Transcript:
Hey guys, it’s Casey Denman here from Tax Sale Academy.com

First off, thanks so much for joining me on today’s livestream here on Youtube. As always, at the conclusion of this livestream, if you’re looking to learn more about investing in tax defaulted real estate head to taxsaleacademy.com, that’s taxsaleacademy.com.

So today, we’ll be discussing a few funding methods for your tax sale investments. This is obviously a fairly important topic, because without some sort of funding method you won’t be able to buy anything, right?

Of course, new investors always want to know what kind of options they have for funding their tax sale investments. And that’s going to be what we go over today.

With extremely rare exceptions, your payment for tax liens and deeds can’t be seller or county financed. The county won’t offer payment terms and expects all their payment soon after the auction ends. In some areas, this will be immediately after you win the specific property. It could also be immediately after the auction concludes, within 24 hours, and then some counties will allow you a week or two to pay. So, be sure to check your county’s requirements.

But back to the actual payment itself. Let’s discuss a few of the different funding methods available to you as a tax sale investor.

The first one is going to be the most obvious which is cash. Without a doubt this is the absolute easiest way to fund any business. Some auctions will require physical cash to pay, others will accept checks or certified funds, and others might require wire transfers. But ultimately, it’s a form of cash. This could be from a checking account, or you could even use a savings account. If you don’t have cash, I always recommend to figure out how you can get cash before you consider any of the other options we’ll be discussing. Can you cut expenses and save? Can you work more hours? Can you get rid of a boat or old car you don’t use? If you’ve followed me for anytime, you know that you don’t need a hundred grand or anything crazy to start, and it’s likely some of you have the ability to get the cash required without much effort.

Beyond actual cash, you have a few other options as well if you’re willing to be a little creative.

One option that I’ve mentioned a few times and that actually helped me get started are my friends over at mastercard and visa. That’s right, credit cards can be used to buy tax defaulted real estate. There are two ways to utilize credit cards. The first way is that some auctions companies will allow the direct payment with a credit card. Yep, just like you’re buying your groceries, you’d walk in, win the property and swipe your credit card when you checkout. Pretty simple process. They will usually charge a 3-5% convenience fee for this to cover their processing fees.

The second way to use credit cards is through the cash advance option. Many credit cards offer the ability of the card holder to use a portion of their credit in exchange for cash. You’ll either be able to withdraw the funds at an ATM or they might issue a check payable to yourself against your credit card account. At that point, you are essentially buying just as if you had cash.

Of course, with all credit cards you’ll have interest that will hit you at some point and these rates can be staggering in many cases. Cash advances on your credit card can be even higher than standard rates, so be sure to check your cardholder agreement and figure out your rates and factor that expense into your investment. And of course, don’t go overboard with credit cards and get them paid off as quickly as you can. I always suggest that if you do use them, use them only as a way to start your business and not a way to run your business indefinitely.

Another option is a loan of some sort. There are a variety of different ways to get a loan. If you have equity in your home or a property, you can consider a home equity line of credit or HELOC. There’s quite a bit of paperwork involved, as well as income and credit verification measures that the lender will take, but it can be a great way to pull out that equity to invest.

There are plenty of other loans available such a signature loans from your local bank or credit union, there are peer to peer lending groups, and there are lots of ways to structure the loans.

One way many investors start is by using a friends and family type loan. The ways these typically work is that you end up splitting the net profits with your partner. And oftentimes, the person that is putting up the capital will receive a lopsided return. So, if you do all the work and they put up all the money, you might receive 20 or 30% of the profits and your partner will receive the rest, along with of course, their initial capital investment. Of course, without them you wouldn’t have been able to do that deal, so it’s a necessary evil. Eventually you should have enough set aside to buy a property without them. If you do partner with friends or family, ALWAYS put everything in writing. I can’t recommend this enough. The fastest way to put a wedge between friendships or families is money.

Another method is by using a retirement account. This is a little advanced to explain for a YouTube video, but essentially if you have a retirement account setup, you can convert it into a self directed retirement account. This is a great way to not only leverage the funds and get the tax benefits from when you put money into your retirement account on a yearly basis, but if you have an employer matching plan this could potentially allow you to leverage that money as well. There are certain ways to set it up, but using a self directed IRA would allow you to buy and sell properties through the IRA, and put the money away without being charged income tax on the profits until you pulled it out as income later in life. I’ve got other videos on this strategy and of course this is something you’ll likely want a CPA and CFP to help setup for you.

There are plenty of other ways to fund your tax sale investments, it’s just a matter of being creative and thinking outside the box. However, you decide to fund your investments, it’s important to start thinking about it well in advance so you’ll have the funds ready to go when you.

That’s it for today’s livestream guys. If you enjoy these livestreams, be sure to hit that thumbs up button just so we know you’re finding out trainings useful so we’ll be able to produce more videos for you in the future.

And of course, if you’re looking to learn more about investing in tax defaulted real estate including in depth training on alternate funding methods, head on over to TaxSaleAcademy.com. Again that’s TaxSaleAcademy.com.

Have a great afternoon! Take care, bye bye.