What Is A Tax Lien? In most jurisdictions, when a property owner is late on paying real property taxes, the county or municipality will issue a tax lien on that persons property. To collect the money needed, the county will then sell that lien to an investor.
What Is A Tax Deed? A Tax Deed sale gives the buyer immediate ownership of the property. This ownership often requires the filing of a foreclosure or quiet title action to have marketable title but it is not subject to redemption by the delinquent tax payer.
Why Tax Liens And Deeds?• Low entry level investment• High Potential Interest Returns• Foreclosure Opportunities ( ) Redeemed by Owner (90+%) Unpaid Property Tax Lien Taxes Free & Clear Property Involuntary Motivated Sellers!
County Cashflow Problem• Counties need tax revenue to operate! • County Staff, Judges, School Teachers, Fireman, Police • Schools, Roads, Public Health, Water, Sewer, Snow Removal, Etc.• Some counties have in excess of $100 mm in Annual Delinquent Property Taxes
Who Invests In Tax Liens• Banks• Hedge Funds• Seasoned Financial Planners• Stock Brokers• Smart Money
Most Common Questions#1 - How Do I Learn About Them?#2 - How Do I Find The Liens & Deeds?#3 - How Can I Fund My Investments? Savings/Self Directed IRA Disposable Income Private Investor/Partner Profit From Other Deals
Three Kinds Of States • Tax Lien States • Tax Deed States • Hybrid States
About Lien States1. A property owner fails to pay the property tax on their property.2. After sufficient attempts have been made to collect the taxes, thecounty will advertise the Tax Lien for sale.3. A public auction will be held and the Tax Lien will be sold to thehighest bidder. That bidder will be given a Tax Lien Certificate thatincludes all past due taxes, penalties and interest.4. This certificate is an interest bearing security against the property onwhich the taxes are due.5. In the owner of the property pays the taxes, the certificate holder willbe paid all interest and penalties.6. If the homeowner never pays the taxes, eventually the holder of thatcertificate may have the right to foreclose on the home and take theDeed.
About Deed States 1. A property owner fails to pay the property taxes on their property. 2. When the taxes go unpaid, they formally become delinquent. 3. After sufficient attempts have been made to collect the taxes, the county will advertise the Tax Deed for sale. 4. A public auction will be held and the Tax Deed will be sold to the highest bidder. That bidder will be given the actual Deed to the property. 5. In some cases, the homeowner may still have a short time to redeem after the sale; otherwise, the investor becomes the legal owner of the property.
About Hybrid States • Hybrid States Sell Both Liens And Deeds • Redeemable Deeds Florida 18% Interest 2 Yr Redemption Period Minimum 5% Penalty
Types Of Liens/Deeds You Can Invest In • Raw Land • Commercial Property • Industrial Properties • Single Family Homes * • Developed Lots * • Multi-Family • Agricultural Land
You’re Choice:Decide On A Method • Online Auctions • Live Auctions • Secondary MarketGet Trained On SKWCentral.Com Now
How I Find Liens/Deeds?• Network In The Industry – NTLA• Call Every County In The Country
Network, Network, Network…“LINKEDIN IS NOT RESPONSIBLE FOR A USER’S MISUSE ORMISAPPROPRIATION OF ANY CONTENT OR INFORMATION YOU POSTIN ANY LINKEDIN COMMUNITY FORUMS SUCH AS THE LINKEDINBLOG, GROUPS OR ANSWERS.” – Linked in
What Due Diligence Do I Do?• Thorough And Unemotional• List Good And Bad• Assess Risk/Fair Market Value• Title And Legal Issues(Pull A Pre-Lim)• Guilty Until Proven Innocent
Redeemed vs. Not Redeemed$1 Million in Tax Liens Certs (1000 Parcels) 900 Redeemed Liens = $1.45 Million In Total Redeemed Value (a 45% Profit For the Investor/Fund) 100 NON-Redeemed Liens That Are Set To Go To Foreclosure (HOME RUN)90+% of Liens Get Redeemed – The Rest Are Set To Foreclose
Buying 100 Liens At A Time…I do the same due diligence
How I Make Money… Remember… I’m An Investor Too! A Typical Lien On My Site Lien Lien Acquisition Redemption Cost My Price Value To You$50-$80 $150 $100Covers My: Risk, Overhead, Due-Diligence, Cost Of Money, etc.
Common Exit Strategies Tax Lien Redemption Foreclose/Deed Too Good To Be True? The Reality Is Better.
Exit Strategies – “Show Me The Money” Wholesale (Quick Money) Home Owner Payment Plan Tax Lien Certificate Cert Redeems (Interest $) Leveraged Buy Out Foreclose
The “Leveraged Buy Out” - 118 Bissell St W Due Diligence • 118-120 Bissell St West Syracuse, NY 13204 • 4-Plex $1800 Mo/Gross Rents • 2008 Tax Lien Certificate $4214.16 • Due Diligence Showed Other Delinquent Taxes • Confirmed Tenancy $$Purchase Transaction• Offered $5000 Counter Offer $25,000• $11,000 “Walk Away” Price• Sold As-Is With The Seller Paying Water Bill• Paid Subsequent Tax Years $20,176.50• $15,000 Proposed Deferred Maintenance Cash Out $35,765.42