Who in your life is worth looking after?
Jack Butala: Who in your life is worth looking after? Every Single month we give away a property for free. It's super simple to qualify. Two simple steps. Leave us your feedback for this podcast on iTunes and number two, get the free ebook at landacademy.com, you don't even have to read it. Thanks for listening.
Jack Butala:
This is Steven Jack Butala for Land Academy. Welcome to our Cash Flow from Land show. We show you how to buy property for half of what it’s worth and resell it the next day, free information from Jack, that’s me.
Jill DeWit:
And inspiration from Jill, that’s me.
Jack Butala:
In this episode, Jack … In this episode, Jill and I talk about who in your live is worth looking after, your wife, your kids, your dogs. Let’s see about this. Jill, great show today, before we start, let’s take a question posted by one of our members on SuccessPlant.com, our free online community.
Jill DeWit:
Cool. Jason from Fort Myers asks, I am new to the real estate investing market. I hear every salesperson talking about how amazing tax liens are and there is absolutely no risk. Clearly, there are risks involved. What’s the good, the bad, and the ugly associated with tax liens? Any information is greatly appreciated. I am here to learn and thank you for the advice.
Jack Butala:
If you have a question, or you want to be on the show, call 800-725-8816 and don’t be boring. Here’s the answer on this tax lien thing. Jill gets on me all the time too if my answer are too long because I could do a whole podcast, not just an episode, but a whole podcast on tax liens. That’s how much I love them. I love tax liens.
Here’s how it works. I’m going to explain exactly how it works, briefly and why, if you’re new to real estate investing, you should never do this. You should plan for it because about two years from now, when you’re doing great sending out mail, which is the best way that, in the beginning of your real estate career, to generate a ton of money fastest. After that, you can get into the tax lien biz because man, it’s awesome.
What happens is this. Somebody stops paying the taxes on their real estate, for whatever reason. A lot of times or mostly, in my experience, it’s because they passed away. They stop paying, for whatever reason. A lot of states, not all of them, but some of them, like Arizona issue a lien. The taxing authority issues a lien against the property. Eventually, after a huge amount of time goes by, they exercise their right to take the property back and actually own in.
In between that step, they issue a tax lien. They make it available for an unrelated third party to buy it. What happens is if Jill has a piece of property, she stops paying taxes. They issue a lien on her, her property. She doesn’t care. She doesn’t want it anyway. If they put it on the internet and I go over there and I buy the tax lien. The tax lien is the amount of taxes that are due. Let’s say it’s a thousand dollars. Then there is some fees associated so that the county can make some money and then an interest rate.
At two, Jill now has two choices. She can pay the tax lien, really pay me because I own the lien now. For that it’ll be a thousand dollars times, plus sixteen percent, so a thousand one hundred and sixty dollars or she can pay the … Then she gets the property back or she can just forget about it, at which time, I eventually can foreclose on it instead of the county and own the property.
It’s no-lose situation, just about. I’ll explain how you can lose and what the risk is in a second. It’s a no-lose situation and in Jill’s case, for me, I either get the property or I get my sixteen percent. Wall Street firms love tax liens. Here’s the problem that can happen. In some cases, especially in our land, rural land product type, the amount of taxes owed can exceed the value of the property because it’s so old.