8 Tax Lien Investing Tips
Eight Tips to Building Your Worthwhile Tax lien Investing Portfolio
There are eight steps that you might want to observe in order to construct a worthwhile portfolio of tax lien certificates or tax deeds. No matter which state you are investing in and whether you are investing in liens or deeds, you want to take these same eight steps. The particulars of how you accomplish every step may change depending on which state you might be investing in and whether or not you might be investing in tax deeds, tax lien certificates or redeemable tax deeds, but the eight steps stay the same. Inside this article I’ll outline these steps and provide you with a brief summary of every one.
Step One: Figure out the goal of your tax lien or tax deed investing portfolio
Are you investing for the future or for current earnings? This can determine what type of investment might be finest for you; tax deeds, tax lien, or redeemable tax deeds. Will probably be a big factor in deciding where you’ll make investments and in figuring out your bidding technique and how you’ll revenue from your investment later on. Briefly everything that you simply do to develop a worthwhile portfolio will likely be based on this decision.
Step Two: Determine where you’ll invest
It’s worthwhile to identify the area that you may be investing in. If you wish to put money into a number of areas or more than one state, I recommend that you start in one area and discover ways to achieve success with that one before shifting on to a different area. Each state and in some circumstances, each county may have completely different legal guidelines and procedures regarding tax sales. What worked in a single area may not work very well in another and you may have a different learning curve for every area.
Step Three: Get the tax auction data
Now that you know where you will make investments, it’s essential to discover out when and where the tax sale is held and acquire a listing of properties that are within the sale. For many areas this step can be straightforward, you just must know the place to go and who to contact to get this information. Generally you’ll have to pay for it but sometimes it is possible for you to to get it free of charge.
Step 4: Carry out your due diligence on the tax sale properties
This is the most important step in the process and whether you do this correctly or not may imply the distinction between being extraordinarily worthwhile and losing money. Once you have an inventory of properties which are within the sale, it’s essential do your due diligence on these properties prior to a bid. The precise procedures you observe will differ depending on which state you might be investing in and whether or not you’re investing in tax liens or tax deeds. It’s important to do a little more due diligence for tax deeds versus tax liens.
Step 5: Get Ready to participate in the tax auction
Preparing to participate in the tax sale consists of registering to bid at the sale together with getting your paperwork and payments in order. In most states you have to register prior to the sale in order to bid. Relying on what state and county you might be investing in, you might have to register so far as two weeks earlier than the sale, or you might be able to register as quickly as proper before. Some municipalities don’t require you to register forward of time, only that you submit the right paperwork if you’re the profitable bidder on a property. Some counties will require a deposit as a way to register. The deposit quantity may very well be wherever from $100.00 to a couple thousand dollars (as within the case of many on-line tax sales). Large deposits are usually returned to the investor if nothing is purchased at the sale. Smaller deposits are usually returned but sometimes not returned, depending on the area. You also need to just be sure you have the right funds for fee before attending the sale. For most tax sales, only certifiable funds will be taken.
Step Six: Figure out a bidding strategy
Prior to bidding at a tax sale auction it is advisable know what the bidding process is and what your technique will be. You may want to settle on the maximum you might be prepared to pay for every property that you will wish to bid on, or how low (in interest rate) you’ll bid. I recommend that you go to no less than one tax sale before you bid so that you are aware of what is really being bid and what the competition is like.
Step Seven: Shield your investment
As soon as you buy a tax lien certificates or tax deed, it is advisable to take steps to guard your investment and maximize your earnings. Depending on whether you’re investing in liens or deeds and which state you are investing in, these steps might include:
a) Recording your tax deed or tax lien with the county recorder’s office
b) Paying subsequent taxes
c) Clearing the title to the property
d) Foreclosing on the right to redeem
Step Eight: Get Your Rear in Gear
Many individuals spend all of their time reading and researching and by no means really do anything with all of their knowledge. You possibly can only earn a living by actually investing, now get out there and take action.
This is an overview of the actions necessary to constructing a worthwhile tax lien or tax deed portfolio.