One of the questions that I frequently get from visitors to my web site, www.taxlienlady.com, is “Can I invest in tax lien certificates online or through the mail?” Many people want to invest in tax lien certificates but don’t have the time freedom to physically attend the tax sales, so they want to do it online or by mail. A couple of tax lien states do hold online tax sales, and a few will allow you to mail in your bid. I don’t, however, recommend investing in tax lien certificates by mail or online unless you can look at the properties or have someone else look at them for you.

First let’s talk about online tax sales. As tax lien investing has become more popular with the average person (it’s not just the secret of the wealthy anymore), it’s also become more competitive. Over the last three or four years, in states where the interest rate is bid down, the bidding has been going lower and lower – as low at .25% in some sates. And in states where the amount of the lien is bid up prices have been bid higher and higher. Online auctions increase the competition even more. Now instead of bidding against every interested party who can come to the sale, you’re competing with every interested party with a computer.

Three things happen at these online tax sales. First of all a lot more bidders show up because all they have to do is get to their computer to register for the sale. Secondly, more money – or lower interest rates are bid for tax lien certificates because there are an increased amount of bidders. And thirdly more properties are sold at these sales. You see, at most tax sales there are “left-over” liens that no one bids on that go to the county. A lot of these properties are junk properties. They are really not worth anything and that’s why the owner stopped paying the taxes. Any bidders that have done their due diligence will know this and will not bid on these properties. But when sales are held online these properties will typically be sold. Don’t you be one of those online bidders who buys a tax lien on a worthless piece of property!

Would you purchase real estate that you didn’t look at first? Even though you are not purchasing the property when you buy a tax lien (you are only paying the past due taxes and penalties and putting a lien on the property), you still need to make sure that the property is valuable. There is always the chance that the lien will not be redeemed and that you will wind up with the property. And if you do have to foreclose on the property, you want it to be worth much more than you have invested in it. Your investment isn’t only the amount that you paid at the sale, but all of the subsequent taxes that you paid, any legal fees and foreclosure costs, and any costs that you incur to fix up the property before you sell it.

Here is something else to consider if you decide to go ahead and tax lien certificates online anyway. You will pay more money for tax lien certificates online than you would at a regular tax sale. First of all you will have to have a hefty deposit just to register for the sale. If you do not purchase any liens your deposit will be refunded. If you do make a purchase it money will be deducted from your deposit. Even if you make a purchase by mistake, the money will be deducted and it will not be returned. If you do not complete the transaction you could be banned from any future sales. In addition to that you will have to pay the online auction company a commission, which could be as high as 10% of the purchase price of the lien(s) that you buy.

What about purchasing tax lien certificates through the mail? Many states do allow for purchasing of tax lien certificates through the mail. Most states allow this for their “left-over” liens and a couple of states will even allow mailed in bids for their tax sales. Buying tax lien certificates through the mail does not have all the problems that I described for online tax sales, especially if you are able to do your due diligence on the properties before placing your bid. You are, however, at a disadvantage when you mail in your bid for a tax sale. I suggest that you find out what the procedure is at the sale. If your bid is read out loud at the sale and those present at the sale have the opportunity to out bid you, than you are at a disadvantage. It is the investors who are present at the sale that have the advantage over you.

There are opportunities in some states that sell leftover liens (sometimes these are referred to as “over-the-counter” liens or “assignment” liens) that are available for purchase through the mail. Be very careful though to do your due diligence on these properties before you placing a bid. Very often, as I mentioned earlier, there is a reason that these liens were not purchased by other investors. If no-body else wanted it maybe there is something wrong with it! Check the property out before you buy. With tax lien investing, there are no refunds!

Joanne Musa is a Tax Lien Investing Coach and Consultant who works with investors who want to learn how to buy profitable tax lien certificates and tax deeds. She is the president of Tax Lien Consulting LLC, a consulting firm for tax lien investors. She is the author of the e-books: Tax Lien Investing Secrets and Tax Lien Lady’s State Guide to Tax Lien and Tax Deed Investing, available at http://www.taxlienconsulting.com For more tips on investing in tax lien certificates send an e-mail to MoreTips@taxlienconsulting.com

To go to the county’s web site, first go to naco.org and click on the link to find a county. This will bring you to a page with a map of the United States. Click on the state that you are interested in and you’ll be taken to that state’s web page with a list of all of the counties in the state. Find the county that you are interested in and click on that link. You will be taken to the NACO page for that county. Click on the link to the county on the top of the page and you will go to the county’s web site. Note that this will only work if the county has a web site.

Once you’re on the county’s web site, look for a link to the department or county office that is responsible for conducting the tax sale. For most states, this will be the county treasurer or county tax collector. If you’re not sure who is responsible for the tax sale in your state, then consult my State Guide. Once you get to the web site of the person or department that conducts the tax sale, look for a link to a list of tax sale properties. For larger counties, you can usually find this online. The exception to this is the counties in the Northeastern states. A lot of the Northeastern states do not have county tax sales. Instead the tax sales are conducted by the municipality, so instead of looking for the county web site, in Vermont, New Hampshire, Maine, Rode Island, Connecticut, Massachusetts, and New Jersey, look for the municipal tax collectors web site – not county web site. New York has both county and municipal sales in some counties.

If you can’t find the tax sale list that you want online, you can always buy a list from a tax sale list provider. Even if you can find the tax sale list online for free, you still may want to purchase the list from a tax sale list provider. That’s because the list that you get from the tax collector does not always have the information that you need. Frequently it will only have a parcel ID number, owner name, and amount due. What you want to know is what is the address of the property, what is the assessment and value of the property, what type or class property is it, and how big is the property. All of this (and sometimes even more information) is included in the detailed list that you can get from tax sale list providers. I talked about some different tax sale list providers in the last podcast episode, “How to Find Out About Tax Sales.” You can listen to that episode to get the names and urls of tax list providers for different areas of the country. Purchasing a detailed tax sale list from one of these companies will save you a lot of work in doing your due diligence.

Joanne Musa is a Tax Lien Investing Coach and Consultant who works with investors who want to learn how to buy profitable tax lien certificates and tax deeds. She is the president of Tax Lien Consulting LLC, a consulting firm for tax lien investors. She is the author of the e-books: Tax Lien Investing Secrets and Tax Lien Lady’s State Guide to Tax Lien and Tax Deed Investing, available at http://www.taxlienconsulting.com

For more tips on investing in tax lien certificates send an e-mail to MoreTips@taxlienconsulting.com

A person is this situation has made three costly mistakes that many first time deed purchasers make. Their first mistake was not checking into the state laws for deed sales. Each state has different laws regarding tax foreclosure sales. In most states other liens are wiped out by a tax sale, but this is not true for every state and this is something that you need to know about before you bid on a property in a tax deed sale. Even in states where most liens are extinguished by a tax sale, some liens may survive the sale. You need to know what liens survive a tax deed or tax foreclosure sale in your state and you need to know how to check for these liens.

The second mistake made in this situation was not having done proper due diligence on the property and checking for other liens. While this step is not always necessary when you’re investing in tax liens, it is critical when you’re buying a tax deed. After you’ve purchased a tax lien certificate on a property, if you decide that you’ve made a mistake and the property is not worth it, you can always walk away and only loose your initial investment. You are not the owner; therefore, you have no liability. If however, you purchase a tax deed on a property, you become the owner of the property. You are now responsible for any liens on the property that survived the tax sale as well as for current taxes and assessments on the property.

The third costly mistake made in this situation was buying the property in the investor’s name instead of in the name of a business entity. Because the tax deed was purchased in the investor’s name, they became personally liable for the property and any other liens held against it. As the owner of record, they would also be liable if anyone got injured or hurt on the property, and as mentioned in the previous chapter, they are also responsible for current taxes and any other assessments or association fees if the property is in a community. If they decide that the property isn’t worth it, they cannot just walk away and only loose their original investment. Now there is more at stake. If they had purchased the deed in the name of a business entity that they had previously set up for this purpose, however, they would not be held personally liable for all of these things.

To learn more about asset protection and business entities for tax deed investing you can download this free recording of a teleseminar interview that I did with Texas attorney and tax deed expert Darius Barazandeh. To download the replay of this teleseminar, just right click on the following link and choose “save target as’ to save it to your computer and listen to it any time you like. Here is the link: http://tinyurl.com/yabhn2.

Joanne Musa is a Tax Lien Investing Coach and Consultant who works with investors who want to learn how to buy profitable tax lien certificates and tax deeds. She is the president of Tax Lien Consulting LLC, a consulting firm for tax lien investors. To learn more about how to invest in tax deeds check out her audio course at http://www.taxlieninvestingsecrets.com

For more tips on investing in tax lien certificates send an e-mail to MoreTips@taxlienconsulting.com

Counties and municipalities depend on money from property taxes to meet their budget. When property owners don’t pay their taxes, the county or municipality will sell the taxes to an investor. The investor is not buying the property but paying the taxes on the property and putting a lien on the property. Why would an investor want to do this? Two reasons; first they are getting a good interest rate on their money and secondly a tax lien comes before most other liens, so the investor is likely to get paid.

In some states, when a property owner does not pay their taxes, instead of selling a lien on the property, the county or municipality will sell the property at a tax deed sale. In states that sell tax deeds you are actually buying the property. In some states the property is sold for back taxes and penalties, in other states the property is sold for a certain percentage of assessed value and in other states the property is sold at market value. A tax deed can be a good investment, especially in states that sell the property for the back taxes because the investor has a chance to buy real estate at under market value.

Some states sell redeemable tax deeds, in which the county does sell the deed to the property at the tax sale. But there is a redemption period in which the delinquent taxpayer can come back and redeem the property. In order to redeem the property the delinquent taxpayer must pay the investor either a penalty or interest on their investment. Some redeemable deed states have a penalty and some have an interest rate. In some states the penalty or interest can be quite high, making it very attractive to the investor.

Because people have been told that tax liens are a great investment and that they can make such good interest rates, they assume that interest is paid out by the county or municipality on a regular basis. The truth about tax lien investing is that you do not get paid a cent until the delinquent property owner decides to redeem the lien. If they do not pay during the redemption period (which is different for every state) then you can foreclose on the property in order to get paid on your lien.

Another misunderstanding about tax lien investing is that after the redemption period is over, the lien holder will automatically get the deed to the property. The truth about foreclosing on a tax lien is that in most states you need a lawyer in order to foreclose and get the deed to the property, and in other states (Florida for example) the property will be sold in a tax deed sale, and will be auctioned to the highest bidder, so your chances of coming away with the property for what you have invested in it are not good.

Some people have the misunderstanding that tax lien investing is a good way to buy properties for pennies on the dollar. This does not happen very often. Especially in states where the value of real estate is very high, the tax lien will almost always redeem sometime during the foreclosure process. Tax lien investing is a way to get a high return on your money. If you are interested in buying property for under market value, you are better of with tax deeds or redeemable tax deeds.

Joanne Musa is a Tax Lien Investing Coach and Consultant who works with investors who want to learn how to buy profitable tax lien certificates and tax deeds. She is the president of Tax Lien Consulting LLC, a consulting firm for tax lien investors. She is the author of the e-books: Tax Lien Investing Secrets and Tax Lien Lady’s State Guide to Tax Lien and Tax Deed Investing, available at http://www.taxlienconsulting.com For more tips on investing in tax lien certificates send an e-mail to MoreTips@taxlienconsulting.com

The reason for her confusion has to do with the type of bidding method used (premium or “over-bid”) in Indiana and the Indiana state laws that govern the tax lien investing process. What she witnessed in Indiana is extreme competition due to favorable state laws for tax lien investing. In Indiana there is a hefty penalty (10 – 15%) on the certificate amount and you do get interest on the premium or “over-bid” amount if the lien is redeemed. You also get interest (10% per annum) on any subsequent taxes paid as well. The redemption periods vary from county to county, but are short – from only four months to one year. And all you have to do to foreclose is petition the court for the deed to the property. Everything has to be done in a timely manner however, or you could loose your claim on the property.

When most new investors go to these sales and see the large over-bids paid for tax liens, they assume that the companies and investors that are paying these large amounts are doing so in hopes to foreclose on the property. While occasionally that might be true, whenever you see banks doing this there is usually another reason for it. Banks do not want to be in the property management business, they want to invest their money at higher returns than then they can get by lending it out, and they wish to diversify their investments. The reason why they are paying so much for these tax liens is because it is worth it – they are making good profits on their investment.

Because they have the ability to let large amounts of money sit in an investment, institutional buyers can bid large amounts on properties that they think will redeem. And because they have done their due diligence on these properties, they know that even if the property doesn’t redeem they will be able to sell it and make a hefty profit. The danger for new investors is that they see these institutional lien buyers and other seasoned investors paying large premiums for tax liens and they start paying large premiums for tax lien certificates on properties that they did not check out. Maybe they heard about tax lien investing from a real estate guru who touted tax lien investing as being totally risk free and “government guaranteed.” What they need to realize is that no one guarantees that you will get paid on a tax lien certificate and that the only thing guaranteeing the lien is the property. Therefore the property better be worth more than what you paid for the lien. And because you will have other expenses involved in your investment and you will have to pay subsequent taxes, the property should be worth a few times what you paid for the tax lien certificate.

If you are considering tax lien investing you might want to read all of the articles on the article page of taxlienlady.com at www.taxlienlady.com/articles.htm, and on my blog at www.taxlienconsulting.blogspot.com. Here you will find a wealth of free information about how to due diligence for tax lien investing and how to determine if tax lien investing is right for you.

Joanne Musa is a Tax Lien Investing Coach and Consultant who works with investors who want to learn how to buy profitable tax lien certificates and tax deeds. For more detailed step-by-step course on how to invest in tax lien certificates and tax deeds, go to http://www.taxlieninvestingsecrets.com

For more tips on investing in tax lien certificates send an e-mail to MoreTips@taxlienconsulting.com

Let’s talk about the time involved in investing in tax lien certificates first. Tax lien sales in most states are usually held on weekdays at normal business hours, so you will need to have the time to go to the sale to bid on the properties that you are interested in. Even though in some states you may be able to mail in your bid, it’s to your advantage to be at the sale.

But this is less than half of the time that you will need to invest in purchasing profitable tax liens. Before you even get to this point you have to do some type of due diligence on the properties that are in the tax sale. The list of properties that you get before the sale from the tax office, in most cases, does not tell you anything about the property. Frequently this list will only consist of the tax ID, owner of record, and amount owed. It doesn’t even give you the location of the property!

So the first thing that you have to do is look up the assessment information on the property and find the address. You’ll want to physically look at the property to be sure that the assessment information is up to date. You want to make sure that the property is worth considerably more than the amount that’s owed for back taxes. Keep in mind that you may have to pay the taxes on this property throughout the redemption period (if it doesn’t redeem) before you can foreclose on it or apply for a deed.

This brings up the other factor that a newbie typically underestimates when they get started in tax lien investing, and that’s how much money is needed to invest in tax lien certificates. Frequently people tell me that they want to get started with less than $250.00. This is really not enough. Although you may not need as much to invest in tax liens as you do for tax deeds, you still need at least $2000.00 to get started. Even though you may be able to purchase a lien for under $200, you still need to pay the taxes on that property until the lien is redeemed. If you don’t, the property could wind up in next years tax sale and another investor could purchase that lien.

Tax lien investing is not like buying a savings bond or putting your money into a CD. You cannot take your money out if you wish to and you do not get paid any interest until the property owner decides to redeem the lien. If the property owner does not pay, than you have to wait out the redemption period and then go through a foreclosure process, or deed application process, before you get the property.

If investing in tax lien certificates is something that you want to do, then I recommend that you have at least $2000 that you know you will not need to meet any of your expenses to use for this purpose. I also think that you will need to have at least a few hours that you can invest in doing due diligence and bidding at tax sales. If you only have $2000, you may only be going to one or two sales each year and spending a few hours of your time every six months or so. If you really want to pursue tax lien investing aggressively, it is even better if you have $5000 – $10,000, and at least 10 hours per week that you can invest. This way you can attend more sales and purchase a few liens per year instead of just one or two. The more money and time that you can invest, the greater will be your return.

Joanne Musa is a Tax Lien Investing Coach and Consultant who works with investors who want to learn how to buy profitable tax lien certificates and tax deeds. She is the president of Tax Lien Consulting LLC, a consulting firm for tax lien investors. She is the author of the e-books: Tax Lien Investing Secrets and Tax Lien Lady’s State Guide to Tax Lien and Tax Deed Investing, available at http://www.taxlienconsulting.com For more tips on investing in tax lien certificates send an e-mail to MoreTips@taxlienconsulting.com

On the positive side, there is no competition; you don’t have to bid against other investors. For liens and redeemable deeds, you may be able to purchase a lien or deed in which the redemption period has already ended, or is close to being over, in which case you may wind up with the property. For some deed states, since the county, state, or municipality has already taken title to the property, you may not have to go through a title clearing process (quiet title or title certification process). You’ll have to check with the county to find this out.

On the negative side, leftovers are usually not worth bidding on in the first place and that’s why they were not sold at the sale. In smaller counties, and in states where the tax sales are conducted by the municipality (New Jersey, and the New England states) there is usually nothing worthwhile that is left over. To find leftover tax liens or deeds, you have to go to counties that have very large lists (a few thousand properties) to begin with. And you’ll have to sift through a lot of junk to find good properties.

Sometimes you can find a nugget of gold in the leftover tax sale list. I know a couple of tax lien investors in Arizona who do this regularly as well as a couple of tax deed investors (in Texas and Pennsylvania) who have done this. With more and more people becoming interested in tax lien and tax deed investing and going to the auctions, there are less leftovers available than there used to be. My advice is to use extreme caution and be extremely rigorous with your due diligence when purchasing leftover liens or deeds. I also believe that investing long distance in leftover liens or deeds is a mistake if you do not have someone that can physically look at the property for you.

If you would like to find out more about how to find that nugget of gold in the leftover tax sale list, this is the topic of Tax Lien Lady’s next teleseminar interview with Brendan Monahan of Arizona Tax Liens on March 15, 2007. To register for the teleseminar at no charge go to .

Joanne Musa is a Tax Lien Investing Coach and Consultant who works with investors who want to learn how to buy profitable tax lien certificates and tax deeds. She is the president of Tax Lien Consulting LLC, a consulting firm for tax lien investors. She is the author of the e-books: Tax Lien Investing Secrets and Tax Lien Lady’s State Guide to Tax Lien and Tax Deed Investing, available at http://www.taxlienconsulting.com For more tips on investing in tax lien certificates send an e-mail to MoreTips@taxlienconsulting.com