Recommendations for tax lien class or course preferably online?

Question

Jerry K. · Answer

@Leigh G. You'll find @Ned Carey is a huge fan of tax liens! Since he sent up the "Bat Signal" my "@mentioning" my name, I do almost all of my tax lien investing in Arizona. I can second everything Ned mentioned. I also like the book "16% Solution" as a basic starting book for tax lien investing.

Tax lien investing is extremely state and many times county  or city specific. I learned the most by reading the state statutes then reading the county rules for the areas that I was interested in investing.

Although I bought my first liens in Illinois (where I live) in the late 1980's, I took many years off until I found Arizona online tax lien auctions in 2009. I switched to investing in Arizona liens but still look at other states and am familiar with Florida, Illinois, Indiana, Colorado, and South Carolina. There are other Biggerpockets members here who are much more involved in those states.

As a new investor, I would recommend sticking with your local area in Arizona first. I get to the areas I invest in in AZ about every 18-24 months to check out new areas and review old areas so I'm aware of the markets.

I actually love Ned's advice of taking a tax lien attorney to breakfast or lunch to pick their brain. I did so myself on an Arizona trip and he helped teach me a ton of little quirks I never would have learned on my own until I put investment money into it. The price of a nice breakfast for an attorney is well worth the payoff.

I started in tax liens by reading about them in real estate books. They were only mentioned in passing in those books. From there, I bought a tax lien guru course off ebay (before ebay was even a public company). That gave me the list of all the counties that sold tax liens. I had already bought liens in Illinois so I had a working knowledge. That course had a video tape of people who invested in liens and those were interesting to watch - but overall the course was too generic since it could not cover every state or county.

At least I paid less than $100 (might have been less than $50) for the course and I didn't have to go through the sales funnel of the guru who had a sales company try to get the original buyers of the course to pay for expensive training. Some of those courses also try to get you to just hand over $25k or more for them to invest in liens for you.

You're in Maricopa county which is one of the largest tax lien auctions in the USA. They used to take several days of auctioning liens each year at a live auction, and they never sold all the liens. Then Maricopa was one of the first to switch to online auctions several years ago and they now sell all almost all the liens and get the tax money the county needs to operate.

I don't invest in Maricopa county, but the online website is easy to use. They provide a lot of good information on the parcels in the auction. They also have a lot of information from the previous auctions. One of the county specific tax lien rules for Maricopa is that if you buy a lien and the owner does not redeem (pay back the taxes and interest) then you as the investor can choose to buy the next year taxes or not. If you don't, you keep the lien for the year you bought, and someone else can buy the next year's lien. But your lien is older and you will reach the date of going for a tax foreclosure first. In AZ you can foreclose on tax lien after 3 years from the date of the tax lien purchase. However, you need to know if anyone bought a tax lien on the parcel in the years before you did.

There are many rules to learn - how to open an account online, what your deposit needs to be, when you need to pay the balance (within 24 hours) - and that's just to bid. There are the statutes of buying, holding and foreclosing on a lien too.  How you bid - you are bidding the lowest interest rate you will accept. It starts at 16% and goes lower in 1% increments. You have no idea what other people bid so you are entering your bid and hoping it is low enough to win. You can change your bid or cancel it before the bidding closes, but once you win, you have to pay. You will basically put in a deposit that indicates how much in total you want to invest. Once you reach that level, the auction software cancels any other bids you have so that you won't overspend.

Lots to learn. What is your end goal? earning high rates or interest on your money or getting the property in foreclosure? Know that about 97% of all liens are redeemed by the owner before you can foreclose.

I have some posts on my Biggerpockets blog about Arizona tax lien investing including some of the basic things you need to know. It is by no means a course, but the posts give you an idea of what you can expect and a glimpse at some of what I do.

Lien Online Me is a link to my blog posts.

Carolyn Morales · Answer

@Leigh G

Not all states are the same. Study Florida Statute 197 for Florida. You may not need a class. LOW RISK INVESTING IN FLORIDA TAX CERTIFICATES on Audible is how I learned it. We have bought 2 Lands Available properties post Auction that were amazing deals and about to buy a 3rd one. We focus on Jacksonville,  Duval land's Avaliable lists because it is huge, like 700 properties big. Also, with the realtaxdeed auction website, auction results do not stick because the whole world has access. Many cert holder wins are forfeited, the return is higher to them when the property sells from lands available list post auction and often out of area investors don't want to manage properties from far away. Many just want their interest. Also, some 3rd party winners also forfiet to Lands available  and the realtaxdeed website doesn't update, so you won't know what's going to lands available unless you are purposely aggressive watching. Obviously we prefer actually buying the properties,  not the certificate or liens ens of it.

Ned Carey · Answer

@Leigh G. most of the due diligence i do is simply figuring the value of the property. The biggest risk and easiest mistake is bidding to much. Remember the property is security for you lien If the property is worthless then so is your lien.

Even though you are only interested in receiving the interest you get no interest if the owner does not eventually pay the taxes. In that situation you need to foreclose to get your money back. So it is important to know the property is valuable enough to recoup your losses and costs to foreclose. Or you simply need to factor in that about 4-5% will not redeem and you need to write that off.

I have done very will with leftover tax liens. However again you need to check the real value of the property; not just the assessed tax value.  Many properties are not bid on in the original auction because they just are not worth anything. There are often gems hidden in the "over the counter" or leftover liens, but it may take some effort to sort through the junk.

Good luck.

Jerry K. · Answer

@John Thedford In Arizona there is a full 3 year redemption period for the owner to pay the taxes back. After that, the tax lien holder can start a tax foreclosure that is a judicial foreclosure. It can take some time but at the end, if the owner or other interested parties do not pay, then title is given to the tax lien holder.

Florida is the only tax lien state I know that when the tax certificate holder starts a foreclosure, it actually goes to a deed auction.

Ned Carey · Answer

@Leigh G. I see you only have a few posts so welcome to BP.

Here on BP that are a lot of threads about tax liens from people actively buying them. I set up a "Keyword Alert" for "tax lien" and "tax sale" so that I am notified whenever someone posts about them.  @Jerry K. is someone here who writes lot of detailed posts specifically about Arizona tax sales.

I haven't read it but I hear the book The Sixteen Percent Solution is a good one.  I got some of my basic knowledge when starting by taking a tax lien attorney out to breakfast.  I was able to pick his brain for an hour for the cost of a nice meal. Another place I learned was reading the state tax sale code and the websites that offer the sales.

I have no direct experience with any of the courses. I am somewhat skeptical because of what I read in their pitches. There are real risks in tax lien investing.  Taking a course that say there is no risk and your profits are guaranteed by the government probably aren't  going to prepare you for some of the risks.

Another concern I have about some of the courses is they are probably not specific enough. The laws vary tremendously from state to state. Not knowing how those law affect your returns is one of the risks I mentioned.

Jerry K. · Answer

@Leigh G. You'll see me post about the OTC (Over the Counter) liens in the forum on occasion and I usually say they are the "picked over" liens. But if you read my blog posts, you'll find one where I randomly pick three OTC liens in Pinal county in AZ. The first two were slivers of land not worth the cost of foreclosure if the owner never repaid the lien. The third parcel actually looked like a good parcel and you would earn 16% interest from day one.

I also bought a parcel OTC list in Pinal a several years ago that would have been a great payoff if I ended up with the parcel. I actually made it to the foreclosure part and the owner redeemed at the last minute. That was ok too since not only did I earn 16% for three years, the owner had to pay all my attorney fees for the foreclosure as well.

I usually look at the OTC list in the summer when the states I look at for investing are slow. There is a lot to sort through to find a decent parcel on the OTC list so I usually don't recommend it for a beginner because they don't know the difference between a good lien and a bad lien. By all means though, take a look - the interest rates are great, just make sure the owner will redeem or the underlying parcel is worth more than all the taxes you invest plus foreclosure costs.

John Thedford · Answer

When you "foreclose" you get title? Public auction? Asking about AZ

Leigh G. · Answer

thank you for the advice. I will look at the book.

So you are not a big fan of Tax liens, would you recommend something else to research? I have a few very safe investments but I am looking for something a little more risky where my investment might actually really get somewhere

Recommendations for tax lien class or course preferably online?

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