Transcript:
Hey there, it’s Casey Denman from TaxSaleAcademy.com. Thanks so much for joining me for this week’s quick tip video.
Today we’re talking about buying crazy cheap tax liens. I’m talking about liens that are available for less than say $250. I just went over a few results lists and saw that were sold for $200, $60, $230, $67, $100, $53. So, these are pretty cheap and were all available OTC. And there are numerous other liens available for this price as well. This is just one particular list I’m looking. There are tens of thousands of liens available at these prices.
We’ll discuss why these liens are available momentarily, but before everyone comments asking what list I’m looking at, you should know by now that I usually won’t directly mention the county or state. There are a number of different reasons for this, mostly because you should want to put in SOME effort, so if you spend a few minutes on Google you will easily come across your own list with liens this cheap.
Now, tax liens exist when an owner fails to pay their property taxes on time. The liens are auctioned off, a tax lien investor buys the liens and earns interest on their money, while the property owner can come in during the tax lien redemption window and pay the delinquent taxes, thereby cancelling the lien. Some liens can be available for purchase OTC or over the counter, which is when the lien fails to sell at auction. You simply pay the price of the lien and walkout without any competition.
So, in some counties there are thousands and thousands of liens that are available. Most of these crazy cheap liens will be available in large, mostly undeveloped extremely rural subdivisions. You have to understand that the liens are sold for the amount of the back due taxes. The taxes are based off of the property’s value. If the property’s value translates to a tax bill of $50, you can probably guess that the value isn’t going to be much.
But, it’s certainly a start IF, and that’s a big IF, the investment makes sense. Is the value there? I’m a firm believer in value over cost, but if you can get both then it makes sense.
So, you have these crazy cheap liens. You can literally go online, do a Google search, browse through some OTC liens and choose a few. In some counties you can just buy online. In other counties you might have to submit your offer through the mail. You can literally start investing in tax delinquent properties within a matter of minutes for less than $50. It absolutely exists.
But, here’s the most important question. Do you really want to? The answer is truthfully, it depends.
In some situations you can get screaming deals. I’ve posted about tax deeds that I’ve been able to pick up for extremely cheap. That’s when you actually get the property.
But tax liens are a little different. It’s a longer term investment.
One thing to consider are any fees involved and the potential for redemption. If a lien costs you $50, plus a $20 processing fee you have to make $20 in interest just to break even. That’s pretty difficult to do off a $50 lien. If it’s redeemed you’ll be losing money, albeit not much money, but you’ll still lose money.
The other thing to factor in is the type of system used in the state to tax ownership of that property. Will you need to go through an actual foreclosure process or can you simply apply for the deed? And how long will that take and how much will it cost? For a lien selling for $50, you really need to make sure the real estate’s value is there before pushing forward too much. If you have to invest another $1500 into legal fees, your margin might be getting pretty thing or even negative for starting with that $50 lien.
So as you can see, it’s easy to get cheap tax liens. It’s easy to get cheap tax deed, even. But at the end of the day, your investment should focus on the land attached to that lien or deed. Sure, if you want to buy a cheap lien to get your feet wet, then be my guest. Know your laws, of course so you don’t end up in a bad spot, but go right ahead. But if you’re looking at a cheap lien as a way to make fast money or a lot of money, it doesn’t exist.
My suggestion is to stop focusing on the quick short term money off cheap investments. Instead, take the time to learn the business, focus on doing it correctly, preparing yourself and then taking advantage of the right opportunity.
I truly hope this has helped you out if you’ve ever thought about those crazy cheap tax liens. If we can help you learn about this business, there are a number of links in today’s video description.
One of those will take you to taxsaleacademy.com where you can get your free copy of my book or you can join the academy for the most comprehensive training we off.
Take care and make it a successful day. See ya!