens, inspecting the property if you can and an evaluation of it’s value vs your expense.

Keep in mind if you end up with the property, will you have the means to manage the foreclosure?

Just a few 101’s on this form of investing.

Good luck"

5

I knew SOMEBODY spoke about it somewhere…you can tell by the spike in the interest/postings!

Keith

6

Tax liens are a great way to make a higher interest rate on your money! On the other hand if you are looking at them as a way to acquire property then it is not a great way to get into real estate! If you are looking at a property that is about to foreclose and there is a tax lien attached to the property by all means try to buy out that lien and put yourself into that position!

7

As Kiosaki always says, “buy assets, rather than liabilities.” For me, I am looking at tax leins as just another wise investment choice. One which will surely generate income. Though the possibility is there, I dont look at them as a means to aquire property. It’s like being given a lottery ticket with your purchase. You are purchasing an asset, with a remote possibility that you might aquire the property. The goal should simply be to purchase a money-generating asset. The goal of aquiring property should be a separate issue.

I would love to hear from more people with experience in doing this.

8

Then it looks like you are doing this for the correct reasons! I think at last check your chances of winning the lottery were better then getting a property throught a tax lien! LOL

9

what are the risks to buying a tax lien? If you buy one, then you usually charge about a 16-17% interest rate on the lien right? How long does the homeowner get to pay the tax lien off?

10

Depends on the county most of the time it is 3 years!

11

Hey,
Darius Baranzedeh’s course on Texas Houses (tax leins) is very good and complete.
As I recall (am at work and do not have the info in front of me and too lazy to try to find it on the web) Texas leins pay 50% per year for 2 years if redeemed.
Peace,
Richard