Tag: tax lien investing

Does title insurance matter? This is a question that many people ask themselves when they are buying or selling property.  The answer, unfortunately, is not always straightforward. 

Title insurance protects your property against any unknown liens or encumbrances that may be on your title.  This type of insurance is especially important if you are buying a property or refinancing your mortgage. Title insurance can also protect you from title fraud, which is when someone tries to take title to your property without your knowledge.

Title insurance policies are also designed to protect the title of a property from any defects that may exist. These defects can include everything from outstanding mortgages to zoning issues. However, title insurance policies do not typically protect buyers or sellers from latent defects, which are defects that are not immediately visible.

For this reason, it is important for buyers and sellers to understand what exactly is covered by their title insurance policy. Title insurance is not always necessary, but it can be a valuable tool in protecting the interests of property owners. 

As with most types of insurance, it is important to shop around and compare rates before purchasing a policy. Title insurance policies can be quite affordable, and the peace of mind they provide is well worth the price.

When buying a home, title insurance is one of the most important things to consider. This type of insurance protects you from any title issues that may arise in the future, such as title fraud or a mistake in the title search. title insurance policies can be quite affordable, and the peace of mind they provide is well worth the price.

If you are thinking of buying a home, be sure to talk to your real estate agent about title insurance. This type of insurance can provide peace of mind in the event that any title problems arise down the road. title insurance is a wise investment, and it is important to shop around for the best rates before purchasing a policy. 

If you are considering buying or selling property, be sure to talk to your title insurance agent to learn more about what title insurance can do for you.

You can also learn more from our free and informative workshops. Join us: https://www.tlwbevents.com/workshop

A self-directed individual retirement account (SDIRA) is a type of individual retirement account (IRA) that can hold a variety of alternative investments normally prohibited from regular IRAs. Although the account is administered by a custodian or trustee, it’s directly managed by the account holder—the reason it’s called “self-directed.”

An SDIRA can be used to invest in a much broader range of assets than a regular IRA. These include real estate, private equity, hedge funds, and venture capital. The account holder can also choose their own investment adviser, rather than relying on the choices made by a custodian or trustee.

One downside of an SDIRA is that account holders are responsible for their own investment decisions. This can be a good thing, as it allows investors to tailor their portfolios to their individual needs and risk tolerances. However, it also means that investors must do their own research into the investments they’re making.

The main difference between SDIRAs and other IRAs is the types of investments you can hold in the account. In general, regular IRAs are limited to common securities like stocks, bonds, certificates of deposit, and mutual or exchange-traded funds (ETFs).  SDRIRAs, on the other hand, can hold alternative assets like real estate, private company stock, venture capital and hedge funds.

This greater investment flexibility is one of the main reasons why SDRIRAs have become so popular in recent years. Since the financial crisis of 2008, investors have been looking for ways to reduce their exposure to the stock market and explore other investment opportunities. SDRIRAs offer a convenient way to do this, without having to set up and manage multiple accounts.

Another advantage of SDRIRAs is that they can be used to defer taxes. For example, let’s say you contribute $5,000 to your SDRIA in 2019. The money will be tax-deferred until you withdraw it, which could be many years down the road. This can be a great way to save for retirement or other long-term goals.

SDRIRAs are also very versatile, and can be used for a variety of purposes beyond just investment. For example, you could use an SDRIA to purchase a rental property, which could generate income and help you build equity. Or, you could use it to invest in a private company, which could give you access to potentially higher returns.

So if you’re looking for a way to expand your investment options beyond the stock market, an SDRIA may be the right choice for you. Contact your financial advisor to learn more about SDRIRAs and how they can fit into your overall investment strategy.

ETFs (Exchange-Traded Funds)

ETFs are also a popular investment option for SDIRAs. ETFs are baskets of securities that track an index, commodity, or sector. They offer investors a way to gain exposure to a wide range of assets, without having to purchase all of them individually. ETFs are also very tax efficient, meaning they generate less in capital gains taxes than individual stocks.

As a result, ETFs have become a popular investment choice for many SDIRAs. They offer investors a way to get exposure to a wide range of assets, while keeping their tax burden low. And, since they track an index or sector, investors don’t have to worry about picking the right stocks or making the wrong investment decision.

So if you’re looking for a way to add some diversification to your IRA portfolio, ETFs may be a good option for you.

You can learn more from our free and informative workshops. Join us: https://www.tlwbevents.com/workshop

Tax lien investing is a major revenue generator for state governments. For this reason, each state has its own set of rules and regulations regarding tax liens. In some states, tax lien investing is open to the public while in other states it’s restricted to licensed real estate brokers.

Before investing in tax liens, it’s important to understand the rules and regulations of the state in which you’re interested. You also need to be familiar with the types of tax liens that are sold in that state. Some states sell real estate tax liens while others sell personal property tax liens.

In some cases, a state will sell tax liens on real estate. This means that the state will become the legal owner of the real estate until the taxes and any penalties are paid in full. The state may then sell or lease the real estate to recover the costs incurred.

It is important to determine if your state sells tax liens on real estate. If it does, you may want to avoid buying or selling real estate in that state. You should also be aware of the tax implications of an unrecorded deed in your state.

Each state has its own auction process for selling tax liens. In some states, the county government auctions tax liens. In other states, the state government auctions tax liens.

The commissioner is the head of the county government and presides over the tax sale. The sheriff is responsible for conducting the sale, and the assessor and treasurer are responsible for setting the opening bid prices.

The real estate market is always changing, so it is important to stay up-to-date on which states sell tax liens. The map below displays the states that currently sell tax liens.

The following states sell tax liens: Alabama, Arizona, California, Colorado, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire , New Jersey , New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington and West Virginia.

The states that do not sell tax liens are: Alaska, Arkansas, District of Columbia, Delaware, Hawaii, Idaho, Kansas City (MO), Massachusetts, Michigan City (IN), Minnesota City (MN), Montana City (MT), New Mexico, North Dakota, Oklahoma City (OK), and Wyoming.

The County Assessor

The county assessor is in charge of assessing a property’s tax estimated value. They put a value on every piece of real estate within the county. They determine the value by considering the county’s budget and the real estate’s fair market value.

Why is the Assessor important to us?

The most important thing is that property records are usually stored with the county assessor. When we research potential investments, the property records will be vital to us. We will find images, values, addresses, sales history, property description, etc. on these records. Increasingly, this information is stored online on the county assessor’s website instead of only in paper form at the county office.

Conclusion

It is important for investors to research the real estate market in each state before investing. The states that sell tax liens typically have a higher interest rate than the states that do not sell tax liens.

The states with a higher interest rate are typically those that sell tax liens.

You can learn more from our free and informative workshops. Join us: https://www.tlwbevents.com/workshop

In the world of investing, due diligence can be described as the collection of good practices related to the investigation of any financial asset. If you are considering tax lien investing, due diligence before buying is important. The due diligence process involves evaluating the property, determining its value and comparing it to the selling price of the tax lien. You do not want to pay more for a tax lien than what the property is worth in order to make an investment profitable. If you are not sure about the due diligence process, fully explain it to a tax lien sales representative from whom you wish to purchase a tax lien.

Who is Selling and For What Price?

When purchasing tax liens, you will need to know who is selling them and for how much. The investor should be informed about the due diligence process and who is selling tax liens. Generally, the investor will do the due diligence research him or herself. He or she can obtain a list of all expired tax lien certificates from his local county’s auditor’s office.

Due Diligence in the Information Age

Due diligence in the world of tax lien investing has taken on a new meaning in recent years due to the growth of technology. Online due diligence is an integral part of any online tax lien sale. This due diligence allows potential investors to spend hours researching each issuer prior to making their decisions. So how does one go about due diligence? By following a few simple steps, you will create due diligence practices that rival the due diligence followed by many of the world’s top investors.

First identify your criteria for due diligence and document them to create due diligence practices. This should include items such as credit, experience, net worth or assets, state tax lien limits or thresholds, and due diligence period. Once these due diligence practices are identified, document them so the due diligence may be followed each time you invest.

Next determine if you will require an investor packet or due diligence report for all investment opportunities. If not required, due diligence should still be performed manually by reviewing documents online based on due diligence practices. If due diligence packets are required, due diligence should be performed automatically by reviewing due diligence reports. These steps will save time and assure due diligence is properly performed.

Conclusion

We recommend thorough due diligence practices in order to review all tax lien issuers prior to investing. This means visiting each issuer’s online public records pages regularly (at least once per month) to review due diligence reports and due diligence packets. If due diligence packets are required, due diligence should be performed automatically by reviewing due diligence reports. These steps will save time and assure due diligence is properly performed.

Investor Tip: Consider using a tax lien due diligence service to help you with your due diligence efforts. A tax lien due diligence service will help you due diligence on each issuer for free.

Want to learn more? Check out our investor workshop demo: https://www.tlwbevents.com/workshop

What is a Tax Lien?

A tax lien investment is a passive investment that you can make through your state and county officials. In most cases, a property owner fails to pay their taxes to the jurisdiction where they live. If this happens, the authorities will put up an auction for all of the delinquent taxes against this particular property.

The auction will have a minimum price at which the government will be willing to accept for this property’s taxes. The tax lien certificate allows you to buy these properties at this set minimum price, and you can sell them later on for more than what you paid originally. Your goal is to win the bids for as many of these properties as possible.

Your return on investment is the difference between the price at which you bought the property and the final selling price of that property. You typically have five or more years to sell these properties, so it’s not like other investments where you need quick results.

Advantages & Disadvantages of Tax Lien Investing

Advantages:

• Passive Investment – You don’t have to do anything after you’ve paid for a property. As long as you’re in possession of the lien certificate, you can choose when to sell it.
• No Experience Necessary – You don’t have to be a real estate expert or have any experience in the industry to buy tax liens. Because you only need the money, not an extensive background in business, anyone can get started with this type of investment.
• Residual Income – If you win the bid on a certain property, you can make an average of $1,000 to $10,000 in pure profit off the final sale price.
• Low-Risk Investment – There’s little risk involved with tax lien investing because it’s not like other types of real estate where you’re actually buying physical property and need to worry about blockages, repairs, and maintenance.
• Passive Investment – You can set up your tax lien business with a professional and still gain the benefits of a passive investment (i.e., you don’t do anything), which many people find more appealing than having to go out and find new properties to invest in all the time.

Disadvantages:

• Time-Consuming – You have to be on top of the bidding process for all your properties because you only get 5 years to sell them. If you do not win any bids at all, then you will not make any money since the taxes are not paid and the tax lien certificate is not turned in.
• Not Beginner-Friendly – While you don’t need to be a real estate guru with years of experience, you should have some knowledge about how tax lien certificates work when starting out. You will also need enough money to make the initial purchase.
• Learning Curve – Like any passive investment, tax lien investing has a learning curve. You need to know how to win bids and collect your money. You can learn all this through books or classes, but you have to put forth the effort in order to get started making money with tax liens.

Conclusion

Tax lien investing is not right for every type of investor. However, if you have the money to invest, are interested in real estate investments but don’t want to get into physical property, then this investment may be for you.

You can learn more from our free and informative workshops. Join us: https://www.tlwbevents.com/workshop

The winner of the tax lien certificate receives the right to collect all delinquent real estate taxes on a property in addition to interest on those taxes. The owner of the real estate continues to be responsible for any current real estate taxes on the property, but is no longer responsible for any delinquent real estate taxes.

Tax Lien certificates are typically sold at a real estate tax auction.

How does a Tax Lien Certificate Work?

The owner of real property which has real estate taxes due receives a notice from the town in which the real property is located. That property has taxes that are delinquent. In addition, there will be a deadline to pay or face penalties and/or lose their property.

After the real estate tax deadline has passed, the town will attempt to collect all unpaid real estate taxes with a treasurer’s sale. A treasurer’s deed is then issued to the state which guarantees payment of real estate taxes assessed against any property that has gone into default.

At this point, the property owners may still be able to redeem their property by paying real estate taxes plus interest. However, the property owner may also face additional penalties.

If the property taxes remain unpaid and the property owners do not pay off their real estate taxes by the time stated in the treasurer’s deed, then owners will lose all rights to that property (including any home or business on that real estate).

After the property has been forfeited, real estate can then be sold at a real estate tax auction.

Real estate tax auctions are an opportunity for the state and local governments to recover real property taxes which have gone into default without receiving any payment from taxpayers; this also encourages property owners to pay their real estate taxes when they are due.

Real estate tax auctions are the real estate equivalent of a foreclosure. The property owner has lost rights to that property and now faces additional penalties for not paying real estate taxes before forfeiting the property. Tax liens are also sold at this time.

How do Tax Lien Certificate Auctions Work?

The state will try to collect real estate taxes through the treasurer’s sale multiple times before real property is forfeited. If real estate tax payments are not made by the real property owner, then more real estate goes into default and becomes subject to additional penalties.

After real property has been forfeited, it will be sold at an auction at which tax liens against that real property are sold. These real estate tax auctions are held on a regular basis, usually quarterly or monthly.

Real property owners can also pay real estate taxes at these real estate tax auctions before real property is forfeited to the state. By bidding on the real estate tax certificates (or liens), real property owners can secure their right to real property.

Once real estate tax certificates are purchased, real property owners can then foreclose on real property to gain ownership of it (or sell real estate tax certificates to third parties). The state of Massachusetts charges 18% interest on real estate taxes if real property owners do not pay real estate taxes at the time they are due; this means that real property owners have to pay real estate taxes in full in 18 months. A real property owner has 51 days from the date of the real estate tax auction in which to redeem real property (or make payment on real estate tax certificates).

If real estate is not redeemed or real estate tax certificates are not paid for within 51 days, then a real property owner will lose real property to the purchaser/purchasers of real estate tax certificates at the real estate tax auction.

You can learn more from our free and informative workshops. Join us: https://www.tlwbevents.com/workshop

It is not surprising that real estate professionals are looking at retirement accounts as new sources of funding, considering the recent successes many real estate entrepreneurs have enjoyed. The industry’s most notable success story is that of billionaire real estate mogul Sam Zell, who began trading real estate in 1966 with a $5000 loan from his aunt. In 2007 alone, he earned nearly $900 million from real estate investments.

Zell is not the only real estate investor to have turned retirement accounts into real cash cows, either. Many real estate professionals have taken advantage of 401(k) accounts, real estate investment trusts (REITs), and self-directed IRAs to make tidy profits in real estate. The latest market trends indicate that, over the past decade, real estate has made up nearly one-tenth of all investments held in self-directed retirement accounts.

The real estate market can prove a real burden on both pre-retirees and retirees alike. If you already own a home, perhaps it is time to rethink your real estate investment strategy. The last thing you want is to be saddled with a mortgage that continues to be a real liability even in retirement.

When Real Estate is Good

The real estate market has been on a tear for the past four years, with prices going up steadily in most major cities across the United States. The real estate bubble of 2007-2008 is still fresh in many people’s minds–and they don’t want it to happen again.

But real estate investment only makes sense if you end up with more money than you started out with.

For most real estate investors, whether they are buying real property for themselves or as an income-generating asset, the real goal is to make capital gains–the difference between what they paid for something and how much it is worth now.

Except for real property that’s expected to increase in value over time, real estate is a liability.

It ties up your capital and, much like a mortgage, continues to drain your liquidity no matter how hard you try to recoup those lost funds from real property sales or rental income.  

Retirees need to be real smart and real careful when it comes to real estate investment. For retirees, real property can pose real problems because their income is limited and no longer growing at a significant pace–just like how mortgages take up real cash in retirement accounts.

When Real Estate is Bad

If you are already retired, there’s no need for you to start investing in real estate unless you are one of the lucky few who is financially independent with enough disposable income to turn real property into a second or third source of income.

Even then, real property investments should be made only after real thorough calculation and real careful consideration of all the risks involved.

For many retirees, real estate can become more trouble than it’s worth–especially if you have to realign your entire retirement investment strategy because real property has real strings attached.

For example, real estate investing can be a real headache for those who are retiring abroad and need their money liquid so they can move from one country to another as often as they please. And if this is what you have in mind, real estate could spell trouble for you in retirement.

Bottom line: real property is only good if you make real capital gains–which is not guaranteed even in the best real estate markets.

If real estate is bad and there’s not much you can do about it, selling real properties once and for all might be your real best move.

You can learn more from our free and informative workshops. Join us: https://www.tlwbevents.com/workshop