Often my clients and students ask me how I made a fortune in Tax Delinquent Real Estate Investing. The answer is obvious, by making over 5000 Real Estate Transactions since 2002 and making money an virtually all of them.

But then I realize that there is more to it than just making deals. The proper mindset also needs to be there in order to consistently make money and in order to build that Fortune up over time.

And this is when I usually get blank stares from my students. All many want to do is do a deal that nets them 20K or 10K or 50K and then go and use that money to buy the Doo-dads and toys they were craving for. While I own a lot of toys and “doo-das”, this is not what I recommend any starting investor do.

Instead of taking the profits from your first deal and spending it on that new car, you should take that money and reinvest it in your business. By doing this, you effectively and massively SUPERCHARGING your pool of money to work with an with time can go after more and more and bigger and bigger deals and make more profits.

Did you know that $10,000 invested with a 30% return (something easily available in the Tax Delinquent Investing World) over only 10 years leads to over $137,000, whereas if you take the even only 20% of the profits each year off you will only end up with less than $2600? That is the power of compound interest. Use it and you will succeed, work against it and it will KILL you.

So if you goal is to buy that new car for $40,000 you should not use the first profits right away to buy it but instead you should re-invest it into your business, continue driving that old car you have until you have made enough money that taking a chunk out for that new car barely affects your portfolio.

That is how the rich get rich, and how they drive their cars. Most rich people actually don’t drive big cars, because they know what it will do to their future earning. Taking out $50,000 of your investment pool today could translate to “missed earnings” of several million down the road.

When it comes to Tax delinquent Property Investing and Tax Lien Investing in particular the investor (=you) has two choices.

1. Does he want to go for the high interest rate offered by “Tax Lien Certificates”
2. Does he want to go for the chance to get the property through foreclosure of the Tax Lien Certificate?

Although I personally like the Second option better and am actually a fan of yet a third way of buying tax delinquent property directly from the owner outside of auctions for as little as $100 to $500 and sell it within days for many thousands of dollars.

But back to Tax Lien Certificates. Any investor playing with the thought of investing in Tax Lien Certificates needs to decide which of the two options he will go for.

Or if the decision it to go for both, then what percentage each of them should be of your portfolio.

There are ways to increase your chances of picking a property which will go for Tax Lien Foreclosure, just like there are ways to increase your odds to pick a Tax Lien that will be redeemed in the future.

So this is not a game of luck but one of analysis and running the list of properties coming up for Tax Lien sale through a list of criteria which separate the ones highly likely to be redeemed from the ones highly likely NOT to be redeemed.

Therefore if you know what you GOAL is in this investment method you can clearly increase your odds of being successful.

The list of Criteria is too extensive to list here but go to www.secretlandprofits.com and buy the ebook available there. It lists them all and will make your life much more easy in the Tax Lien Investment Arena.

When investing in Tax Liens you need to first STOP and think about what you want to accomplish. Too many people just run to a Tax Lien Sale intrigued by the prospect of a very high interest rate (which they will get) only to realize after they bought some good tax liens, that

1. The interest payments are not monthly or yearly but only when and IF the property owner redeems the Tax Lien on the property.
2. There is no way of knowing when and if the redemption will happen, and therefore there is not way of knowing when the investor will get his initial capital plus interest will be paid back.
3. It is possible to want to just get a high interest rate and then end up with the actual property (usually though that is a good thing and I call it “hitting the jack pot”)

Whether these possibilities laid out above are an advantage or disadvantage to your investment heavily depends on what you set out to do in the first place.

If your investing goal is to get the actual property, then ending up with a high interest rate but without the property is not what you set out to do.

If your investing goal is not property ownership but instead a secure, safe and high interest rate then you don’t want to invest in a Tax Lien Certificate on a property that has a high likelihood of not being redeemed. Chances are you would not get your interest payments ever and would be forced to foreclose on your Tax Lien, and then you would still have to go through the effort of selling that property to get your money back. (but the good news is that once you do that chances are you got a multiple of your initial investment back)

Although you never will know in advance whether or not a property will be redeemed or not you can massively increase your chances of betting on the right kind of property by applying some rules to the list of available properties coming up for Tax Lien or Tax Deed sale.

In any case the bottom line is, when investing in Tax Liens make sure you know what the rules are and don’t invest money into Tax Liens which you might need for other purposes in the near future. Because it might take several years for the owner of a Tax delinquent property to pay up, or it might be only weeks. One never knows.

And get in with the exit in mind. It will decide which properties you invest in.

What do you think is more likely to be redeemed down the road, a Tax Lien on a 1,000,000 custom home in a gated community, or a 100,000 boarded up junker with man high weeds in the front yard? The answer is clear. So depending on what your investment goal is, a high Interest rate or Property ownership you know which Tax Lien you should go after.

When someone decides to stop making their property tax payments and let their property go for taxes, there are many reasons for this.

But below these superficial reasons is a feeling of the owner that he/she just does not want to deal with this property anymore.

Reality does really not play a big role in the minds of these owners. In their minds they just wrote this property off and do not want to deal with it anymore.

They fully know that they could sell the property fast if they would only sell it at a discount and advertise it a little bit, but even that is too much effort for them. And it doesn’t even matter if they could recover thousands and even tens of thousands of dollars from such a sale. Once their mind is made up that they don’t want the property anymore they rarely sway from their position.

This is GREAT for you because you as an investor learning from people like me how to find these people and buy their properties for as little as $100 to $500 can make a fortune with these properties. And you are not even taking advantage of the sellers.

In many of my deals I have actually told the seller that I will re-sell the property down the road for a good profit and they have congratulated me to this and wished me luck.

So buying Tax Delinquent properties directly from the owners for purposes of reselling them is not something you have to hide from your sellers but instead something you can be upfront about.

The reasons a property owner ultimately gets to the point of deciding to let a property go for taxes are multi-fold, but many of them are centered around the following scenarios.

1. A Property owner tried selling their property in a bad market many years ago using an even worse Real Estate Agent. The property did not sell and now they think it cannot be sold.
2. The Owner tried in the past to sell the property for CASH ONLY, no financing. Since obtaining Bank financing on raw, vacant land is more challenging than on houses, this diminishes the pool of available buyers drastically. Most people don’t have $5,000, $10,000 or $20,000 sitting in their bank accounts ready to be used to buy a piece of land. Since this did not lead to success they now are not willing to try it again, or don’t even know that they could sell the piece of land fast with seller financing.
3. The owner is an absentee owner who was for many years hoping for some development to spring up in the property area. If this did not happen, he looses faith in his investment and decides to cut his losses. However, what these owners do not realize is that today we live in the age of the Internet and the entire world is their market. This was not the case to that degree even 10 years ago and not at all 15-20 years ago. As a result, one person’s junk is another person’s treasure. There is Vast numbers of people all over the US looking for any type of real estate at any given time. It is just a matter of you being able to put it online (I can help) and expose this piece of land to the most people possible. With that you should be able to sell any piece of real estate fast and for good $$$.

Most people know about going to Tax Lien and Tax Deed auctions and consider these to be the only two ways you can make money investing in Tax Delinquent Properties?

However this like saying that putting a fishing rod with a fly into the sea is the only way to fish. It is ONE way but for sure not the only way.

Here are some additional ways you can profit from Tax Delinquent property investments.

1. Buy multiple years of Tax Lien Certificates over the counter from the county and immediately proceed to foreclosure.
2. Buy the list of Tax Lien Investors from the County and ask them to buy the Tax Lien Certificates (TLC) from them. Remember, times and circumstances change and a Tax Lien Investor who might have had lots of money to invest a few years ago might be strapped of cash right now and willing to sell that TLC for a discount. Once you have multiple years of TLCs proceed to foreclose immediately.
3. My Favorite method. Buy the Properties directly from Tax Delinquent Property owners prior to the auction for pennies on the dollar. All you need to do is find out who of the sometimes VAST lists of tax delinquent properties might be willing to sell the property for a steep discount because they have given up on their property. I have developed such a method to filter these lists. Visit www.landforpennies.com for more information.

Any of these methods will bring you properties for as little as 5-10% of the true market value (meaning a property worth 20,000 can be bought for as little as $500 to $1000) without any measurable competition.

And the best is that you can do almost everything here from the comfort of your home. All you need is a computer, internet access, a small printer, a telephone, and some postage.

Most people know about going to Tax Lien and Tax Deed auctions and consider these to be the only two ways you can make money investing in Tax Delinquent Properties?

However this like saying that putting a fishing rod with a fly into the sea is the only way to fish. It is ONE way but for sure not the only way.

Here are some additional ways you can profit from Tax Delinquent property investments.

1. Buy multiple years of Tax Lien Certificates over the counter from the county and immediately proceed to foreclosure.
2. Buy the list of Tax Lien Investors from the County and ask them to buy the Tax Lien Certificates (TLC) from them. Remember, times and circumstances change and a Tax Lien Investor who might have had lots of money to invest a few years ago might be strapped of cash right now and willing to sell that TLC for a discount. Once you have multiple years of TLCs proceed to foreclose immediately.
3. My Favorite method. Buy the Properties directly from Tax Delinquent Property owners prior to the auction for pennies on the dollar. All you need to do is find out who of the sometimes VAST lists of tax delinquent properties might be willing to sell the property for a steep discount because they have given up on their property. I have developed such a method to filter these lists. Visit www.landforpennies.com for more information.

Any of these methods will bring you properties for as little as 5-10% of the true market value (meaning a property worth 20,000 can be bought for as little as $500 to $1000) without any measurable competition.

And the best is that you can do almost everything here from the comfort of your home. All you need is a computer, internet access, a small printer, a telephone, and some postage.

After writing many articles about the ins and our of Tax Delinquent Property Investing I keep coming across a large number of people who are confused between Tax Liens and Tax Deeds.

In this article I will go back to the basics and explain how this works.

In a few words it can be summarized as follows:

Tax Lien Certificates deal with a Financial Lien against a property. The owner of the property does not loose his/her property when such a TLC (Tax Lien Certificate) is issued.

Tax Deeds deal with the actual property. At a Tax Deed Auction the actual property is being sold and the original owner looses all rights to this property.

Background:

In the United States a lot of the services each state, county and municipality offers their residents is paid for through the collection not of Income taxes but instead of “Property Taxes” levied on any Real Property (meaning Real Estate including Raw Land).

Now what happens if a property owner refuses (or just forgets) to pay the property taxes on such a property? Obviously this strips the County/City/… of funds needed to pay for services like Police, Street work, Firefighters….

As a result in the US (vs. other countries where they have completely different systems), the States have given the counties the right to do one of two things.

1. Sell the outstanding property taxes to investors in exchange for several rights, amongst them
   1. The investor gets issued a Lien against the property (called Tax Lien Certificate)
   2. The Right to collect a high interest rate (usually between 12 and 24% but can be higher in some states)
   3. The Right to foreclose on the lien against the property (down the road) if the owner not redeeming the Lien
2. Sell the actual property at public auction. (called a Tax Deed Sale, or plainly a Tax Sale)

Now how can you make a profit from this!! Very easily!!!

1. You can go and attend the Tax Lien Auction and buy one or many Tax Lien certificates and collect a high interest rate until the owner pays off. If the owner does not pay off the Tax Lien Certificate in the Statutory Redemption period, you hit the JACK POT and can foreclose on the property and OWN The actual REAL ESTATE for only the back taxes you paid plus some foreclosure cost.
2. You attend the Tax Deed auction and buy a property there directly from the State for pennies on the dollar.
3. You follow my Proprietary method of buying Tax Delinquent properties directly from the Long time owners PRIOR TO AUCTION with Title insurance, FREE AND CLEAR for as little as $100 to $500

When attending a Tax Lien Sale you are investing your hard earned money in a Lien against a property you don’t own.

You obviously don’t want to do this without checking out the underlying property at least a little bit by doing a quick preliminary title search.

For this do NOT hire a title company to do that for you. I don’t believe in paying money for a service on a property I don’t even know if I will be able to buy the Tax Lien Certificate for.

Therefore the way to do this is to do it YOURSELF.

Here is how you do it:

1. Go to the County Recorder/Clerk (called differently in many counties and states, but basically the county official who keeps records of all property transactions and where all Deeds, Mortgages, Liens… are being recorded). Go to the “Grantor/Grantee index.Nowadays most Counties have online Services which often include the online Grantor / Grantee Index. The Grantor/Grantee index is the database of all property transactions. GRANTOR means the one that GRANTS (=usually the seller) and GRANTEE means the one that receiveds (= usually the buyer)
   
   
2. Once at the Grantor / Grantee Index look for the name of the person owning the property. Note, These Indexes are organized by Book and Page as well as by Name and also often by Legal Description. If you have any of these you can search the index and all documents pertaining to that Name / Legal Description will come up.
   
   
3. Now you only need to go document by document to look at everything that affects this property. What to look out for:
   1. IRS Tax Liens
   2. Bankruptcies
   3. Environmental Claims.
   4. Mortgages (if you are aiming to own the property it is quite unlikely that the Bank holding the mortgage will let the property go for taxes and instead will redeem the property prior to the redemption period expiring)

4. Do this for all properties you are interested in and you will have a good picture of any hidden problems existing. Of course where there is a problem, cross this property off your list and move on to the next one.
   
   
5. Once you are used to doing this, any preliminary title search should only take you approx. 5 to 10 minutes per property

I remember in my early days when I just started investing in Tax Delinquent Properties I was quite confused as to what all these different county departments actually do and how I need to use their services.

For the purpose of Investing in Tax Delinquent Properties you usually don’t work with more than 3-5 different departments which usually are:

- Treasurer / Tax Collector’s office

- Assessor

- Clerk / Recorder

- Mapping Department

- Planning and Zoning Department

Mostly you will work with the first three, and the second two only occasionally.

Here is a brief explanation of what these departments do:

1. Treasurer / Tax Collector’s office
   The name might be different in your state but this is basically the office that collects the property taxes. It is that this office where you can find out how much property taxes each property owes and when the next sale (tax Lien or Tax Deed) is scheduled. Also if your state allows for purchase of Tax Liens or Tax Deeds over the counter AFTER the auction, you will be able to do this here.

2. Assessor
   The County assessor’s responsibility to assess each property the value for taxation purposes. Whenever a property is being sold, the Assessor usually gets a notification of the sale price as well as some of the terms of sale. With this information he can then assess the value of all properties in the county. You might remember getting a “Property Valuation Notice” from your county Assessor telling you how much he thinks your property is worth.In many states, the Assessor also keeps copies of all Property Maps, also commonly called Plat Maps. Instead of going to the Recorder (who keeps all official records for the county but these are often in large and weird formats) you can also often go to the Assessor who has all maps in usually more handy formats and paper sizes.

   For me this is usually the first stop at a county when I am about to look at a bunch of properties. I go to the Assessor’s office, get copies of all property plat maps which helps me finding the properties I am looking for.

3. Clerk / Recorder:
   This official and office keeps records of all recorded documents in the history of the county. That means all property ownership changes, Deeds, Agreements, Mortgages, Liens, Court Judgments are recorded here and kept electronically or in form of paper or micro-fish. Nowadays most counties are well advanced in their conversion from Paper and Micro-fish to Electronically scanned images but some are still in the process of converting these files. In any case and no matter what format the recorded documents exist, they are sorted by Book and Page in chronological form and will allow you to do a title search to any level of detail.

4. Mapping Department:
   I personally only use the Mapping department when either the Assessor does not have copies of all Plat Maps available or more frequently when I am looking for a comprehensive County Map with all roads and other orientation points. Usually the mapping department has something like that for sale for a token amount of approx. $10.00

5. Planning and Zoning:
   You will need to go to the planning and zoning department if you have questions about what is allowed to be built on the property you are buying and to check the limitations of the allowed uses. For example, if you are planning to bid on a parcel with a House at a busy intersection at Tax Sale you might want to check if this property is zoned commercial or residential. Or if you are planning to purchase a Vacant lot in the outskirts of town, you definitely want to check how this lot is zoned. Is it Residential, Commercial, or even Agricultural… depending on what it is zoned and what the surrounding plans are you might be able to re-zone it which alone can multiply the value of a property.

After writing many articles about the ins and our of Tax Delinquent Property Investing I keep coming across a large number of people who are interested in the subject but who did not yet have the chance to learn what this Tax Deed and generally the Tax Delinquent Property Investing system is all about.

Well, let me take the time today to go back to the basics and explain how this works.

In the United States a lot of the services each state, county and municipality offers their residents is paid for through the collection not of Income taxes but instead of “Property Taxes” levied on any Real Property (meaning Real Estate including Raw Land).

The taxing authorities here are multifold (Municipality, County, State, Fire District…) but the collection is usually being done by the County in which the property is located in.

Now what happens if a property owner refuses (or just forgets) to pay the property taxes on such a property? Obviously this strips the County/City/… of funds needed to pay for services like Police, Street work, Firefighters….

As a result in the US (vs. other countries where they have completely different systems), the States have given the counties the right to do one of two things.

1. Sell the outstanding property taxes to investors in exchange for several rights, amongst them
   1. The investor gets issued a Lien against the property (called Tax Lien Certificate)
   2. The Right to collect a high interest rate (usually between 12 and 24% but can be higher in some states)
   3. The Right to foreclose on the lien against the property (down the road) if the owner not redeeming the Lien
2. Sell the actual property at public auction. (called a Tax Deed Sale, or plainly a Tax Sale)

In either case basically there is the possibility that the owner gets the property taken away due to non-payment of property taxes.

In effect this is something that remains from the “WILD WILD WEST” days of the US.

Now how can you make a profit from this!! Very easily!!!

1. You can go and attend the Tax Lien Auction and buy one or many Tax Lien certificates and collect a high interest rate until the owner pays off. If the owner does not pay off the Tax Lien Certificate in the Statutory Redemption period, you hit the JACK POT and can foreclose on the property and OWN The actual REAL ESTATE for only the back taxes you paid plus some foreclosure cost.
2. You attend the Tax Deed auction and buy a property there directly from the State for pennies on the dollar.
3. You follow my Proprietary method of buying Tax Delinquent properties directly from the Long time owners PRIOR TO AUCTION with Title insurance, FREE AND CLEAR for as little as $100 to $500