Pinpoint If Tax Lien Investing is Something you would enjoy
Even before you choose to tax on tax lien investing, you should learn about the pros and cons
You need to realize some of the common terms and procedures such as redemption period for the particular county, bid down the interest, bid on the premium, etc etc. Once you have a good understanding of the basics of tax lien investing, you need to decide if this type of investing is for you and suits your personality.
If buying tax liens are in your future, proceed to the next chapter!
Find A Good Website For Purchasing Tax Liens
Finding a tax lien website is actually quite simple. Tax lien sales are processed at the courthouse so you should probably start by finding the website of tax collector for county you want to invest in.
Another option, use the famous google search engine and enter the county that you are interested in, followed by "tax collector". If I wanted to buy tax liens in California, I would type in "California Tax Collector" in the Google search engine.
Using google will turn up a lot of results for tax lien investing and allow you to even sign up for a few auctions from the comfort of your couch.
Register With Online Tax Lien Directories
Keep in mind that not all Tax Lien auctions are available online so your county of choice may not be available.
Be ready to fill in personal information about yourself such as your social security number, bank routing info or credit card info for funding and payment purchases, this is normal. You might need to set up an account and or provide a deposit which will be required if you want to be a bidder. There could be a minimum requirement to register as a bidder. Don't worry it is refundable.
Understand how the Tax Lien Bidding process works
There are several different types of bidding methods involved in a tax lien auction. In the cases where more than one investor wants to bid on the same property, one of the following five methods is used.
Depending on the laws of the county, the bid winner will be determined by one of the five methods below. Bid Down the Interest.this is where several investors negotiate to see who will accept the lowest interest rate among all the bidders. In some cases the interest rate can go as low as 0%, but this is rare.
Premium.Here investors (bidders) bid on the face value of the lien or premium. In some counties the additional premium does not earn any interest and may not be refundable. Colorado is one state that does this.
Random Selection.the order of bidders is selected at random with the random selection method. Typically a computer is used to select bidders at random, but this can vary from county to county. Nevada uses the random selection method.
Rotational Selection. With this method, the first lien will be offered to the investor holding bid ticket number one. If the first bidder passes on the lien, the next bid ticket holder gets priority of the lien. However, bidder number one will not be offered another lien until their ticket number comes up again in the rotation. Once bidder 1 bids, bidder 2 gets to bid, then bidder 3, then 4 and so on...then back at 1 and repeat.
Bid Down the Ownership. The winning bid goes to the tax lien investor willing to accept the least percentage of ownership on the lien. For example, an investor may decide to take a lien on only 85% of the property. If the lien is not redeemed, the bid winner only receives 85% ownership of the property with the remaining 15% owned by the original owner. In actuality, very few investors will bid on liens for less than full ownership to the property.
So in case where multiple investors are bidding on the same property, the random selection process will be used instead. If a tax lien is not purchased at an auction, the county will take possession of it. Some states allow "over the counter" purchases of liens not sold at auction.
Even before you choose to tax on tax lien investing, you should learn about the pros and cons
You need to realize some of the common terms and procedures such as redemption period for the particular county, bid down the interest, bid on the premium, etc etc. Once you have a good understanding of the basics of tax lien investing, you need to decide if this type of investing is for you and suits your personality.
If buying tax liens are in your future, proceed to the next chapter!
Find A Good Website For Purchasing Tax Liens
Finding a tax lien website is actually quite simple. Tax lien sales are processed at the courthouse so you should probably start by finding the website of tax collector for county you want to invest in.
Another option, use the famous google search engine and enter the county that you are interested in, followed by "tax collector". If I wanted to buy tax liens in California, I would type in "California Tax Collector" in the Google search engine.
Using google will turn up a lot of results for tax lien investing and allow you to even sign up for a few auctions from the comfort of your couch.
Register With Online Tax Lien Directories
Keep in mind that not all Tax Lien auctions are available online so your county of choice may not be available.
Be ready to fill in personal information about yourself such as your social security number, bank routing info or credit card info for funding and payment purchases, this is normal. You might need to set up an account and or provide a deposit which will be required if you want to be a bidder. There could be a minimum requirement to register as a bidder. Don't worry it is refundable.
Understand how the Tax Lien Bidding process works
There are several different types of bidding methods involved in a tax lien auction. In the cases where more than one investor wants to bid on the same property, one of the following five methods is used.
Depending on the laws of the county, the bid winner will be determined by one of the five methods below. Bid Down the Interest.this is where several investors negotiate to see who will accept the lowest interest rate among all the bidders. In some cases the interest rate can go as low as 0%, but this is rare.
Premium.Here investors (bidders) bid on the face value of the lien or premium. In some counties the additional premium does not earn any interest and may not be refundable. Colorado is one state that does this.
Random Selection.the order of bidders is selected at random with the random selection method. Typically a computer is used to select bidders at random, but this can vary from county to county. Nevada uses the random selection method.
Rotational Selection. With this method, the first lien will be offered to the investor holding bid ticket number one. If the first bidder passes on the lien, the next bid ticket holder gets priority of the lien. However, bidder number one will not be offered another lien until their ticket number comes up again in the rotation. Once bidder 1 bids, bidder 2 gets to bid, then bidder 3, then 4 and so on...then back at 1 and repeat.
Bid Down the Ownership. The winning bid goes to the tax lien investor willing to accept the least percentage of ownership on the lien. For example, an investor may decide to take a lien on only 85% of the property. If the lien is not redeemed, the bid winner only receives 85% ownership of the property with the remaining 15% owned by the original owner. In actuality, very few investors will bid on liens for less than full ownership to the property.
So in case where multiple investors are bidding on the same property, the random selection process will be used instead. If a tax lien is not purchased at an auction, the county will take possession of it. Some states allow "over the counter" purchases of liens not sold at auction.
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