Tax lien investing is one thing I have never done. I have kept busy with flips, rentals, and running a real estate team. However, After my interview with Ted Thomas on this weeks podcast, I am considering learning more about tax liens myself. Ted has been an expert on tax liens for decades and seen the industry change over the years. Ted has also been a very active investor for decades buying commercial, and residential rental properties. After decades of investing Ted loves to buy tax liens because of the incredible deals he can get on them. Ted discusses on the podcast how to earn great returns with tax liens (up to 24 percent interest) and how to buy properties at steep discounts (40 cents on the dollar).
How did Ted Thomas get started investing in real estate?
Ted was an airline pilot in early 1980’s, but knew he wanted more out of his life than working for someone else. He got the real estate bug and bought commercial office buildings in the the 1980’s. He did very well for himself until the real estate crash in 1986, when he virtually lost everything he had. Instead of start over in another field or try commercial real estate again, Ted decided to invest in real estate differently. He discovered tax lien investing where he could buy properties extremely cheap and sell them without being exposed to market ups and downs. Over the last 30 years, Ted has perfected his tax lien investing strategy and teaches others how to do it as well.
What are tax liens and how can you buy them?
Just about every property in the United States has property taxes that must be paid to the government. The taxes pay for schools, roads, and other local government. Some states have higher taxes than others, but the government makes sure they always get paid. When a homeowner stops paying taxes, the government will place a lien on the property that is in first position. First position means that lien supersedes any other lien on the property, even a mortgage. The reason banks escrow property taxes and insurance into your mortgage payment is because they want to protect their position in the property. They require insurance, because if the home burns down they want to make sure the homeowner can rebuild or pay off the mortgage. The bank makes sure the taxes are paid, because if they are not and the government sells the property at a tax lien sale, the banks mortgage gets wiped out.
Tax liens have been a very safe investment because the almost always get paid off with interest. In some states, properties can be bought very cheap at tax lien sales.
Where does Ted buy his tax liens?
Ted has bought tax liens in 25 different states. Every state has different guidelines for how tax liens are sold, what interest is charged, and how properties are auctioned off. In Baltimore you can receive as much as 24 percent interest on tax liens, in Florida you can get 18 percent, but in Colorado you may only make 9 to 12 percent. In some states they have absolute auctions for properties that go to the tax sale, but in other states you may have to buy multiple liens for years to ever get a home. Ted has figured out where the best states to buy properties and liens are.
How can Ted Thomas buy tax liens in 25 different states for 40 cents on the dollar?
One of the great things about the world we live in is technology. Thanks to the internet, many tax liens can be bought through online auctions. Ted had bought a tax lien in Michigan while he was in Florida right before we did this interview. Ted likes to sell his properties very quickly after buying them to other investors. He has to get amazing deals on his tax liens since he is buying from out of state and selling off market. He has learned the best markets to buy in with the most favorable tax lien laws.
How can you contact Ted?
Ted not only buys tax liens himself, he helps other investors buy them as well. He has many students across the country who he helps buy tax liens in their own state, or in other states like he does. His goal is to have everyone of his students making at least $100,000 from tax lien investing in their second year in the business. After learning what he does and how cheap he can buy properties, I am going to look into the business myself! You can find out more on Teds program and contact him here: Ted Thomas.
Reminder about my sale on InvestFourMore
My sale is running until Friday the 9th on all my products in the store and on my Amazon Kindle and Paperback books. You can get more information on the sale here.