Boston Gal's Open Wallet

That's one of Kiyosaki's favorite investments. But I don't know anything about it.

 

Love your site.

Here is one article to get started.

http://www.creonline.com/articles/art-267.html

 

I did an internet search for [my county] tax lien auction (fill in your county name), and found information about an annual tax sale auction.

For each property/parcel, bids are accepted as 99% to 1% of the "undivided interest". I guess this means what is owed.

Very interesting.

 

All of this has led me to investigate books on the topic.

This book has a very interesting review from someone who tried his hand at bidding.

http://www.amazon.com/gp/product/0793195179/ref=pd_cp_b_title/104-6962609-4083162

He writes...

"After returning home in total disgust, I decided to review the day's results online. I discovered that in only the first hour, approximately 100 different buyers had been awarded certificates. One might assume that there had been a fair distribution of the available certificates among everyone who had been present. However, when reviewing the mailing addresses of these 100 different buyers, I discovered that about 70 of them shared only six or seven different mailing addresses. Each of the entities sharing those six or seven addresses had sent up to 15 individuals to bid on their behalf. You do the math and you can see that one lone individual has very little chance of even getting a certificate under such a scenario, not to mention ever getting a higher rate of return than the bare minimum."

 

Investing in Tax Liens is actually very safe. I went to a real estate investor seminar once and it included buying tax liens. Basically its up to the state you live in or you are willing to travel to. A person doesn't pay for the taxes, you pay their back taxes TO the government (so your money is backed and held by the government), and then the government returns your money + 15% to 36% interest payable to you for lending the government money. The tax liens are held in the county real estate office. All you have to do is call and most of the time search taxes unpaid. You basically can tax a house from under a person that hasn't paid their taxes or if its a foreclosure only pay the taxes owes on it and bam you gotta a house for cheap then flip it.

for shizzle. well hope I didn't confuse and cleared tax liens up some. cheers -P

 

We've invested in tax liens. Determination of rates of return are different per state. The sale process can sometimes vary by county within a state. Our state implements a round robin bidding war; larger institutions with lots of money show up and bid down the interest rate, making it difficult for smaller investors to get a good deal.

Our neighboring state has a lottery system with a fixed interest rate. Good return, but not always worth the drive for us (not counting the extra day off work). It's all in the luck of the draw -- Your number might not be called and you could end up empty handed. Or, your liens could be paid back the next day. Between my husband and I, we've had between $2k-$6k in liens on the years we attended. Other people walk away with significantly larger liens. Some of our liens have been paid back quickly, others have taken a few years. We've never had the opportunity to get the tax deed (the chances of that are really quite slim).

I think these are one of the safest returns you can get, but the process (like you've mentioned about foreclosure sales) is regional: lien amounts, how return is calculated, the sale process, how many people show up, etc... It's really hard to generalize. YMMV, as they say!

 

Tax liens are one of the best vehicles out there because you can control your return and understand the risks.

My favorite tax lien book and I think the #1 sales ranked book on tax liens right now is Investing Without Losing: The Beginner's Guide to Real Estate Tax Lien and Tax Deed Auctions (ISBN: 0978834607).

I mainly like it because their web site is updated when a tax lien sale is up.

 

Thanks for posting the topic and getting such great comments. I was curious about tax liens myself after having read about it in the Money Coach's Guide to Your First Million. She mentioned those and tax credits as alternative real estate investments. I'll have to get around to reading more about these sometime!

 

I did this in New Orleans; spent about 600 at a tax auction on local properties 2 years ago. My cabbie had told me his brother had acquired a hunting lodge for the cost of taxes. One of the properties produced an earnings of 130 above my expenditure within 4 months. The other property was in such a state of poverty that we wrote off the experience as a mitzvah. Overall, made about 40 in four months - better than a savings account if more effort. I talked to a real estate agent who spends about 50k a month purchasing tax debt. He said it keeps his company solvent and is overall a safe way to make money. I'd do it again.

 

Boston...your my homey.

I decided to do a little investigating after reading Kiyosaki's book.

Gotta watch out for those web sites that want to sell you an auction list. Online lists are available for free if you look around.

Try realauction.com they are hosting a denver auction up till november 6th at http://www.denvertaxsale.com/

 

Check out www.investingwithoutlosing.com for upcoming tax lien auctions online and offline.