8 Steps to Constructing Your Profitable “Tax lien investment” Portfolio

There are 8 steps that you need to observe if you intend to construct a profitable portfolio of tax lien certificates or Tax Deeds. Regardless of which state you might be investing in and whether or not you are investing in liens or deeds, it is advisable to take these identical eight steps. The way you accomplish every step may change depending on which state you are investing in and whether you might be investing in tax lien certificates, tax deeds, or redeemable tax deeds, however the eight steps remain the same. In this article I will outline these steps and provide you with a quick description of every one.

Step One: Decide on the goal of your tax lien or tax deed investing portfolio

Are you investing for the future or for present earnings? This will decide what type of investing will be best for you; tax lien certificates, redeemable tax deeds, or tax deeds. This will probably be an enormous factor in deciding the place you will invest and in determining your bidding techniques.  It will also impact the way you will profit from your investing later on.  In summary, every step that you do to develop a worthwhile portfolio might be based on these decision.

Step Two: Decide where you’ll invest

You have to establish the areas that you can be investing in. If you want to spend money on multiple counties or multiple states, I suggest that you begin in a single area and discover ways to be successful with that one prior to moving on to another area. Each state and in some instances, each county may have totally different legal guidelines and procedures concerning tax sales. What worked in one county might not work very nicely in another and you may have a large studying curve for every area.

Step Three: Get the tax auction information

Now that you realize where you’re going to invest, you have to find out when and where the tax sale is held and obtain a listing of properties that are in the sale. For most areas this step shall be straightforward, you just need to know where to go and who to contact to get this information. Sometimes you will have to pay for it and generally it is possible for you to to get it free of charge.

Step Four: Carry out your due diligence on the tax sale properties

This is an important step and whether or not you do this correctly or not could mean the distinction between being extraordinarily profitable and losing money. After getting a list of properties which are within the sale, it is advisable do your due diligence on these properties before you bid. The exact procedures that you follow will vary depending on which state you might be investing in and whether or not you’re investing in tax lien certificates or tax deeds. You must ususally perform extra due diligence for tax deeds than you do for tax liens.

Step Five: Prepare to participate in the auction

Preparing to go to the sale consists of registering to bid on the sale together with getting your paperwork and payment in order. In most states you must register earlier than the sale in order to bid. Depending on what state and county you are investing in, you might need to register as far as two weeks earlier than the sale, otherwise you might be able to register the day of the sale. Some municipalities do not require you to register ahead of time, only that you submit the proper paperwork to bid on a property.

Some counties will require a deposit to register. The deposit amount might be somewhere from $100.00 to a few thousand dollars (as in the case of many online tax sales). Big deposits are normally returned to the investor if nothing is purchased at the sale. Smaller deposits are sometimes returned depending on the county. You also must make sure that you have the correct types of funds before you go to the sale. For many tax sales, only certified funds are accepted.

Step Six: Settle on a bidding technique

Before you bid at a tax sale you’ll want to know what the bidding procedure is and what your strategy will be. You will have to decide how much you might want to pay for each property that you wish to bid on, or how low you will bid. I recommend that you just attend a minimum of one tax sale before you bid so that you’re conscious of what is actually being bid and what the competition is like.

Step Seven: Shield your funding

As soon as you buy a tax lien certificate or tax deed, you have to take steps to guard your investment and maximize your profit. Depending on whether or not you might be investing in liens or deeds and which state you’re investing in, these steps could embrace:

a) Recording your lien or deed with the county clerk
b) Paying subsequent taxes
c) Clearing the title to the property
d) Foreclosing the right to redeem

Step Eight: Take Action

Many people spend all of their time reading and researching and by no means truly do anything with all of their knowledge.  You cannot generate income by only doing research or watching, now get out there.  Nothing will happen until you move!

This is an abstract of the steps essential to building a profitable tax lien or tax deed portfolio that I learned from the Tax Lien Lady. Here’s more information about how one can construct your own tax lien or tax deed portfolio.

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Filed under: Tax Auctions • Tax Deed • Tax Deed Investing • Tax Lien • Tax Lien Investing

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