Tax Lien/Deed Investing
Important Bonus Report America’s Secret Investment Strategy (Featuring an Exclusive Q & A Segment)
A Shocking Report by Saen Higgins, President
Wealth Without Risk
Special Information:
This bonus report is presented with the understanding that neither the author nor the publisher is engaged in rendering legal or investment information. While a great deal of care has been taken to provide accurate and current information the ideas, suggestions, and guidepoints are not intended as guarantees of profit or any other representations for the individual investor. The reader is urged to consult legal counsel regarding any points of law and to be aware that points of law may vary in structure and practice from state to state. The information herein has been compiled and developed from the author’s experience, the questions have been gleaned from those asked by audiences throughout America, and every attempt has been made to provide information that is helpful to the tax lien or tax deed investor. Careful attention to prudent investigatory practices will afford the investor, beginning or seasoned, the maximum protection from unknown risks in the marketplace. The investor should always follow complete, practical, and thorough steps to satisfy himself or herself that actions have been taken with full knowledge of potential risks. The author specifically disclaims any liability, loss, or risk, personal or otherwise, incurred as a consequence directly or indirectly of the use and application of any of the techniques described in this publication.
©2011, WWR Publishing Published by WWR Publishing, Sacramento, California For information regarding the purchase of this manual or any other product or service offered by the Wealth Without Risk please write to: W.W.R. 3301 C St 200A Sacramento, CA 95816 or call our offices at: 1-800-882-0467, international customers please call +1-916-290-9316. All rights are reserved. The text of this publication, or any part thereof, may not be reproduced in any manner whatsoever without written permission from the publisher. Printed in the United States of America
SPECIAL BONUS REPORT
Bonus: America’s Secret Investment America is truly the land of plenty when it comes to investment choices. Senior citizens will recall the days when bank savings accounts offered almost the same return, the stock market was considered a risky place to put your money, real estate was unpredictable, and a small retirement account through your employer was the best one could expect. Then along came changes in banking and investment laws, along with an economy that seemed to add something new every day. All of a sudden banks offered very small returns on their savings accounts, the stock market produced consistently high returns, real estate took off, and the traditional retirement accounts gave way to 401Ks, IRAs, SEPs and lots of other exotic investment vehicles. Consumers discovered that a simple bank savings account was no longer adequate, and that special knowledge was needed to succeed in most other investments.
1
2
SPECIAL BONUS REPORT
But, all the while, banks, sophisticated investors, insurance companies and others were putting their cash (and they get their cash from you!) into the safest, highest yielding investments in America; Tax Lien Certificates. It is amazing that an investment that has been around for almost 200 years is making so much money for a few people, people who already have a lot of money. Why? Well, tax lien certificates are not advertised, they are not taught in school, and even real estate agents learn little or nothing about them in their training. Real property taxes are the most important source of income for most municipalities across America. On January 1 of each year most counties assess property taxes for both improved and unimproved properties within their boundaries. In a perfect world every property owner would pay property taxes on time, the counties would have lots of cash, and everyone would live happily ever after. Unfortunately, not everyone pays his or her property taxes on time, but the counties prepare their budgets as if all taxes will be paid on time. Therefore, finding a way to make up for the taxes that are delinquent is critical to the county budget.
SPECIAL BONUS REPORT
The individual states work with the local counties/ municipalities to determine the method used to collect taxes, and the types of penalties charged to those who pay late. Generally, interest rates and/or penalties ranging from 5% to 50% of the taxes due are levied (the tax lien and deed directories compiled by W.W.R. list the counties nationwide and their rules) as an inducement to get homeowners to pay their taxes. However, the counties realize that simply issuing the levy is not putting money in their pockets, so many counties will sell the liens to investors, like you and me, and then, when the homeowner finally pays, the county simply forwards the penalty plus interest to the investor. A simple, clean, profitable way to do business for both the county and the investor. Tax liens – as with all liens – are evidence of a debt owed against property. The debt has a very high priority (it comes ahead of mortgages) and can lead to foreclosure if the owner fails to pay it in a timely manner. Tax deeds result from the foreclosure of the tax lien by the county, and result in loss of ownership for the property owner.
3
4
SPECIAL BONUS REPORT
Some counties will sell tax liens, others sell only deeds. All properties have liens placed on them for property taxes, but not all counties make the liens available to investors. The counties who do not sell the liens still charge penalties to the homeowner, but they don’t let investors participate. These counties sell the actual property if the owner fails to pay the taxes by a deadline date. The beauty of property tax liens is that the interest rate is established by the county, the county administers all payments, and the investor is guaranteed a high return on his or her money, or ownership of the property for pennies on the dollar, if the owner fails to pay the taxes by the deadline. Those of us who invest in liens are always fascinated by the simplicity of the system. We follow the basic rules established by the county, and then simply wait for our high return. Simple enough. Our students who move forward with tax lien certificate investing almost uniformly tell us they were shocked to find out everything they did went exactly as we taught. A great, great way to put rockets on your investment earnings!
SPECIAL BONUS REPORT
Tax lien certificates, and deeds, remain the great secret investment in America today. Even though we train thousands of people annually, there are literally millions of liens and deeds available throughout the country at any given time. Some can be bought by visiting the counties, others can be bought at auctions, and still others can be bought by mail from the comfort of your living room. You owe it to yourself to learn all you can about tax lien certificate investing and adding it to your investment strategies. It has been said that more than 90% of all wealth in the United States is a result of real estate investing. Indeed, when one thinks of the giants of America (with the possible exception of the new computer millionaires) real estate always comes to the forefront. Donald Trump, Baron Hilton, even those who owned manufacturing or service businesses were careful to use their riches to acquire real estate because they knew that real estate is the foundation from which everything else comes. A home has long been known as the American dream. It is very hard to find anyone, anywhere who does not want to own a home. The priority is so high that lenders nationwide have exclusive programs devoted to first time homebuyers
5
6
SPECIAL BONUS REPORT
only. Communities boast of the quality of their homes when trying to attract new business to town. Communities grow because homeowners work hard to protect and improve what they own. For many citizens, tax lien purchasing has paved the way to home ownership when all other methods proved too expensive. Your goal in using the information we provide may be as simple as increasing the interest you earn on your investments, but it may also be as important as finally getting the home you own. Tax liens and deeds can be dream makers for you, if you just follow the simple guidelines we have developed through our experience. Finally, as we travel the country and talk to the thousands of Americans who sincerely want to improve their lives, we write down the questions and concerns that you have and search out the answers. Our counselors in our main office do the same. Then, when enough questions have been compiled, we sit down with Saen Higgins and discuss them. Those we can answer easily, we answer on the spot, others we hand off to our research staff and provide the answer when we are sure it is accurate.
SPECIAL BONUS REPORT
The questions and answers that follow represent the most common requests brought to our attention by our clients throughout America. We hope they help give you inside information into the most important investment strategy in America today.
7
8
SPECIAL BONUS REPORT
Questions and Answers – Tax Lien/Deed Investing (Candid information from Mr. Saen Higgins, Author, Speaker, Tax Lien/Deed Investing Strategies Expert)
Q. When I invest in a tax lien certificate, who pays me the interest and how do I get my money back? A. Tax lien investing is such a simple process it is difficult to believe that all the work is done by the county. Compare it to putting money into the bank; the bank simply adds the interest to your money and pays it back. Where does the bank get the money? From people like you and me who make deposits. Tax lien investments work the same way. You provide your money to the county, the county collects the interest and pays you. Who pays the county? The delinquent tax payer submits the full payment to the county, the county simply forwards the original investment plus interest to you.
Q. Who makes the mortgage payments, utility payments, maintenance and repairs while I hold the tax lien? A. A very common question, and one that is difficult to grasp for most people. To understand the way a tax lien operates, it is
SPECIAL BONUS REPORT
critical to understand that a tax lien is a debt against a property, it is not the property. When you buy a share of stock in General Motors, you are not required to maintain the cars the company sells. When you invest in a certificate of deposit (CD) in a bank, you are not required to maintain the bank or pay their utility bills. When you buy a tax lien, you are buying the debt only, not the house. So, when you invest in a tax lien you are simply paying the county the money the homeowner was supposed to pay. The county adds interest as a way to get the homeowner to pay and to entice you to invest in the tax lien. When the homeowner writes a check to the county to pay the delinquent taxes, the county simply processes the check, determines the amount due you, and pays you.
Q. If I get ownership of a property through a foreclosure, do I have to pay off the mortgage? A. All mortgages are extinguished when a property is foreclosed.
Q. Why would a bank let you foreclose on the property and risk losing their mortgage? A. The bank has the same right of redemption the owner of the property has. If the bank fails to redeem the taxes before the end
9
10
SPECIAL BONUS REPORT
of the redemption period the mortgage is wiped out and you acquire the property free and clear of all mortgages.
Q. Why would the homeowner lose his or her home for back taxes? After all, the tax bill may be only 1% or 2% of the total value of the house. I can’t imagine someone losing a $100,000 house over a $1,000 or $2,000 tax bill? A. The quick answer is that people do things for their reasons, not ours. It seems very unlikely that a reasonable person would lose a home for a small tax bill. Only a small percentage – 2% or so – actually go into default, which means 98% pay the delinquent taxes. Only about 2% of all homeowners have enough other troubles that they let their homes fall into foreclosure. Divorce, death, financial troubles, neighborhood issues, all contribute. But, as the lien holder, you are not in contact with the homeowner. All you know is that 98% of the time the homeowners pay the delinquent taxes; therefore, you do not purchase liens expecting to end up owning the property. But, if you are “unfortunate” to end up with ownership you have lots of equity to sell.
SPECIAL BONUS REPORT
Q. If property tax liens are so good why doesn’t everyone invest in tax lien certificates? A. The information you learned today was probably new to you, as it is to 95% of all the people who attend our programs. Even though tax lien certificates are clearly the best and safest investment vehicle in America today, there is no University of Tax Lien Certificates. Realtors are not taught about them in their training, stock brokers don’t offer them (there are no commissions involved), and you don’t ever read about them in the daily paper. Big investors, like the insurance companies and banks, have no reason to bring you into their strategies. After all, as long as you are willing to “donate” your money to them in return for 3%, 4%, or 5% returns, they can continue buying liens in bulk and earning 16%, 24% and more.
Q. Why don’t banks, pension funds, and other institutional investors buy tax lien certificates? A. As you learned in the previous question, banks, pension funds and other institutional investors love tax lien certificates. However, they invest at such a large level that they are not competition for you. For example, a pension fund cannot risk investing in a lien on a single $60,000 house because they cannot afford to own it; their overhead is just too high. They can, though invest $1,000,000 in many liens and then be able
11
12
SPECIAL BONUS REPORT
to afford any foreclosures because their overall profit will be high enough. When you show up at the tax lien auction with your $1,000 or so, you will not have to worry about a large bank scooping that lien away from you.
Q. Why don’t stockbrokers, bankers, financial planners, etc., recommend tax lien certificates to you? A. My favorite question. In my previous life, as many of you heard me tell during my live presentations nationally, I was a stockbroker. I earned money not by producing a profit for my clients, but by fees or commissions paid every time someone did a stock transaction. The more shares of stock I sold, the more money I made. Likewise, Realtors are taught to chase commissions; tax liens, as you know, do not produce commissions. The Realtor who recommends tax liens is going to have a hard time supporting himself or herself. The same holds true for financial planners, and other commission based salespeople. There are no commissions paid by the county for tax lien certificates so people who make their living chasing commissions cannot afford to spend any time either recommending or offering tax liens to their clients.
SPECIAL BONUS REPORT
Q. What if there is an IRS lien on a property in addition to the property tax lien? A. One cold hard fact of life is that the IRS is always first in line. Even though the county will tell you that property taxes are a first position lien, ahead of mortgages, mechanics liens, and most other liens, income taxes are more first. Income taxes must be paid or settled before a property can be offered free of all liens. So that’s the bad news! But there is good news, too. For example, many counties around the country have an agreement with the IRS to release the lien as soon as the property is sold for taxes. The reason? The income taxes are the personal debt of the owner, they do not belong on the property. Using the techniques taught in our courses and working with our counselors, those who have purchased our Tax Lien Certificate program can easily determine whether or not the IRS lien will create a problem. (P.S. If you are concerned about an IRS lien just ignore that lien and move on to another one.) When you identify an IRS lien on a property you can petition the IRS to release the lien, and they may do so, or you can offer to settle the debt in order to get the property. Why would you do that? Well, let’s suppose you have a lien of $1,000 on a property worth $40,000. Following our research guidelines, you discover an IRS lien of $14,000 against the property. If you have to foreclose you would have to pay off the IRS lien so your cost would be $15,000 to own that property. That’s not bad at all. But, you might be able to call the IRS and get them to agree to accept a $5,000 payoff for the lien. If they do you have purchased the property for just $6,000 and increased your profit.
13
14
SPECIAL BONUS REPORT
Q. It seems to me the only tax liens available would be on run down properties, because someone with a nice property would never let it be sold for back taxes? A. People have their own reasons for doing what they do. A logical person would not lose his or her home for a small tax lien, but circumstances can force someone to do something completely out of the ordinary. For example, a divorce may create a financial burden so heavy that both parties just walk away from their home. Or an accident, a death, a lawsuit.… As we noted earlier, less than 2% of homes end up being foreclosed on properties so it is very rare when a lien holder has an opportunity to pick up a deed. But it does happen. And, since the county does the foreclosure you may never know why the owners walked away. Of course, when you realize the profit you are going to make, you probably won’t worry too much about the reason.
Q. What happens if I own the lien on the property and the house burns down? Am I responsible for insurance repairs, and will the insurance company pay me a settlement? A. Another common question, and a common fear. When you acquire a lien you are acquiring the debt on the property, not
SPECIAL BONUS REPORT
the ownership. Since you don’t own the property you are not responsible for maintenance, the insurance, or problems, like fires, that may develop. And you are not the one who pays the insurance so the insurance company will have nothing to do with you. And, of course, that leads to the next question: What happens if the owner refused to rebuild the house. Am I stuck with the property! This is one reason why we prefer homes with mortgages on them; the bank will require insurance so the money will be there to rebuild. However, if the owner just walks and there is no insurance you might end up owning a vacant lot. Let’s see how that might work out for you: You bought the lien for $1,000. The house would sell on the open market for $60,000, and the appraiser allocated $15,000 to the land and $45,000 to the building. You can safely assume you might be able to sell the vacant lot for $15,000. That’s not a bad profit, is it? The point is, that it is almost impossible to lose when you own a tax lien.
Q. If the owner does not redeem am I obligated to foreclose on the property? A. No. but the county needs the money so the county can move ahead with foreclosure and offer the property for sale to the highest bidder. However, the highest bid must include the total owed to you, taxes and insurance, so your investment is protected even if you choose not to foreclose. Of course, I can’t imagine why you wouldn’t want to foreclose since the profits are so high, but you can’t lose no matter what you do.
15
16
SPECIAL BONUS REPORT
Q. How can I find out about tax lien or deed sales? A. This is the easiest and, at the same time, most frustrating part of our business, and it is the reason W.W.R. devoted considerable staff and thousands of hours of time to development of our lien and deed directories. Most counties have an office or a person who handles delinquent property tax issues. Some counties have one office for the assessor and another for the tax collector. Some counties have collections handled by the treasurer’s office. So, it is vital that you know where to look or where to call before contacting the county; otherwise, you might spend an entire day being shuffled back and forth from department to department trying to find the right department. When in doubt start with the property tax division for the county and work your way forward from there.
Q. How do I know which tax lien certificates to invest in and which ones to avoid? A. Research. Research. Research. The county issues the certificates as a matter of timing, but they don’t research the properties; that’s not their job. It is up to you to do the research necessary to assure a safe and profitable lien. It always amazed me, when I attended auctions, that so many people literally begin their research at the auction. They get the list, register, show up, and then hope they do okay. I always followed the nine steps for successful investing, outlined in Chapter 4 of your Tax Lien Certificate investing manual. I knew what the property was
SPECIAL BONUS REPORT
worth, what kind of property it was, the zoning, and other important information before showing up at the auction. And, the best thing about research is that you can literally accomplish everything from the comfort of your living room.
Q. Do I have to physically go to an auction or to the county office in order to invest in tax liens? A. Usually, no. Most counties will end up with properties, often thousands, left over after the auction. Those properties are then returned to the appropriate county office and are then either cataloged to be offered at a future auction, or are offered to anyone who either comes to the office (over the counter) or is willing to send a check through the mail (assignment purchasing). In fact, utilizing the strategies outlined in our Tax Lien Certificate investing course, you can literally research liens anywhere in the United States from the comfort of your living room and buy as many as you want without leaving your home.
Q. What are the best markets to invest in? A. There is no magic “pockets of profitability” anywhere in the country. Certainly, a penalty state like Texas offers some great inducements to buy, but the best market is not just a financial
17
18
SPECIAL BONUS REPORT
issue for you, it is a matter of comfort. A lady at one of my programs once told me she would never invest in Kansas because she just knew a tornado would come and destroy her property. And many east coast people are convinced California is about to fall in the ocean. Since there are literally millions of liens available, there are liens throughout the country that you can choose from. If a certain state or a certain county doesn’t feel right for you, just move on to another location.
Q. Will W.W.R. invest in tax liens for me? A.. When I began my tax lien investing career I did so to eliminate some of the headaches that come from dealing with regular properties. For example, traditional ownership leads to management, maintenance and other headaches. When I buy liens I only buy the debt. So, when I dedicated my life to teaching as well as investing, I wanted to keep things simple. If I agreed to invest for others I would need a bigger staff just devoted to overhead, and I would be subject to investment laws throughout the country. Not only that, sometimes my clients would do spectacularly well with their investments, but there is never a guarantee. The last thing I ever want to do is stay awake late at night wondering what to do to satisfy a bunch of dissatisfied investors. By providing you easy to follow training, I have been able to keep my overhead down yet offer you the same path to riches that I have taken. It’s the best of all worlds.
SPECIAL BONUS REPORT
Q. Many homeowners pay their taxes through their monthly payment to their mortgage company, and the mortgage company forwards the taxes to the county. What happens if the mortgage company fails to pay the taxes to the county? A. This might be the most unfortunate aspect of property taxes. No matter what happens, you are responsible for the payment of your property taxes. If the bank makes a mistake and fails to pay the tax bill on time you are still responsible for the payments. You might not even know that the taxes haven’t been paid, but that doesn’t matter to the county because the county looks to you and not to the bank for the payments. The only way you can be certain the mortgage company has paid the taxes is to receive a receipt from the mortgage company proving the taxes have been paid. If you don’t think the mortgage company has paid you must contact the county and have them check their records. They will allow you to pay them direct, plus any penalties or interest, of course.
Q. What happens if the homeowner declares bankruptcy? A. Bankruptcy laws are Federal so they are relatively uniform throughout the country. Property taxes must be paid so bankruptcy cannot eliminate taxes. But a bankruptcy can delay your payment possibly until the bankruptcy is discharged. So
19
20
SPECIAL BONUS REPORT
the bad news is that an unexpected bankruptcy could delay the payment you have been expecting, but the good news is that you will continue to earn interest/penalty money while waiting.
Q. Several times during your presentation you talked about something called Quiet Title; what is it? A. Quiet Title is an action taken by a title insurance company to assure you that you can resell the property after you become the owner. When a county forecloses on a property, it will issue you a deed, but it will include a disclaimer that says it has not verified the ownership and will not be responsible for any mistakes. So, when you march off to your lender to borrow against the property, or when you prepare to sell the property, you run into a snag: Since you can’t prove you own the title free and clear, the bank is afraid to offer you a loan, and the buyer is afraid to proceed with a purchase unless ownership is guaranteed. You have two courses of action: 1. If the original owner is willing and is available, you can have him or her sign the property ownership over to you using a Quit Claim Deed. Or, 2. You can file Quiet Title action through a title insurance company. Basically, for a fee, the title insurance company will publish legal notices giving anyone with a valid claim to the property a certain period of time to prove the claim. When the time expires the title insurance company will insure the title and you are then free to borrow against it or sell it. It’s not a complicated process and it’s not expensive.
SPECIAL BONUS REPORT
Q. Are there any special secrets you have that you use to make sure you always make a great profit? A. Every secret, every strategy, every inside bit of information is included in my comprehensive course. I learned early on that there are so many liens available throughout the country that I could never make a dent of any sort no matter how much I could buy. And, I love helping other people succeed. You spend so much of your life just paying taxes, doesn’t it make sense to try to make taxes make you money once in a while?
Q. How much money do I need to get started? A.. Another very common question. This is another great thing about tax liens, they come in all sizes and shapes. I have seen single tax liens selling for as much as $350,000 and as little as $5.48. Anybody can invest in tax liens, it’s really a matter of your budget. Tax deeds, on the other hand, because they represent ownership, tend to be more expensive.
Q. What do you prefer to invest in, liens or deeds?
21
22
SPECIAL BONUS REPORT
A. This is another one of those questions that is a matter of personal choice. Liens are trouble free investments, like CDs. People who don’t want any headaches and who have limited capital should pursue tax liens. Tax deeds, on the other hand, may offer greater overall profit but they require more capital up front and subject you to the issues normally associated with home ownership, ranging from tenant headaches to maintenance expenses. When I purchase deeds, I prefer they be ready to build on land (lots that already have utilities in and are approved by the county for a structure) or for homes. When I look at homes, I look at reasonably priced homes in good areas that will be easy to sell.
Q. Saen, if you had just one piece of advice for the beginning tax lien certificate investor, what would it be? A. I would tell you to follow the steps we have established, don’t try to reinvent the process. Tax lien certificate investing is very simple. The county has something to sell. You are interested in buying. You are doing a great service for the county and they will treat you well if you just treat them with respect. This is a fun opportunity you can do from home, while on vacation, or anytime and anywhere.
A Shocking Report by Saen Higgins, President
Wealth Without Risk
Special Information:
This bonus report is presented with the understanding that neither the author nor the publisher is engaged in rendering legal or investment information. While a great deal of care has been taken to provide accurate and current information the ideas, suggestions, and guidepoints are not intended as guarantees of profit or any other representations for the individual investor. The reader is urged to consult legal counsel regarding any points of law and to be aware that points of law may vary in structure and practice from state to state. The information herein has been compiled and developed from the author’s experience, the questions have been gleaned from those asked by audiences throughout America, and every attempt has been made to provide information that is helpful to the tax lien or tax deed investor. Careful attention to prudent investigatory practices will afford the investor, beginning or seasoned, the maximum protection from unknown risks in the marketplace. The investor should always follow complete, practical, and thorough steps to satisfy himself or herself that actions have been taken with full knowledge of potential risks. The author specifically disclaims any liability, loss, or risk, personal or otherwise, incurred as a consequence directly or indirectly of the use and application of any of the techniques described in this publication.
©2011, WWR Publishing Published by WWR Publishing, Sacramento, California For information regarding the purchase of this manual or any other product or service offered by the Wealth Without Risk please write to: W.W.R. 3301 C St 200A Sacramento, CA 95816 or call our offices at: 1-800-882-0467, international customers please call +1-916-290-9316. All rights are reserved. The text of this publication, or any part thereof, may not be reproduced in any manner whatsoever without written permission from the publisher. Printed in the United States of America
SPECIAL BONUS REPORT
Bonus: America’s Secret Investment America is truly the land of plenty when it comes to investment choices. Senior citizens will recall the days when bank savings accounts offered almost the same return, the stock market was considered a risky place to put your money, real estate was unpredictable, and a small retirement account through your employer was the best one could expect. Then along came changes in banking and investment laws, along with an economy that seemed to add something new every day. All of a sudden banks offered very small returns on their savings accounts, the stock market produced consistently high returns, real estate took off, and the traditional retirement accounts gave way to 401Ks, IRAs, SEPs and lots of other exotic investment vehicles. Consumers discovered that a simple bank savings account was no longer adequate, and that special knowledge was needed to succeed in most other investments.
1
2
SPECIAL BONUS REPORT
But, all the while, banks, sophisticated investors, insurance companies and others were putting their cash (and they get their cash from you!) into the safest, highest yielding investments in America; Tax Lien Certificates. It is amazing that an investment that has been around for almost 200 years is making so much money for a few people, people who already have a lot of money. Why? Well, tax lien certificates are not advertised, they are not taught in school, and even real estate agents learn little or nothing about them in their training. Real property taxes are the most important source of income for most municipalities across America. On January 1 of each year most counties assess property taxes for both improved and unimproved properties within their boundaries. In a perfect world every property owner would pay property taxes on time, the counties would have lots of cash, and everyone would live happily ever after. Unfortunately, not everyone pays his or her property taxes on time, but the counties prepare their budgets as if all taxes will be paid on time. Therefore, finding a way to make up for the taxes that are delinquent is critical to the county budget.
SPECIAL BONUS REPORT
The individual states work with the local counties/ municipalities to determine the method used to collect taxes, and the types of penalties charged to those who pay late. Generally, interest rates and/or penalties ranging from 5% to 50% of the taxes due are levied (the tax lien and deed directories compiled by W.W.R. list the counties nationwide and their rules) as an inducement to get homeowners to pay their taxes. However, the counties realize that simply issuing the levy is not putting money in their pockets, so many counties will sell the liens to investors, like you and me, and then, when the homeowner finally pays, the county simply forwards the penalty plus interest to the investor. A simple, clean, profitable way to do business for both the county and the investor. Tax liens – as with all liens – are evidence of a debt owed against property. The debt has a very high priority (it comes ahead of mortgages) and can lead to foreclosure if the owner fails to pay it in a timely manner. Tax deeds result from the foreclosure of the tax lien by the county, and result in loss of ownership for the property owner.
3
4
SPECIAL BONUS REPORT
Some counties will sell tax liens, others sell only deeds. All properties have liens placed on them for property taxes, but not all counties make the liens available to investors. The counties who do not sell the liens still charge penalties to the homeowner, but they don’t let investors participate. These counties sell the actual property if the owner fails to pay the taxes by a deadline date. The beauty of property tax liens is that the interest rate is established by the county, the county administers all payments, and the investor is guaranteed a high return on his or her money, or ownership of the property for pennies on the dollar, if the owner fails to pay the taxes by the deadline. Those of us who invest in liens are always fascinated by the simplicity of the system. We follow the basic rules established by the county, and then simply wait for our high return. Simple enough. Our students who move forward with tax lien certificate investing almost uniformly tell us they were shocked to find out everything they did went exactly as we taught. A great, great way to put rockets on your investment earnings!
SPECIAL BONUS REPORT
Tax lien certificates, and deeds, remain the great secret investment in America today. Even though we train thousands of people annually, there are literally millions of liens and deeds available throughout the country at any given time. Some can be bought by visiting the counties, others can be bought at auctions, and still others can be bought by mail from the comfort of your living room. You owe it to yourself to learn all you can about tax lien certificate investing and adding it to your investment strategies. It has been said that more than 90% of all wealth in the United States is a result of real estate investing. Indeed, when one thinks of the giants of America (with the possible exception of the new computer millionaires) real estate always comes to the forefront. Donald Trump, Baron Hilton, even those who owned manufacturing or service businesses were careful to use their riches to acquire real estate because they knew that real estate is the foundation from which everything else comes. A home has long been known as the American dream. It is very hard to find anyone, anywhere who does not want to own a home. The priority is so high that lenders nationwide have exclusive programs devoted to first time homebuyers
5
6
SPECIAL BONUS REPORT
only. Communities boast of the quality of their homes when trying to attract new business to town. Communities grow because homeowners work hard to protect and improve what they own. For many citizens, tax lien purchasing has paved the way to home ownership when all other methods proved too expensive. Your goal in using the information we provide may be as simple as increasing the interest you earn on your investments, but it may also be as important as finally getting the home you own. Tax liens and deeds can be dream makers for you, if you just follow the simple guidelines we have developed through our experience. Finally, as we travel the country and talk to the thousands of Americans who sincerely want to improve their lives, we write down the questions and concerns that you have and search out the answers. Our counselors in our main office do the same. Then, when enough questions have been compiled, we sit down with Saen Higgins and discuss them. Those we can answer easily, we answer on the spot, others we hand off to our research staff and provide the answer when we are sure it is accurate.
SPECIAL BONUS REPORT
The questions and answers that follow represent the most common requests brought to our attention by our clients throughout America. We hope they help give you inside information into the most important investment strategy in America today.
7
8
SPECIAL BONUS REPORT
Questions and Answers – Tax Lien/Deed Investing (Candid information from Mr. Saen Higgins, Author, Speaker, Tax Lien/Deed Investing Strategies Expert)
Q. When I invest in a tax lien certificate, who pays me the interest and how do I get my money back? A. Tax lien investing is such a simple process it is difficult to believe that all the work is done by the county. Compare it to putting money into the bank; the bank simply adds the interest to your money and pays it back. Where does the bank get the money? From people like you and me who make deposits. Tax lien investments work the same way. You provide your money to the county, the county collects the interest and pays you. Who pays the county? The delinquent tax payer submits the full payment to the county, the county simply forwards the original investment plus interest to you.
Q. Who makes the mortgage payments, utility payments, maintenance and repairs while I hold the tax lien? A. A very common question, and one that is difficult to grasp for most people. To understand the way a tax lien operates, it is
SPECIAL BONUS REPORT
critical to understand that a tax lien is a debt against a property, it is not the property. When you buy a share of stock in General Motors, you are not required to maintain the cars the company sells. When you invest in a certificate of deposit (CD) in a bank, you are not required to maintain the bank or pay their utility bills. When you buy a tax lien, you are buying the debt only, not the house. So, when you invest in a tax lien you are simply paying the county the money the homeowner was supposed to pay. The county adds interest as a way to get the homeowner to pay and to entice you to invest in the tax lien. When the homeowner writes a check to the county to pay the delinquent taxes, the county simply processes the check, determines the amount due you, and pays you.
Q. If I get ownership of a property through a foreclosure, do I have to pay off the mortgage? A. All mortgages are extinguished when a property is foreclosed.
Q. Why would a bank let you foreclose on the property and risk losing their mortgage? A. The bank has the same right of redemption the owner of the property has. If the bank fails to redeem the taxes before the end
9
10
SPECIAL BONUS REPORT
of the redemption period the mortgage is wiped out and you acquire the property free and clear of all mortgages.
Q. Why would the homeowner lose his or her home for back taxes? After all, the tax bill may be only 1% or 2% of the total value of the house. I can’t imagine someone losing a $100,000 house over a $1,000 or $2,000 tax bill? A. The quick answer is that people do things for their reasons, not ours. It seems very unlikely that a reasonable person would lose a home for a small tax bill. Only a small percentage – 2% or so – actually go into default, which means 98% pay the delinquent taxes. Only about 2% of all homeowners have enough other troubles that they let their homes fall into foreclosure. Divorce, death, financial troubles, neighborhood issues, all contribute. But, as the lien holder, you are not in contact with the homeowner. All you know is that 98% of the time the homeowners pay the delinquent taxes; therefore, you do not purchase liens expecting to end up owning the property. But, if you are “unfortunate” to end up with ownership you have lots of equity to sell.
SPECIAL BONUS REPORT
Q. If property tax liens are so good why doesn’t everyone invest in tax lien certificates? A. The information you learned today was probably new to you, as it is to 95% of all the people who attend our programs. Even though tax lien certificates are clearly the best and safest investment vehicle in America today, there is no University of Tax Lien Certificates. Realtors are not taught about them in their training, stock brokers don’t offer them (there are no commissions involved), and you don’t ever read about them in the daily paper. Big investors, like the insurance companies and banks, have no reason to bring you into their strategies. After all, as long as you are willing to “donate” your money to them in return for 3%, 4%, or 5% returns, they can continue buying liens in bulk and earning 16%, 24% and more.
Q. Why don’t banks, pension funds, and other institutional investors buy tax lien certificates? A. As you learned in the previous question, banks, pension funds and other institutional investors love tax lien certificates. However, they invest at such a large level that they are not competition for you. For example, a pension fund cannot risk investing in a lien on a single $60,000 house because they cannot afford to own it; their overhead is just too high. They can, though invest $1,000,000 in many liens and then be able
11
12
SPECIAL BONUS REPORT
to afford any foreclosures because their overall profit will be high enough. When you show up at the tax lien auction with your $1,000 or so, you will not have to worry about a large bank scooping that lien away from you.
Q. Why don’t stockbrokers, bankers, financial planners, etc., recommend tax lien certificates to you? A. My favorite question. In my previous life, as many of you heard me tell during my live presentations nationally, I was a stockbroker. I earned money not by producing a profit for my clients, but by fees or commissions paid every time someone did a stock transaction. The more shares of stock I sold, the more money I made. Likewise, Realtors are taught to chase commissions; tax liens, as you know, do not produce commissions. The Realtor who recommends tax liens is going to have a hard time supporting himself or herself. The same holds true for financial planners, and other commission based salespeople. There are no commissions paid by the county for tax lien certificates so people who make their living chasing commissions cannot afford to spend any time either recommending or offering tax liens to their clients.
SPECIAL BONUS REPORT
Q. What if there is an IRS lien on a property in addition to the property tax lien? A. One cold hard fact of life is that the IRS is always first in line. Even though the county will tell you that property taxes are a first position lien, ahead of mortgages, mechanics liens, and most other liens, income taxes are more first. Income taxes must be paid or settled before a property can be offered free of all liens. So that’s the bad news! But there is good news, too. For example, many counties around the country have an agreement with the IRS to release the lien as soon as the property is sold for taxes. The reason? The income taxes are the personal debt of the owner, they do not belong on the property. Using the techniques taught in our courses and working with our counselors, those who have purchased our Tax Lien Certificate program can easily determine whether or not the IRS lien will create a problem. (P.S. If you are concerned about an IRS lien just ignore that lien and move on to another one.) When you identify an IRS lien on a property you can petition the IRS to release the lien, and they may do so, or you can offer to settle the debt in order to get the property. Why would you do that? Well, let’s suppose you have a lien of $1,000 on a property worth $40,000. Following our research guidelines, you discover an IRS lien of $14,000 against the property. If you have to foreclose you would have to pay off the IRS lien so your cost would be $15,000 to own that property. That’s not bad at all. But, you might be able to call the IRS and get them to agree to accept a $5,000 payoff for the lien. If they do you have purchased the property for just $6,000 and increased your profit.
13
14
SPECIAL BONUS REPORT
Q. It seems to me the only tax liens available would be on run down properties, because someone with a nice property would never let it be sold for back taxes? A. People have their own reasons for doing what they do. A logical person would not lose his or her home for a small tax lien, but circumstances can force someone to do something completely out of the ordinary. For example, a divorce may create a financial burden so heavy that both parties just walk away from their home. Or an accident, a death, a lawsuit.… As we noted earlier, less than 2% of homes end up being foreclosed on properties so it is very rare when a lien holder has an opportunity to pick up a deed. But it does happen. And, since the county does the foreclosure you may never know why the owners walked away. Of course, when you realize the profit you are going to make, you probably won’t worry too much about the reason.
Q. What happens if I own the lien on the property and the house burns down? Am I responsible for insurance repairs, and will the insurance company pay me a settlement? A. Another common question, and a common fear. When you acquire a lien you are acquiring the debt on the property, not
SPECIAL BONUS REPORT
the ownership. Since you don’t own the property you are not responsible for maintenance, the insurance, or problems, like fires, that may develop. And you are not the one who pays the insurance so the insurance company will have nothing to do with you. And, of course, that leads to the next question: What happens if the owner refused to rebuild the house. Am I stuck with the property! This is one reason why we prefer homes with mortgages on them; the bank will require insurance so the money will be there to rebuild. However, if the owner just walks and there is no insurance you might end up owning a vacant lot. Let’s see how that might work out for you: You bought the lien for $1,000. The house would sell on the open market for $60,000, and the appraiser allocated $15,000 to the land and $45,000 to the building. You can safely assume you might be able to sell the vacant lot for $15,000. That’s not a bad profit, is it? The point is, that it is almost impossible to lose when you own a tax lien.
Q. If the owner does not redeem am I obligated to foreclose on the property? A. No. but the county needs the money so the county can move ahead with foreclosure and offer the property for sale to the highest bidder. However, the highest bid must include the total owed to you, taxes and insurance, so your investment is protected even if you choose not to foreclose. Of course, I can’t imagine why you wouldn’t want to foreclose since the profits are so high, but you can’t lose no matter what you do.
15
16
SPECIAL BONUS REPORT
Q. How can I find out about tax lien or deed sales? A. This is the easiest and, at the same time, most frustrating part of our business, and it is the reason W.W.R. devoted considerable staff and thousands of hours of time to development of our lien and deed directories. Most counties have an office or a person who handles delinquent property tax issues. Some counties have one office for the assessor and another for the tax collector. Some counties have collections handled by the treasurer’s office. So, it is vital that you know where to look or where to call before contacting the county; otherwise, you might spend an entire day being shuffled back and forth from department to department trying to find the right department. When in doubt start with the property tax division for the county and work your way forward from there.
Q. How do I know which tax lien certificates to invest in and which ones to avoid? A. Research. Research. Research. The county issues the certificates as a matter of timing, but they don’t research the properties; that’s not their job. It is up to you to do the research necessary to assure a safe and profitable lien. It always amazed me, when I attended auctions, that so many people literally begin their research at the auction. They get the list, register, show up, and then hope they do okay. I always followed the nine steps for successful investing, outlined in Chapter 4 of your Tax Lien Certificate investing manual. I knew what the property was
SPECIAL BONUS REPORT
worth, what kind of property it was, the zoning, and other important information before showing up at the auction. And, the best thing about research is that you can literally accomplish everything from the comfort of your living room.
Q. Do I have to physically go to an auction or to the county office in order to invest in tax liens? A. Usually, no. Most counties will end up with properties, often thousands, left over after the auction. Those properties are then returned to the appropriate county office and are then either cataloged to be offered at a future auction, or are offered to anyone who either comes to the office (over the counter) or is willing to send a check through the mail (assignment purchasing). In fact, utilizing the strategies outlined in our Tax Lien Certificate investing course, you can literally research liens anywhere in the United States from the comfort of your living room and buy as many as you want without leaving your home.
Q. What are the best markets to invest in? A. There is no magic “pockets of profitability” anywhere in the country. Certainly, a penalty state like Texas offers some great inducements to buy, but the best market is not just a financial
17
18
SPECIAL BONUS REPORT
issue for you, it is a matter of comfort. A lady at one of my programs once told me she would never invest in Kansas because she just knew a tornado would come and destroy her property. And many east coast people are convinced California is about to fall in the ocean. Since there are literally millions of liens available, there are liens throughout the country that you can choose from. If a certain state or a certain county doesn’t feel right for you, just move on to another location.
Q. Will W.W.R. invest in tax liens for me? A.. When I began my tax lien investing career I did so to eliminate some of the headaches that come from dealing with regular properties. For example, traditional ownership leads to management, maintenance and other headaches. When I buy liens I only buy the debt. So, when I dedicated my life to teaching as well as investing, I wanted to keep things simple. If I agreed to invest for others I would need a bigger staff just devoted to overhead, and I would be subject to investment laws throughout the country. Not only that, sometimes my clients would do spectacularly well with their investments, but there is never a guarantee. The last thing I ever want to do is stay awake late at night wondering what to do to satisfy a bunch of dissatisfied investors. By providing you easy to follow training, I have been able to keep my overhead down yet offer you the same path to riches that I have taken. It’s the best of all worlds.
SPECIAL BONUS REPORT
Q. Many homeowners pay their taxes through their monthly payment to their mortgage company, and the mortgage company forwards the taxes to the county. What happens if the mortgage company fails to pay the taxes to the county? A. This might be the most unfortunate aspect of property taxes. No matter what happens, you are responsible for the payment of your property taxes. If the bank makes a mistake and fails to pay the tax bill on time you are still responsible for the payments. You might not even know that the taxes haven’t been paid, but that doesn’t matter to the county because the county looks to you and not to the bank for the payments. The only way you can be certain the mortgage company has paid the taxes is to receive a receipt from the mortgage company proving the taxes have been paid. If you don’t think the mortgage company has paid you must contact the county and have them check their records. They will allow you to pay them direct, plus any penalties or interest, of course.
Q. What happens if the homeowner declares bankruptcy? A. Bankruptcy laws are Federal so they are relatively uniform throughout the country. Property taxes must be paid so bankruptcy cannot eliminate taxes. But a bankruptcy can delay your payment possibly until the bankruptcy is discharged. So
19
20
SPECIAL BONUS REPORT
the bad news is that an unexpected bankruptcy could delay the payment you have been expecting, but the good news is that you will continue to earn interest/penalty money while waiting.
Q. Several times during your presentation you talked about something called Quiet Title; what is it? A. Quiet Title is an action taken by a title insurance company to assure you that you can resell the property after you become the owner. When a county forecloses on a property, it will issue you a deed, but it will include a disclaimer that says it has not verified the ownership and will not be responsible for any mistakes. So, when you march off to your lender to borrow against the property, or when you prepare to sell the property, you run into a snag: Since you can’t prove you own the title free and clear, the bank is afraid to offer you a loan, and the buyer is afraid to proceed with a purchase unless ownership is guaranteed. You have two courses of action: 1. If the original owner is willing and is available, you can have him or her sign the property ownership over to you using a Quit Claim Deed. Or, 2. You can file Quiet Title action through a title insurance company. Basically, for a fee, the title insurance company will publish legal notices giving anyone with a valid claim to the property a certain period of time to prove the claim. When the time expires the title insurance company will insure the title and you are then free to borrow against it or sell it. It’s not a complicated process and it’s not expensive.
SPECIAL BONUS REPORT
Q. Are there any special secrets you have that you use to make sure you always make a great profit? A. Every secret, every strategy, every inside bit of information is included in my comprehensive course. I learned early on that there are so many liens available throughout the country that I could never make a dent of any sort no matter how much I could buy. And, I love helping other people succeed. You spend so much of your life just paying taxes, doesn’t it make sense to try to make taxes make you money once in a while?
Q. How much money do I need to get started? A.. Another very common question. This is another great thing about tax liens, they come in all sizes and shapes. I have seen single tax liens selling for as much as $350,000 and as little as $5.48. Anybody can invest in tax liens, it’s really a matter of your budget. Tax deeds, on the other hand, because they represent ownership, tend to be more expensive.
Q. What do you prefer to invest in, liens or deeds?
21
22
SPECIAL BONUS REPORT
A. This is another one of those questions that is a matter of personal choice. Liens are trouble free investments, like CDs. People who don’t want any headaches and who have limited capital should pursue tax liens. Tax deeds, on the other hand, may offer greater overall profit but they require more capital up front and subject you to the issues normally associated with home ownership, ranging from tenant headaches to maintenance expenses. When I purchase deeds, I prefer they be ready to build on land (lots that already have utilities in and are approved by the county for a structure) or for homes. When I look at homes, I look at reasonably priced homes in good areas that will be easy to sell.
Q. Saen, if you had just one piece of advice for the beginning tax lien certificate investor, what would it be? A. I would tell you to follow the steps we have established, don’t try to reinvent the process. Tax lien certificate investing is very simple. The county has something to sell. You are interested in buying. You are doing a great service for the county and they will treat you well if you just treat them with respect. This is a fun opportunity you can do from home, while on vacation, or anytime and anywhere.
