How to Make Money on Tax Lien Certificates

In this video, I'm going to show you how to make money with tax lien certificates. Now, that's not all I'm going to show you. I'll give you some other tips on how to make some money and I'll also give you some tips on what not to do, and that's just as important as knowing what to do. So, I'll come right back in a minute.

To start with, about half of the states and counties will sell tax lien certificates.   Now, any state or county that sells a tax lien certificate is what I call a benevolent state.   Now, why would I say that a tax collector was benevolent? I would say it because they don't kick people out of the property.  Selling a tax lien certificates is the county’s The person that got in trouble is a homeowner. 

They can't pay the taxes. The worst thing that could happen to them is to get thrown out. They don't throw them out. They just tell them, "A tax certificate has   been filed, but we need money to pay our employees  so we're going to sell the tax certificate to the   public." So, all the county is doing is selling you their rights in the property. And their right is to tax. All right, so half of the states sell these certificates, now you can buy as many as you want.  

Tax Certificates

There will be thousands and thousands of tax certificates. So, let me just pick one state and I'll use that to give an example. In the state of Florida in May and June, they will have 1   million property tax lien certificates to sell. Now, those tax lien certificates are in all size houses. Maybe a little 100 thousand dollar house, a mansion, it's an office building. 

It could be any taxable property is taxable within the state. Now, if you pay for the certificate,   you're helping the county and you're helping the people that own that property. Why are you helping the people own the property? Because they didn't get kicked out because the tax lien certificate was issued. So, those people in Florida will have up to 2 years to pay their taxes. 

You'll have up to 2 years to buy that certificate. All right now, this is a wonderful way to make money because you can make up to 18 percent on a Florida tax certificate. Now, certificates work like this in Florida. They start at 18 percent and then they go down.17 and a half, 17, 16 and a half. Now, you could bid all the way down to a quarter percent. Now, I wouldn't recommend that you do that.

That's not a very good investment, but you could do that. Other states work similarly, but many states sell taxing certificates there is no bid down process. Like in Iowa, the minimum you can make on a tax lien certificate is 24 percent. Now, think about that. If you earn 24 percent and you compound that in 3 years, you just doubled your money. 

Figure it out, just get a mathematician to help you out with that and you'll see. That certificate as soon as you buy it, you've helped the county, because what you just did is you just paid the county employees,   you just paid the school teachers, you just helped out with the fire department pay. You just help with the police department pay so, when you buy tax lien certificates, you're helping everybody.

Tax lien certificates

You're paying for the school system, you are helping them pay the garbage bill, you're paying the county's bills when you pay the tax lien certificate. So, these certificates are available almost all year round but, they usually have big auctions. Now, you can do this online. So, let's say there are a million certificates in Florida, you can sit and go county to county. You don't have to buy them for everyone,   you can just sit on your assets and type in your computer and you can buy tax lien certificates.  

They'll be too many. They will never be able to sell all the tax certificates. Now you say, "Why  won't they be able to sell them all?" Because people don't understand what we're talking about. If you go and tell your friends about this video, and I want you to do that, as a matter of fact, you can have them send it to their friends, people are not going to believe this. But, everything I'm telling you is 200 years old. I did not invent it. I started 30 years ago buying certificates. 

When I found out I could earn 24 percent in Iowa, I can assure you I was in Polk County, which happens to be the capital, I went to Polk county des Moines and I started buying tax certificates and earning 24 percent of my money. Tell me one place I could make 24 percent of my money with no risk. 

Why didn't I have any risk? 

Because if I didn't get paid on the certificate, I got the property. So, half of the states are selling certificates, if they don't sell them they put them on a list. And now that you know there's a list, it could be called forfeited lands. It could be called surplus lands. 

They could have any name. I don't know what name the county is going to use, but if they have a tax lien certificate auction and they don't sell them all, just ask the clerk that's selling them or call the county and say, "What are you doing with the leftovers that weren't sold?" And sometimes they call them leftovers. And you can buy those over the counter, in other words, when you go up to the cashier at a store there's a counter. So, over the counter. Just say, "I'd like to see all the list of tax liens certificates." They will give you the list.  

Now, the list is just numbers. It's the tax number. So, take the tax number, stay right there, type it in your computer, and property will pop up just like that. How easy could that be? Let's talk about how much money you can make with tax lien certificates. 

Let's start out with a small rate of return. And that would be Phoenix, Arizona. In Phoenix, they pay 16 percent on a tax certificate. So, let's figure out how you can make some money. So, let's say you bought a certificate today for 16 percent. Okay, if you hold it to the end of the year, you make 16 percent. 

But, what if they paid you at the end of the year and you got your money in return? What I want you to do is reinvest it in another certificate. They call that roll it over. You hear those investment guys saying that all the time. "Just roll it over." 

Now, you can do this personally, you can do it in a corporation, you can do it in your IRA, you do a Roth IRA, you're doing a pension one. She made 16 percent. But, where are you going to be in 20 years? 

Tax Deed

Well, if you invest 16  percent today, you can very easily figure out what it's going to be in 20 years. Unless they invested 2 thousand dollars, you know one year, do it 19 more times. Well, in 20 years that'll be 30,000. 30 000. S ll you invested was one time 2 thousand dollars and now it's worth 30. Be a visionary.  

You'd much rather have the 30. All right now, let's make a number that's going to shock you. Let's do the exact same thing in Iowa. Now, Iowa pays 24 percent. Alright, so the first year you're going to get 24 percent. All right so, figure out what the interest- what the money is going to be.  

All right now, do it- whatever that answer is, 24 times the 2,000. Whatever that answer is, do it 19 more times. Well, you're not going to end up with 2,000 dollars, you're going to end up with 120 thousand dollars.

Now, if you don't believe me, do the math. But, even if I'm fifty percent wrong, would you invest 2 thousand? So, in 20 years you could have 60 thousand? Well, if you say yes then do Iowa certificates. Because if you make 24 percent and you roll it over every single year for 20 years, you just keep reinvesting, you'll have 120. They're going to think you're an investment genius. What would your family say if you had 120,000 20 years from now? 

know what they'd say, they would think you were Warren Buffett or Jeff Bezos, or someone like that. The money's there. This business has been around for 200 years. I didn't invent it. I just learned how to use it. You need to do the same thing. I'm not a person that is a genius. All I did is I figured out how to do it. If I didn't figure it out the county would tell me how to do it. They'll do the same thing for you. You just have to learn the step-by-step process. 

All right so, I'm going to run out of time so, let me tell you this. I don't want you to make any mistakes. But, to avoid that I'm going to tell you 2 things that you shouldn't do. So, number 1, don't buy a tax lien because I said to do it. Buy the taxing because you looked it up and then you went and looked at the property. That means you might have to drive there. 

If you don't drive there and you're buying in another state, get someone to drive there and take a picture of it. But, don't buy it unless you know what you're buying. What if it was next to an oil refinery? It had smelly air coming at you all the time. You wouldn't want to own that property. You might not be able to sell it even. So, now you're going to waste your money. 

So, don't waste your money. Go and look at the property or have someone look at it. Don't pay any attention to pictures. I don't know how old the pictures are and neither do you. All right, the last thing is if you're going to be an investor, you need to think about your exit strategy from any investment.  

Every investment, you're really after ROI. Return on Investment. Now, put money in the bank, you get a nice return on the investment. It's 1 percent per year. And don't be surprised if that goes to zero in the future. But, right now you get a nice solid  1 percent. 

I don't want you to make 1 percent. I want you to make a lot more than that. So, the only way you can know your return on investment is to make sure you pick an exit strategy where you can buy it low, then sell it low. And do it fast. So, let's buy it for 20 cents on the dollar, sell it for 40 cents on the dollar, and all those fixer-upper people that are watching television, they want to buy them from you. 

So, you can just be their supplier. You don't have to tell me about a tax auction. But, the government is going to have millions of properties. How many millions? About  3 percent of all properties in the United   States will go to tax auctions of some kind. So,  that's between 2 and a half and 3 million opportunities this year for you to learn how to do this.