Hey guys,
I’m curious…for all the beginners out there, what are your biggest fears when it comes to getting started with Tax Liens?
I’m doing a little research on the subject and was curious if other investors out there had the same fears as I do!
So what scares you, what keeps you from moving forward…what keeps you from even getting started at all?
Thanks!
Hi,
There is nothing scary about actually buying them but you want to be careful how you hold them and what you do with them!
I will give an example from my experience, when I was buying tax lien properties early in my investing career, I had very little experience in what to do, so I went in with everyone else, registered and bid on a few properties!
I thought “wow” the picture of that house looks great, I will bid on it and it went a few round’s then another few rounds and then a few more and bingo I had my first house. I was excited and went to the cashier and paid my cashiers check and cash, and they asked me what name I wanted to put it in, and of course I told the lady “Gold River” very proudly and smiled.
Well I left that day with two lot’s and a house, not bad for the first day of a three day tax sale auction, well to make a long story a little shorter I bought seven properties that auction and felt really good about what I accomplished.
Well I had arranged for an extra 36 someodd hours after the auction to stay in town so I figured like any good “Lord of the land” I would run out to my properties and see them, maybe change the locks on the doors and take a few pictures.
Well my first stop was one of the lot’s I bought, not much too it but covered in brush and weeds about 5 foot deep so I took some pictures and took off, made most of my stop’s and thought “This real estate thing is great” I will be a millionaire by this time next week.
Well, that was kinda short lived; as the two lot’s I bought the first day were in violation of the cities “Cleanliness Statutes” and I had to get them cleaned up, well I found someone to go in and “Cut the lawn and trim the bushes” I thought a little simple clean up, well in that beautiful 5 foot deep weeds and grass and brush (In two seperate locations mind you) were three 40 foot dumpsters full of trash, no kidding this thing was being used as the neighborhood dump and of course when I got them it was the old “Gold Rivers” name on all the documents proud as a peacock I was!
So when this nice city cited me for the trash, they basically said "Either you clean it up or we will clean it up and bill you for the clean up and at that point the citation sticks and you will have to pay the fine. (There was a grace period for compliance since I bought it from the tax auction)
Well the purchase of 2 lot’s in the old “Gold Rivers” name for a bargain $250 and $450 dollars respectively just became a $4500 dollar expense, a second plane flight out to this nice city and additional expenses.
If I had just bought these In an LLC I could have just walked away, well that same auction one of the homes I bought was “Red Tagged” and actually was eventually demolished by the city, I ended up paying almost $11k for that fopau, a house I bought for $1300 dollars, so now I never buy at any auction without placing the property ownership in an LLC.
I limit my self to no more than a few thousand dollars in one group or no more than one property if there fairly expensive, that way I can walk away and limit myself to just the single entities assets as a loss.
I think there is a lot of money to be made at tax lien sales, but watch bidding against experienced investors because we like to help new investors bid the property up and drop it on you, so watch continuing to bid and two put your vestment of title in a LLC or many LLC’s.
I also no longer bid on properties I have not seen and I am careful to understand what the compliance laws are in each city, and what they require me to do to hold the property long term if necessary.
Good Luck,
GR
Awesome! That was full of knowledge, plus I think will help newbies out when they’re getting started in this industry.
Great to know about the LLC thing too!
Anybody else have any stories like this - or fears they have about getting into real estate?
Don’t fall for the John Beck infomercial BS he spews that is no where near what Tax Liens are all about. There is more too Lien investing than just simply bidding on the Lien you have to do due diligence all the time when it comes to Liens to make sure there isn’t anything wrong or much like what happened to GR you’ll end up paying more than you bargain for.