Formulate Your Investment Strategy
Your ultimate success, as a tax lien investor, is a function of setting honest and realistic goals with respect to the time and money you can dedicate to this incredible investment opportunity.
Generally, your strategy will fall into one of two possible strategies:
1. Investing to acquire high interest returns;
2. Investing to acquire properties for a significant discount.
As you become familiar with the investing process and procedures you can progressively move on to more challenging and profitable deals with confidence.
Select the Right State
Where do you begin? With so many states to choose from the task can seem outright daunting. Then you throw the 3000 plus counties into the mix and its downright overwhelming. Don't worry. You've already taken the time to identify your goals making it a "Snap".
Over the years I've learned that there's a little more to selecting the right state than choosing the one that offers the highest rate of return. When you join my newsletter I'll send you a report detailing each states tax lien certificate process and procedure including interest rates, redemption periods and classifications. I created this valuable resource to save you a lot of time and grief.
Select the Right County
Once you've selected the "Right State", you're ready to select the "Right County/ Counties". At the outset it can seem overwhelming, especially if you've selected a state with a lot of counties. Georgia, for example, has over 159 counties while Texas, has over 254 counties. Don't be discouraged.
Request A Current Tax Sale List
By now you should have identified your investment goals and selected the right state and county/counties to commence your investing. You are now ready to obtain a current and correct tax sale list from the county. You can do this by contacting the tax collector of the county you're interested in. Typically, you can download the tax sale list from the county website. They may charge a small shipping fee to send it to you. Warning! There are website's that make a killing selling these lists. Don't be fooled into buying something you could get free from the county.
Perform Your Due Diligence
Are you ready? Okay. Let's get started. First you should have several tax sale lists. As you review them, some may be small and others as big as the empire state building. Don't worry, the bigger they are the harder they fall.
So, maybe you're wondering "What does all this mean?" That's a good question. But before we move forward, let me emphasis the importance of performing extensive, and thorough risk reducing research. If you purchase a tax lien on raw, useless, and/or otherwise contaminated property, chances are you'll lose your shirt and a whole lot more. Honestly, what value does a useless property have? None. Furthermore, there's no incentive for the delinquent tax payer to pay off the tax lien and interest. You'll never recoup your money. The strength of your investment is based on the strength of the real estate from which the lien is generated. Crummy property equals crummy investment.
Make the Purchase
At this point you should've completed your research and selected the tax liens/tax deeds that you'd like to purchase. You should know that there are several ways of purchasing a tax lien or tax deed;
* At the physical auction.
* After the auction (left-overs).
* On the Internet.
* Through an agent/third party.
The method you choose will be a function of your goals, budget and the rules of the county you've selected. For example, lets say that you only plan on investing $1,000. It doesn't make sense, really, for you to travel a great distance to participate in the physical auction. Let's really think about it, you would eat up all of your potential profits in travel expenses. Therefore, left-overs via mail, or a live Internet auction make much more sense.
Whatever method you choose, you'll want to make sure that you have a firm understanding of the registration, auction, bidding, payment and redemption process/procedures.
Manage Your Investment
What next? After full and timely payment for the tax lien certificate has been made, all you can do is wait, wait, and wait some more. Utilize this time to your advantage. I recommend that you be familiar with the foreclosure requirements well before the expiration of the redemption period. It would be an unfortunate thing if you couldn't foreclose because you failed to follow the laws governing foreclosure.
Getting The Interest
As the owner of a tax lien certificate, you have two potential outcomes. If the delinquent tax payer steps forward and pays their tax bill within the statute mandated redemption period, they will have to pay what you paid to aquire the tax lien certificate, plus pay a penalty interest fee. Once full payment is received, you will be contacted by the taxing district and ordered to return the tax lien certificate. In return, the county will issue you a check in the amount you paid to purchase the tax lien certificate plus penalties and interest.
Getting The Property
If the delinquent tax payer neglects to pay their outstanding tax bill, and interest, within the statute mandated redemption period, as the owner of the tax lien you can foreclose the subject's right to redeem. This effectively wipes out all junior liens and claims to the subject property. At that point it becomes your property.
Typically, the county will issue a treasurer's, sheriff's or tax deed to the property. Generally speaking, it does not convey a marketable. This is because the county does not want to take on the risks associated with a warranty deed. Mainly, that the grantor (i.e. the county) will protect the grantee (i.e. the investor) against any and all claims (prior liens or interests) to the property.
To get a "marketable title" you'll want to have your lawyer initiate an action to quiet title. This is a legal process that establish your title to the real property against anyone and everyone, and consequently "quiet" any challenges or claims to the title.
Once you have foreclosed, filed a quiet title action and the court is convinced the title is yours, a quiet title judgment will be granted which can be recorded and convey a title free from defects. Then you'll want to apply for title insurance. In it's simplest form, it guarantees that the owner has title to a property and can legally transfer title to someone else. Should a problem arise, the title insurer (title company) pays any legal damages. Once you obtain title insurance you'll have a warranty deed.
Now that you are the owner of the property you can either sell it or rent it.
There you go. I've given you a brief overview of the tax sale process. You've literally nothing to lose and a world of profits to gain! I don't know about you, but for me, this is exciting stuff. I mean think about it. As a tax sale investor you'll either receive sky-high returns or real estate for just pennies on the dollar.
Source:
As soon as I find it again I will post it.
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