After the Purchase

Oftentimes, new tax lien investors purchase a tax lien and then wonder what is next for them as the tax lien certificate holder.
 
Statistically speaking, the majority of tax lien certificates are paid off when the property owner pays their delinquent taxes plus interest accrued to that point.  When that happens, the county forwards the money directly to the certificate holder on file.  In most cases, we will transfer ownership from our name to the client’s name on the county records, so the check goes directly to the client.  In rare cases, the redemption occurs before the transfer is complete and the check will go to our company.  We will receive the check, see which client has purchased the tax lien from our inventory, then we forward the entire amount on to the client.
 
The property owner will pay off the delinquent taxes on their own, without any help from the tax lien certificate holder, in many cases.  But sometimes the property owner needs a nudge.  In that case our servicing team can help create a strategy to help motivate the property owner to pay their taxes and force the redemption.
 
If the client prefers to foreclose and take ownership of the property, then our servicing team will create a strategy to do that.  It’s still possible that the property owner will pay off the delinquent property taxes plus interest when you start the foreclosure process, but the more you do, the more likely you are to get a property through a tax lien certificate foreclosure.
 
An even greater question arises, that may cause our clients a bit of anxiety.  What will you do with the property once you take ownership of the property?  This is a phenomenal question, and this is when a tax lien investor becomes a real estate investor and has to start thinking like a real estate investor.
 
There are many strategies that you could pursue.  You could quickly flip the property or fix it up and sell it or rent it, etc.  There are so many options, and the option that you choose simply depends on you.
 
Our suggestion is that you speak to one of our real estate coaches.  Our tax lien team is qualified to help you with your tax lien investing questions, but once you become a real estate investor, you should seriously consider speaking with one of our real estate coaches so they can hold your hand through the entire process.
 
Give our office a call, and we can get you in touch with that department to make sure you maximize your returns.

Contract Signing and Execution

This video is meant to describe the Secondary Market purchase process in some detail.
 
When a client expresses interest in purchasing on the Secondary Market through our team, we will assign the client to a concierge who will interview the client.  The concierge holds this interview because they need to understand the client’s current position, and whether the client should be investing aggressively or if the client should start more slowly. During this interview, the concierge will find out the level of real estate experience that the client has, how much the client would like to invest, and how they would like to invest it.  
 
Once the concierge has an understanding of what the client would like to accomplish, and the practicality of the client’s situation, then the concierge will dive into our current inventory, which changes everyday due to redemptions, foreclosures, and sales, and the concierge will find the best certificates that meet the criteria set by the client.
 
They will then put together a short agreement, which includes important information regarding the certificates and send it by email, as shown in the video above.  Simply click the link in your email to pull up the agreement and certificate information in your web browser.  
 
The client should then use this certificate information to perform due diligence, which is something that our concierge can help the client do, if the client would like.  The concierge can answer questions and point the client to resources until the client is satisfied with their portfolio.  The concierge can also make adjustments to the portfolio, if necessary.
 
Once the client is ready to go, then they simply complete the agreement as shown in the video above.  Simply sign each applicable field.  If the client chooses to pay by having our team collect by ACH, then fill out those; type in the name as it’s shown on the actual bank account, fill in the account number and routing number as shown on a check for this account, then select whether the account is a checking or savings account.  If the client prefers to pay another way, then the client need only to arrange payment with their concierge using one of the other payment methods listed on that page of the agreement.
 
Once all signatures and fields are complete, click submit at the bottom of the contract, and a copy will be emailed to our team and the client will also be emailed a copy of the completed agreement.
 
Once payment is received, our administration and servicing teams will begin the transfer of ownership process.  
 
Depending on the county in which the purchase is made, and the speed with which they process transfers, this process can take 30 – 60 days.  However, once the agreement is signed and payment is made, then the certificate technically belongs to the client and all interest is earned in the client’s name.

Tax Lien Servicing

Servicing is a space widely unknown to the typical investor.  Servicing a tax lien certificate includes providing much of the administration work for a tax lien investor.
 
The duties of a tax lien servicer include, but are not always limited, to the following:
  • Providing potential tax lien investment deals.
  • Providing agreements, contracts, and paperwork to complete a transaction.
  • Completing clients’ assignment paperwork to transfer or assign interest or ownership.
  • Collecting county required documents for assignments and submitting documents and payment to the county.
  • Interacting with the county and following up to make sure all assignments are completed and correct.
  • Acting as liaison between the county and the tax lien certificate holder.
  • Consulting the client on opportunities with a specific tax lien certificate, i.e. potential foreclosures, forcing redemption, etc.
  • Helping the client complete or begin the foreclosure process for a tax lien certificate.
Servicers are crucial for any tax lien investor.  Having a good servicer on your team is very important.  Servicers cost money (typically 1 – 2 percent of money invested), but it’s well worth it.  
 
Here is the caveat; in order to work with a servicer, an investor needs to have at least 1 million dollars out in tax lien investments; otherwise it’s not worth the servicer’s time to manage the investor’s account.
 
Luckily we have in-house servicing for our clients.  We have a servicing team of administrators and account managers that will help each client after the completion of the sale.  Phew!  You got lucky that you found us!
 
One other thing to note, and this is where it gets confusing, is that some states require the use of a specific servicer…  Remember when we mentioned in a previous video that some counties would only sell through a request for proposal with large investors?  Well in Connecticut, for example, it is state law that individual investors cannot purchase tax lien certificates.  They also require the use of one of the four largest servicers, who all require 1 million plus in investment.
 
For most individual investors, those obstacles are insurmountable.  Luckily you’ve found us, because this is what we did on a particular deal.  Recently, we purchased a deal worth over 5 million dollar from an institutional investor who was holding Connecticut certificates.  We negotiated with Connecticut and the servicer and both allowed the deal to be completed, so not only were we able to secure tax liens for our clients, but we also got one of the largest and best servicers in the industry to agree to help our clients.
 
Through this deal, our clients are the first individuals to have access to Connecticut certificates and this servicer.
 
Servicing makes tax lien investing simpler and more lucrative than one can immediately imagine.  It’s only through investing and using a servicer that someone will be able to appreciate it.  

Tax Lien Flipping

When you partner with us, and leverage our industry connections and our buying power to acquire seasoned and foreclosure ready tax liens, you are now able to do something that has never before been possible with tax lien investing.  You can now acquire and flip tax liens. 
 
The way investors have been investing in the past on the primary market, is to invest in tax liens at the auction and then you would have to hold the tax lien for up to 3 years before you could start the foreclosure process. By partnering with us, and buying seasoned foreclosure ready tax lien certificates, the process has been reduced from years down to months or weeks. 
 
During the foreclosure process, your tax lien will continue to accrue the full state-mandated interest rate. Using our full service approach we will take care of every step of the collection and foreclosure process for you. 
 
The foreclosure process can take several months. Usually, when you start the foreclosure process, the property owner will figure out a way to pay off their back taxes, penalties, and interest. There is something extremely motivating about the Sheriff showing up on your doorstep with a foreclosure notice. The property owner will find a way to pay, and as the investor you will get a check for your original investment plus any interest that has accrued.  
 
Most of the time, you should count on making the state-mandated interest rate, but occasionally, the property owner will let the property go to foreclosure and this is when you get big lump sum gains. This is when tax lien investing gets really exciting.  I like to think of tax lien investing as a big slot machine and every time you put in a quarter you get $0.30 back.  If you found a slot machine like that wouldn’t you just keep dumping quarters in all day?  Me too.  But even better is that every once-in-a-while you will pull that lever and win the jackpot. It’s a win-win.
 
When you buy from us you don’t have to worry about putting some little old lady onto the streets. We have a lawyer who will go by the house, talk with the person, and figure out a solution.  Sometimes they help them get into a reverse mortgage; sometimes they will help them contact family members to come up with the money.  The lawyer is very good at helping you make money and finding a solution for the previous property owner.
 
Every time we teach people about tax lien investing suddenly they aren’t satisfied with making a better interest rate than they could even dream about just a few minutes ago. All they can think about is huge amount of money they are going to make by acquiring property. 
 
Buying tax liens through us makes getting the property more probable for our students than if they purchase through county auctions; that’s true.  But in most cases, our clients will still get their money back plus interest.
 
If you are interested in tax lien investing to acquire properties, then our suggestion is to purchase tax liens and begin the foreclosure process as quickly as possible and force the property owner to pay, or you get the property.  If you continue to do this, then your chances of getting a property through a tax lien increase dramatically.