"Well, real estate is always good, as far as I'm concerned."
- Donald Trump
A Primer on Tax-Lien Investing: How to Get up to 24% Yields Guaranteed by the Government
By Darius M. Barazandeh
Tax liens can offer a very high, government-guaranteed yield on an almost completely passive investment. At the same time, you could end up with the bonus of owning the underlying property itself... for profits in the hundreds, even thousands, of a percent. No other investment can quite match the unique benefits of tax liens.
It's not surprising, then, that there is a rapidly growing amount of information about tax liens on the Web: tax-lien investing, tax-lien riches, tax liens for wealth, tax lien this, tax lien that. Yet, what most of these "experts" don't tell you is what could go wrong with your investment if you fail to do the proper research.
I have helped thousands of investors profit from tax sales. And I have been involved in the process from many different perspectives - as an investor, attorney, teacher, and business consultant to one of the largest tax-collection entities in the United States.
Here's the gist of what you need to know to start investing wisely in tax liens...
High Yields and the Chance for a Property Windfall to Boot
Earning 16 percent to 24 percent interest through a low-risk and low-maintenance investment is rare, to say the least. But that's exactly what tax liens can offer. And yet, the high returns and passive nature of tax liens are just the first of many unique advantages this investment has.
Tax liens are generally insulated from changes to Federal Reserve interest rates. They are secured by real property, usually with first-priority claim. With tax liens, you can get a high yield to start... and end up owning a property for a fraction of its value.
Finally, there are tax liens for every budget. You'll find tax liens ranging from a couple of hundred dollars to tens of thousands.
The end result is a flexible but highly secured investment with minimal downside and market risk. But to become an investor, you first have to educate yourself on some of the basic distinctions in tax-lien law among the various states.
Understand the Distinction Between Tax Liens and Tax Deeds
Tax liens or tax deeds are sold in 35 states. Almost every state and territory in the United States has a process for collecting delinquent property taxes and placing reliable taxpayers back on the tax roll. This process occurs at the last juncture of the tax-collection process, and it allows ordinary individuals to purchase the rights of local governments in tax-delinquent property.
The process can be separated between two general types of systems: "tax-lien systems" and "tax-deed systems." These systems may be distinguished by the "bundle of rights" sold to the purchaser.
If the taxes are not paid in states using a tax-deed system, county governments will sell full ownership and possession rights to the investor. That means you get the property itself right away. Currently, 17 states authorize the sale of ownership rights to tax-delinquent property through a tax deed sale or assignment deed.
Conversely, in so-called "tax lien" states, county governments sell only their right to the tax lien or tax claim on the real property. That means the delinquent taxpayer has to pay you the overdue taxes plus interest and penalties. Only if he fails to pay you after a certain amount of time can you then petition the authorities to get a deed to the property itself. A total of 18 states have authorized sales of a county's tax-lien position to the public.
My own program on tax liens only covers the 21 states with tax-lien processes. The only tax-deed state I deal with is Texas. I have invested exclusively in tax deeds in that state for almost three years, because of the special opportunities it presents. However, for the sake of this primer, I'll give you a brief overview of the tax-deed process in general.
Tax-Deed Processes
In a tax-deed state, the county will sell all of its rights to a property at a public foreclosure auction or through a later assignment process. The sale will generally occur three to five years after the first tax payment becomes delinquent. Property is sold for the back tax amount plus any fees, interest charges, and court costs.
Since property taxes are a small percentage of market value, investors can acquire full property rights at a fraction of the market price. The purchaser will generally obtain full ownership rights, or at least all rights held by the county. In tax-deed states, the purchaser generally has the customary rights of a landowner, namely to possess and/or occupy the property.
Tax-Lien Processes
In a tax-lien state, counties do not sell property; rather, they sell their liens for unpaid property taxes. The lien is an encumbrance or enforcement right held by the county. While the lien does not grant full ownership rights to the property, it does provide the investor with two commanding rights: (1) The right to receive interest penalty charges if the lien is paid off by the delinquent property owner, and (2) the right to foreclose the tax lien and take title to the property if the lien is not paid. Even better, the property-tax lien is a high-priority lien superior to judgment liens, mortgage liens, trust deeds, and other private liens.
Because of the powerful nature of these rights, tax liens are a very attractive investment opportunity. Moreover, since the property-tax lien is usually for a small fraction of a property's market value, the investment is highly secured. In addition, the lien purchase does not subject the investor to landowner liability, since no right to possess or occupy the property is granted by the sale of the lien.
So... How Much Can You Make?
States offer maximum interest rates on tax liens that range from 16 percent to 24 percent, depending on the state and county. And because you buy your tax lien in a competitive bidding process, you may end up getting less than the maximum amount. For most states, that can happen in one of two ways: through the Price-Bid-Up Process or the Interest-Bid-Down-Process.
It's important to note that the starting price of the lien includes more than just past-due taxes. It also includes penalties, assessments, and other charges or fees. Once the initial price is determined, in virtually all states, the lien has to be sold at public auction and all ordinary citizens may take part in the sale.
The Price-Bid-Up Process: Some states use a process in which the price of the lien is bid up based on competition for the lien. In this format, while the price may be bid higher, the nominal interest rate is fixed and will not fluctuate due to bidding. States using this system include Alabama, Georgia, Indiana, Montana, and Kentucky.
For instance, say there's a tax lien for $10,000 paying 24 percent. You might bid $12,000 to get that tax lien. That lowers your effective interest rate, but it doesn't change the nominal interest rate or the amount the debtor will owe. That remains as $10,000 and 24 percent per annum.
The Interest-Bid-Down Process: During this type of auction, the price paid for the lien does not change... only the interest rate does. The lien ultimately goes to the bidder who is willing to accept the lowest rate. States using this system include Arizona, Florida, Maryland, New Jersey, and Missouri, to name a few.
For example, let's say you've got that same $10,000 lien, but now you're in Florida. The bidding starts at the maximum 18 percent. As the auction progresses, there are takers at 17 percent, then 16 percent, then 15 percent... and so on. It could get bid all the way down to three percent or even less. It depends on the lien and the bidders that day. But let's say you end up getting the lien at 12 percent. That's your final number. You'll get $10,000 plus the 12 percent per annum.
[Ed. Note: Darius Barazandeh holds an MBA and is an attorney and an active real-estate and tax-deed investor in Texas, as well as a leading national speaker on tax liens and corporate entities for small businesses and real estate investors.]
______________________________
How to Silence Snoring
By Suzanne Richardson
If you're being jolted out of dreamland most nights by your spouse's jackhammer snore, you're probably feeling pretty tired. And with that comes crankiness and less productivity.
But short of kicking your spouse out of the bedroom (which more and more people are doing), what can you do to stop that earth-shattering noise?
Although snoring can be a result of anything from a common cold to sleep apnea (when you stop breathing during sleep), obesity is one of the biggest causes of this nighttime malady. So getting your partner to lose weight might be a good start.
Some other common remedies, according to the National Sleep Foundation:
. using a nasal strip
. asking your dentist/orthodontist to prescribe a dental appliance for the snorer
. making sure your spouse always sleeps on his/her side
. getting your spouse to give up alcohol and/or cigarettes
If you're up for a more cutting-edge solution, you may want to suggest that your spouse take up the didgeridoo (an Australian wind instrument). According to a small study published in the British Medical Journal, playing this instrument can strengthen the upper airways and make them less susceptible to collapse and vibration. After four months of practicing the didgeridoo, participants in the study had less daytime sleepiness and fewer episodes of sleep apnea.
Also in the works for snorers is a new type of surgery. At Belgium's University of Antwerp Hospital, Dr. Evert Hamans is testing a technique in which two metal anchors are implanted in the base of the tongue and lower jawbone. This pulls the tongue closer to the jawbone, opening up the airways to prevent sleep apnea and snoring.
______________________________
It's Fun to Know: About Wii-itis
Who says you can't physically overexert yourself playing video games? A Massachusetts doctor has diagnosed and treated himself (with rest and ibuprofen) for Wii-itis, a condition similar to tennis elbow that results from marathon gaming sessions with the Nintendo Wii. The Wii, unlike most game consoles that allow gamers to remain sedentary, requires players to simulate movements, such as swinging a tennis racket or wielding a fishing pole. The physician believes most cases of Wii-itis go unreported.
(Source: CNN)
______________________________
Word to the Wise: Noblesse Oblige
"Noblesse oblige" (noh-BLES oh-BLEEZH) - literally French for "nobility obliges" - is the benevolent, honorable behavior considered to be the moral obligation of people of high birth or rank. The term is used, sometimes ironically, to insinuate that wealth, power, and prestige bring certain social responsibilities.
Example (as used by Alison Owings in a New York Times movie review of The Waitress): "Waitresses know that 'taking it' includes a string of verbal and nonverbal slights: the 'give me this, give me that' order, the 'you're only a waitress' show-off vocabulary, the 'you are my servant for now' treatment, the noblesse oblige (or no oblige) power regarding a tip..."
Michael Masterson
__________________________________________________
These articles appear courtesy of Early to Rise [Issue #2108, 07-31-07], the Internet's most popular health, wealth, and success e-zine. For a complimentary subscription, visit http://www.earlytorise.com/.
- Donald Trump
A Primer on Tax-Lien Investing: How to Get up to 24% Yields Guaranteed by the Government
By Darius M. Barazandeh
Tax liens can offer a very high, government-guaranteed yield on an almost completely passive investment. At the same time, you could end up with the bonus of owning the underlying property itself... for profits in the hundreds, even thousands, of a percent. No other investment can quite match the unique benefits of tax liens.
It's not surprising, then, that there is a rapidly growing amount of information about tax liens on the Web: tax-lien investing, tax-lien riches, tax liens for wealth, tax lien this, tax lien that. Yet, what most of these "experts" don't tell you is what could go wrong with your investment if you fail to do the proper research.
I have helped thousands of investors profit from tax sales. And I have been involved in the process from many different perspectives - as an investor, attorney, teacher, and business consultant to one of the largest tax-collection entities in the United States.
Here's the gist of what you need to know to start investing wisely in tax liens...
High Yields and the Chance for a Property Windfall to Boot
Earning 16 percent to 24 percent interest through a low-risk and low-maintenance investment is rare, to say the least. But that's exactly what tax liens can offer. And yet, the high returns and passive nature of tax liens are just the first of many unique advantages this investment has.
Tax liens are generally insulated from changes to Federal Reserve interest rates. They are secured by real property, usually with first-priority claim. With tax liens, you can get a high yield to start... and end up owning a property for a fraction of its value.
Finally, there are tax liens for every budget. You'll find tax liens ranging from a couple of hundred dollars to tens of thousands.
The end result is a flexible but highly secured investment with minimal downside and market risk. But to become an investor, you first have to educate yourself on some of the basic distinctions in tax-lien law among the various states.
Understand the Distinction Between Tax Liens and Tax Deeds
Tax liens or tax deeds are sold in 35 states. Almost every state and territory in the United States has a process for collecting delinquent property taxes and placing reliable taxpayers back on the tax roll. This process occurs at the last juncture of the tax-collection process, and it allows ordinary individuals to purchase the rights of local governments in tax-delinquent property.
The process can be separated between two general types of systems: "tax-lien systems" and "tax-deed systems." These systems may be distinguished by the "bundle of rights" sold to the purchaser.
If the taxes are not paid in states using a tax-deed system, county governments will sell full ownership and possession rights to the investor. That means you get the property itself right away. Currently, 17 states authorize the sale of ownership rights to tax-delinquent property through a tax deed sale or assignment deed.
Conversely, in so-called "tax lien" states, county governments sell only their right to the tax lien or tax claim on the real property. That means the delinquent taxpayer has to pay you the overdue taxes plus interest and penalties. Only if he fails to pay you after a certain amount of time can you then petition the authorities to get a deed to the property itself. A total of 18 states have authorized sales of a county's tax-lien position to the public.
My own program on tax liens only covers the 21 states with tax-lien processes. The only tax-deed state I deal with is Texas. I have invested exclusively in tax deeds in that state for almost three years, because of the special opportunities it presents. However, for the sake of this primer, I'll give you a brief overview of the tax-deed process in general.
Tax-Deed Processes
In a tax-deed state, the county will sell all of its rights to a property at a public foreclosure auction or through a later assignment process. The sale will generally occur three to five years after the first tax payment becomes delinquent. Property is sold for the back tax amount plus any fees, interest charges, and court costs.
Since property taxes are a small percentage of market value, investors can acquire full property rights at a fraction of the market price. The purchaser will generally obtain full ownership rights, or at least all rights held by the county. In tax-deed states, the purchaser generally has the customary rights of a landowner, namely to possess and/or occupy the property.
Tax-Lien Processes
In a tax-lien state, counties do not sell property; rather, they sell their liens for unpaid property taxes. The lien is an encumbrance or enforcement right held by the county. While the lien does not grant full ownership rights to the property, it does provide the investor with two commanding rights: (1) The right to receive interest penalty charges if the lien is paid off by the delinquent property owner, and (2) the right to foreclose the tax lien and take title to the property if the lien is not paid. Even better, the property-tax lien is a high-priority lien superior to judgment liens, mortgage liens, trust deeds, and other private liens.
Because of the powerful nature of these rights, tax liens are a very attractive investment opportunity. Moreover, since the property-tax lien is usually for a small fraction of a property's market value, the investment is highly secured. In addition, the lien purchase does not subject the investor to landowner liability, since no right to possess or occupy the property is granted by the sale of the lien.
So... How Much Can You Make?
States offer maximum interest rates on tax liens that range from 16 percent to 24 percent, depending on the state and county. And because you buy your tax lien in a competitive bidding process, you may end up getting less than the maximum amount. For most states, that can happen in one of two ways: through the Price-Bid-Up Process or the Interest-Bid-Down-Process.
It's important to note that the starting price of the lien includes more than just past-due taxes. It also includes penalties, assessments, and other charges or fees. Once the initial price is determined, in virtually all states, the lien has to be sold at public auction and all ordinary citizens may take part in the sale.
The Price-Bid-Up Process: Some states use a process in which the price of the lien is bid up based on competition for the lien. In this format, while the price may be bid higher, the nominal interest rate is fixed and will not fluctuate due to bidding. States using this system include Alabama, Georgia, Indiana, Montana, and Kentucky.
For instance, say there's a tax lien for $10,000 paying 24 percent. You might bid $12,000 to get that tax lien. That lowers your effective interest rate, but it doesn't change the nominal interest rate or the amount the debtor will owe. That remains as $10,000 and 24 percent per annum.
The Interest-Bid-Down Process: During this type of auction, the price paid for the lien does not change... only the interest rate does. The lien ultimately goes to the bidder who is willing to accept the lowest rate. States using this system include Arizona, Florida, Maryland, New Jersey, and Missouri, to name a few.
For example, let's say you've got that same $10,000 lien, but now you're in Florida. The bidding starts at the maximum 18 percent. As the auction progresses, there are takers at 17 percent, then 16 percent, then 15 percent... and so on. It could get bid all the way down to three percent or even less. It depends on the lien and the bidders that day. But let's say you end up getting the lien at 12 percent. That's your final number. You'll get $10,000 plus the 12 percent per annum.
[Ed. Note: Darius Barazandeh holds an MBA and is an attorney and an active real-estate and tax-deed investor in Texas, as well as a leading national speaker on tax liens and corporate entities for small businesses and real estate investors.]
______________________________
How to Silence Snoring
By Suzanne Richardson
If you're being jolted out of dreamland most nights by your spouse's jackhammer snore, you're probably feeling pretty tired. And with that comes crankiness and less productivity.
But short of kicking your spouse out of the bedroom (which more and more people are doing), what can you do to stop that earth-shattering noise?
Although snoring can be a result of anything from a common cold to sleep apnea (when you stop breathing during sleep), obesity is one of the biggest causes of this nighttime malady. So getting your partner to lose weight might be a good start.
Some other common remedies, according to the National Sleep Foundation:
. using a nasal strip
. asking your dentist/orthodontist to prescribe a dental appliance for the snorer
. making sure your spouse always sleeps on his/her side
. getting your spouse to give up alcohol and/or cigarettes
If you're up for a more cutting-edge solution, you may want to suggest that your spouse take up the didgeridoo (an Australian wind instrument). According to a small study published in the British Medical Journal, playing this instrument can strengthen the upper airways and make them less susceptible to collapse and vibration. After four months of practicing the didgeridoo, participants in the study had less daytime sleepiness and fewer episodes of sleep apnea.
Also in the works for snorers is a new type of surgery. At Belgium's University of Antwerp Hospital, Dr. Evert Hamans is testing a technique in which two metal anchors are implanted in the base of the tongue and lower jawbone. This pulls the tongue closer to the jawbone, opening up the airways to prevent sleep apnea and snoring.
______________________________
It's Fun to Know: About Wii-itis
Who says you can't physically overexert yourself playing video games? A Massachusetts doctor has diagnosed and treated himself (with rest and ibuprofen) for Wii-itis, a condition similar to tennis elbow that results from marathon gaming sessions with the Nintendo Wii. The Wii, unlike most game consoles that allow gamers to remain sedentary, requires players to simulate movements, such as swinging a tennis racket or wielding a fishing pole. The physician believes most cases of Wii-itis go unreported.
(Source: CNN)
______________________________
Word to the Wise: Noblesse Oblige
"Noblesse oblige" (noh-BLES oh-BLEEZH) - literally French for "nobility obliges" - is the benevolent, honorable behavior considered to be the moral obligation of people of high birth or rank. The term is used, sometimes ironically, to insinuate that wealth, power, and prestige bring certain social responsibilities.
Example (as used by Alison Owings in a New York Times movie review of The Waitress): "Waitresses know that 'taking it' includes a string of verbal and nonverbal slights: the 'give me this, give me that' order, the 'you're only a waitress' show-off vocabulary, the 'you are my servant for now' treatment, the noblesse oblige (or no oblige) power regarding a tip..."
Michael Masterson
__________________________________________________
These articles appear courtesy of Early to Rise [Issue #2108, 07-31-07], the Internet's most popular health, wealth, and success e-zine. For a complimentary subscription, visit http://www.earlytorise.com/.
posted by Oak Stone at 5:23 PM
0 Comments:
Post a Comment
<< Home