Interested in real estate foreclosures or tax lien investing but don’t know where to start? Me too.
Confused and bewildered by the wide variety of books, websites, and quick profit scammers pitching their solution? Ditto.
Well, save yourself some time, and read my real estate tax lien book reviews here on Enwealthen and learn as I learn, which are the best resources for educating yourself on foreclosures and tax lien investing.
Profit by Investing in Real Estate Tax Liens: Earn Safe, Secured, and fixed Returns Every Time is an exceptional book. It is well-written, informative, detailed, and concise. The author, Larry Loftis, is a real estate investor from Florida who has written this book to teach others about the methods and pitfalls of real estate tax deed and real estate tax lien investing.
I always appreciate reading investment advice from people who have been down the road they’re recommending, such as Robert Allen. So many investment gurus spout the words, but make their money talking rather than doing.
Not so, with this book.
Real Estate Tax Liens: The Basics
Real estate tax liens are a complex topic, but here’s a summary if this is your first experience with them.
If you don’t pay your property taxes to the county, the county places a lien on your property in the amount of your overdue taxes. This means that if you sell your property, the county will be paid before you will.
Since the county still needs the money to operate, it will auction off your tax lien to investors. Investors pay the property tax amount, and often a premium of the face value or interest rate, to win the lien from the county.
When you pay your property taxes, plus interest, plus penalties, the county gives that money to the investor.
Everybody wins – property owner doesn’t lose the property, county gets the money it needs, and the investor gets a return on their capital.
Not So Latest Information
Content-wise, the book covers the important information and the details, but with a few shortfalls.
In addition to summarizing all the states’ auction types, there is a detailed appendix with information about every state’s auctions. My primary regret on the content is that the book was written in 2005, apparently before the tax sales for various states started going online, so there are very few URLs for where to find more information. I’d have preferred a book that included web addresses for each state’s tax sale information. Even though most states do tax auctions county by county, some, like Iowa, have rules consistent across counties, so it would be nice to be able to link to the appropriate top level site for each state.
In my research, Florida seems to be the most tech-savvy tax sale in the United States. About half of Florida’s tax sales go through realauction.com, with detailed information on each auction item available online. Rules of the road say to see the property with your own eyes and run a title search before bidding, but Florida does make it the easiest of all the states to invest from home.
Show Me The Money
Payment is touched upon in the book – different states have different rules about the types of payment they accept – travelers checks, personal checks, certified checks, money orders, credit cards, etc. It’s impossible to cover all the possible permutations. However, you, like me, are likely a beginner at this, so it would have been nice to have an analysis of the pros and cons of each payment type.
Most tax auction professionals say to bring a certified check in the minimum bid of each property you’re interested in. Then bring several other checks in different amounts along with some cash to fill in any gaps. That sounds expensive, both in time and in money, plus if you don’t use them, having to convert them back to cash or cancel them seems like a headache as well.
A few real-life, start-to-finish, examples in the book would have been a huge help. Personally, I wish these auctions accepted wire transfers. I’d much rather walk up to the auction cashier, find out the amount due and their wire transfer information, call my bank right there and have them wire it over. Much less hassle, and no worry about someone stealing your roll on the way to the auction (or after).
You Use Protection, Right?
The other piece of information I wish the author had spent some time on was corporate entities. Most real estate investors will tell you not to invest in your own name, invest through a corporation. A corporation will shield your personal assets (home, savings, retirement, etc.) in the event of a catastrophe (e.g. end up with a property with a $500 million toxic waste cleanup bill).
The book doesn’t spend any time discussing the needs for protection, perhaps because it’s so fundamental that it’s assumed. Personally, I’d like to see a chapter devoted to incorporation, and a comparison of what formation (LLC, S-corp, C-corp) would work best for which states you’re working in.
All said, I highly recommend it. Florida here I come!
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Share your opinion on the book, or other tax lien investing resources in the comments below.
Photo of foreclosure sign courtesy of BasicGov.