What exactly are Tax Liens and Tax Deeds? If a homeowner doesn’t pay their taxes, a Tax Lien is placed on the property. The Tax Liens are sold to investors who can earn 5-18% annually in FL and up to 24% in some states. We’ve bought tax liens at 18% without competing against other bidders. If the homeowner doesn’t pay off the taxes within 2 years, they risk losing their property at the Tax Deed auction. At these Tax Deeds auctions the winning bidder gets immediate possession of the property however the title is not yet marketable by title insurance standards. This is there the ‘title rehab’ as I call it begins to get marketable title.
As an Investor, you can buy either the Tax Lien or Deed. Tax Lien auctions are held once a year in Florida (in May). Meanwhile, you can buy the actual properties at the Tax Deed auctions year round. After the sale is over there are more ways you can still turn a profit such as a $40,000 payday two of my students got without having to purchase the property.
I’ve been investing in for more than 10 years. Four times a year, I take about a dozen students to a Tax Deed Auction and then spend two days teaching them all they need to know to be successful at Tax Deeds & Liens. As a CFRI member you have a chance to join us on the 2 Day Tax Deed & Lien Field Trip at a discounted rate.
Back to Marketable title, not only is it important when you are buying tax deeds but it is also essential in all facets of real estate regardless of the way you are purchasing the property. People outside the Tax Deed business might tell you that you cannot get clear or marketable title on a Tax Deed. Truth of the matter is that not only can you get marketable title on a Tax Deed… but there is more than one way to get it!
Black’s Law dictionary defines marketable title as ‘a title that a reasonable buyer would accept because it appears to lack any defect and to cover the entire property that the seller has purported to sell; a title that enable a purchaser to hold property to sell; a title that enables a purchaser to hold property in peace during the period of ownership and to have it accepted by a later purchase who employs the same standards of acceptability.” The same dictionary defines clear title as ‘a title free from any encumbrances, burdens or other limitations.’ An encumbrance is a fancy word for a lien. Although a property can have a lien, like for mortgage or tax lien, that lien will not prevent the transfer of the property. It’s important you learn what the various liens are and how it will affect your title’s marketability.
I am not an attorney and this is a subject you may want to discuss with your title company or attorney howeverI think the most important title is one that is marketable title. Marketable title means title companies will offer title insurance after they have reviewed it. Clear title is not always available because these days many properties have encumbrances such as a homeowner’s association restrictions, condo association restrictions or easements etc. Almost all title policies have exceptions on the policy due to that fact.
Here are 2 of a few ways you can easily get marketable title when you buy a tax deed:
1. One of the methods that is sometimes used is through the previous property owners. You can get clear title to a piece of property you bought at a Tax Deed sale by getting in touch with the previous owners. That’s right those same people who lost the property at the Tax Deed Sale. They may or may not be willing to work with you, but you won’t know unless you contact them. When you do reach these people you’ll have to make it advantageous for them to help you.
That simple move of contacting the previous owners can save you thousands of dollars in legal fees and court costs. Not only will it save you money but it can also greatly reduce the time it takes to get marketable title. I can show you what you need to have those previous owners do to give you the marketable title and what you should say to them.
But hold on, there’s more that you need to know before you reach out to the previous owner(s). Working with the previous owners only works in certain circumstances. What are those circumstances? And can you find out if the property you are interested in is a good candidate for working with the previous owners? Yes, you can know before the auction if that particular property will be a good candidate for working with the previous owners. In the long run, this will save you thousands of dollars.
2. File a Quiet Title suit to get marketable title. The Quiet Title suit is the court’s way of verifying that the County Clerk correctly administered the Tax Deed Sale. During the Quiet Title the court verifies that all property owners and lien holders were properly notified. If all goes well it can take 3 months.
An action to quiet title is a lawsuit brought in a court having jurisdiction over land disputes, in order to establish a party’s title to real property against anyone and everyone, and thus “quiet” any challenges or claims to the title. Black’s Law Dictionary says this legal action is “brought to remove a cloud on the title so that plaintiff may forever be free of claims against the property.
This is one step you do not want to take lightly. You HAVE to pick the right attorney to do a Quiet Title. That means you pick an attorney that has EXPERIENCE doing Quiet Titles.
Quiet Title Suits are one of four methods to get marketable title. Title companies will not insure a property unless it has marketable title. It is very difficult to sell a property if you do not have marketable title.
Quick Tip: First things first you need to start marketing the property if your intentions are not to keep the property. Don’t wait until the title is marketable to start marketing, you have to start your marketing like yesterday. The property can go under contract while the Quiet Title is underway or even before the Quiet Title and just set the closing until after the Quiet Title is complete. If you intend to keep the property you can concentrate on just the Quiet Title.
Let’s say you don’t know any attorneys in your area or you didn’t buy the property anywhere near your region of the state. Using the right attorney is about 80% of getting a Quiet Title completed successfully. 80%, that’s a pretty high number… so you can see how significant this step is to be successful. How do you find a QUALIFIED attorney to do the Quiet Title? The emphasis is on ‘QUALIFIED’.
No matter where you are the answer can be as close as your fingertips… literally. I’ve got your attention now don’t I? I will show you how to find some of the best attorneys out of the newspaper’s legal notices.
On the Queen Of Tax Deed’s 2 Day Tax Deed & Lien Field Trip you will have an opportunity to learn about additional ways to get marketable title during my 2 Day Tax Deeds & Liens Field Trip. Remember when you are buying at the auction, there is no Inspection Period so all of your homework must be done prior to purchase. On the 2 day Field Trip you will learn how to do your Due Diligence, Tips and Tricks; mistakes to avid and more. Best of all once you sign up, you can repeat the field trip anytime you want and as many times as your want for FREE* (you pay approximately $39 for copies and refreshments). You also will receive a 2 manual home study course that contains documents you will need and 7+ hours of audio instructions. Sign up now, this class fills up at 12 people.
Happy New Year! I hope you rang in the new year with optimism, ambition and love. Now is the time to take advantage of the opportunities you may have neglected last year. As a person who buys properties at the tax deed auctions, I am in and out of vacant houses all the time. One issues that I am always asked about is security. How do you maintain your safety when you are in a vacant property? Because the house is empty there may be no one checking on the property to make sure vagrants, squatters or unwanted people stay out.
Is it a good idea to enter a vacant house alone? The answer is NO. I try to make sure I have someone with me at all times when I am looking at vacant properties.
What happens if no one is available to go see the properties with you? If no one can go with me the next best option I chose is to ask a neighbors that you already know. If you are alone nosey neighbors can work to your advantage. They are watching everything that is going on in the neighborhood and often they know more about that house then anyone else on the block. Picking the right neighbor is a judgment call because you don’t want to pick a person who may bring more harm than good. I always say hello and strike up a short conversation with the neighbors to let them I know will be in the house. When all else fails and no one is available I try to check in with a loved one to let them know where I am and the situation, that way they will check on me if they don’t hear back.
There’s also an app for that! Seriously, there is an app for your smartphone that was built for real estate agents but works just as well for real estate investors. AgentArmor is an app that puts mobile security in the palm of your hands. It has settings for showing properties, open houses, listings etc. The app allows you to record a voice memo of where you are, the vehicle description of who you are meeting at the property and even allows you to captures a copy of the driver’s license of who you are showing the property to at that time.
All the data is uploaded to the AgentArmor servers and in case of an emergency it is shared with your office, another contact and law enforcement. The app checks-in with you later and at that time you are asked to enter a pin to let it know you are ok. If everything is not ok, you tap call 911. If you don’t check-in the prescribed time period your emergency contacts are notified via text and email as well as the cops. GPS coordinates are sent so police can respond in case of an emergency.
This isn’t just for women… The app’s youtube video states that 30% of all crimes to realtors are committed against male realtors. You can download the app in the apps store on your smartphone or go to their website or youtube channel for details. It’s available right now in the Google Play and the Apple’s App Store.
Another important safety tip when you are inside of a home with someone you don’t know is to always maintain a direct access to the exit. Don’t let anyone stand between you and a door. If you have to flee the area you want direct access to the exits. Never let anyone stand between you and any exit in a house.
Beware of your surroundings and maintain a confident posture. Keep an eye out for potential danger. Beware of who may be watching you. The bad guys (or girls) see you coming long before you see them. Always make direct eye contact with people. Walk with confidence even if you lack it because people can sense fear. You know that saying, ‘fake it until you make it.’ That applies here too.
I recently bought a keychain called the Munio self defense key chain. It was created by a martial arts instructor. It is a non-lethal and there are no legal restrictions so you can carry it anywhere. The keychain’s innocent and attractive appearance makes it easy to carry. If attacked you can use it a defensive weapon. There are similar products on the market place like the Kuboton.
Wishing you a Safe and Happy New Year! In addition to being the immediate Past President of CFRI, Sandra Edmond is also a Realtor ® and a licensed real estate agent with Matrix International Realty. She has been buying tax deeds & liens full time since 2004, a CFRI Success Team & Lifetime member and is known as the Queen Of Tax Deeds. Visit her at BuyingTaxDeeds.com or ArdnasInc.com for more safety tips and information.
I was just showing someone how to use Google Streetview to see pictures of a house and neighborhood as though you were on the street when I SAW MYSELF and a friend in the streetview trying to break into a house we had just bought at the auction. I always wondered if people saw the vehicles coming… now I know they just creep up on ya! How long do these pictures last? Probably until they go back around to that neighborhood to get a new picture, which could be another year. Here’s something cool. If you click on the link it will take you to the streetview picture. If you zoom into the white truck’s glass you can see the reflection of the Google car as it rode by… it’s a green and white car that says Maps on it. bc they take it from the public street and don’t use the zoom it is completely legal but they could’ve at least tap the horn and given me a heads up so my booty wouldn’t been in shot!
Originally posted to Blog on 2/9/2012
1. Business cards
2. A Pleasant demeanor and self confidence
4. Sneakers or boots
5. Writing instruments
6. Bug/Wasp Spray
8. Contract – Purchase Agreement, Option Agreement
10. Friend (especially if the property maybe vacant)
11. Digital Camera or Camera Phone
A pleasant demeanor goes a long way along with the ability to communicate with a home owner as well as a tenant or vagrant and neighbors. I find this and self-confidence to be one of the best tools to getting the information you need or the outcome you desire.
Your self-confidence goes a long way. If you don’t believe in yourself why should anyone else. People can sense your lack of self-confidence about as well as a dog can sense fear. On that note if you find yourself in fear, its ok, just DON’T SHOW IT. I won’t go into detail here in the newsletter about the techniques but I will warn you that it is not as easy as you think. It’s important that you think ahead about why you are going out to the property and it’s also important that you imagine and prepare for every scenario that can happen. There are a variety of techniques investors implement when using some of the items I’ve listed above, some techniques may not be as obvious as you might think.
Originally posted to Blog on 1/6/2012
Thanks to Entrust Administrative Services of Florida for inviting me to teach their Tax Deed & Tax Lien Webinar using self-directed IRAs.
Originally posted to Blog on 12/28/2009
Charitable Donations – If you are making donations to the Salvation Army, Goodwill or your church make sure you do it before midnight on Dec 31. Most importantly make sure you have a receipt of your generosity since these contributions may be tax deductible. If you are paying by check or credit card be sure to ask if they will be processing the payment before the end of the year. Don’t go overboard, if a single item has a value of over $500 the IRS may require an appraisal. Consult with your Certified Public Account for information.
Flexible Spending Account (FSA) – Use it or lose it! If you haven’t used the money in your FSA, the IRS allows purchases to be made through March 15th to account. Ask your employer for a debit card for your FSA spending. Make sure your plan allows for it.
Mortgage Interest – Are you still looking for another deduction? Make January of 2010’s mortgage payment in December of 2009. Just don’t forget to add the extra month’s worth of interest onto the IRS Form your mortgage company sends you (Form 1098). This will increase your deductions for the 2009 however you won’t be able to deduct the payment from your 2010. You may want to do the same for interest on your student loan payment.
Real Estate Taxes – Same as above for your real estate taxes. Make your January 2010 real estate tax payment in Dec 2009. If you may be hit with the Alternative Minimum Tax (AMT), don’t pay it since taxes are not a deduction under the AMT.
Homebuyer Credits – If you are a new home owner and have never owned a principal residence in the past three years, you may be eligible. You have to purchase the home before May 1, 2010, and close before July 1, 2010. If that is the case, you can qualify for a 10% refundable credit your purchase price. The credit is maxed out at $8,000. Not a new homeowner? You may qualify if you’ve owned your principal residence for at least five years and buy a new principal residence within the time limits stated above. This credit limit is $6,500. The homebuyer credits phase out for single taxpayers with adjusted gross incomes of $125,000 to $145,000 and for joint filers with incomes of $225,000 to $245,000. If you don’t want to wait until 2010 to cash out on one of these credits, you can claim it on an amended 2008 return, even if the purchase was in 2009.
Medical and Miscellaneous Deductions – Health insurance premiums are deductible as long as you didn’t pay them with your flexible spending account. Medical expenses that exceed 7.5% of your adjusted gross income count. Miscellaneous itemized expenses have to exceed 2% of your AGI. If you think you may not hit those minimums then you can pay some of the professionals you do business with, such as your orthodontist or CPA, before 2009 is over for services you will be using in 2010.
Pension or IRA Contributions – This is very important if you are self-employed. Unless you expect tax rates to increase, you may want to pay your tax “tomorrow” rather than today. If you’re contributing to a retirement plan such as a 401k or a 403b, you can put in $16,500 this year and the same amount in 2010. If you’re 50 or older, you can put in an additional $5,500 as a catch-up contribution.
Cash Gifts – If you will ever be subject to the estate tax, then you should make your 13,000 tax-free gift before the stroke of midnight.
Capital Gains & Losses – If you have capital gains, remember that any net capital losses over the $3,000 allowed on your 2008 tax return should be carried forward to offset those 2009 gains. If you still have net losses, up to $3,000 may be used to offset ordinary income for 2010. If you have net capital gains in your stocks or real estate investments, sell enough of the losers to offset the gains. If you have more losers, sell at least enough to get the $3,000 offset against ordinary income.
Go Green – Buy energy efficient improvements to your home and qualify for a credit of 30% of the cost with a maximum limit of $1,500. This can be for items like more insulation, installing energy-efficient windows, heating and Ac systems also qualify.
The IRS has some more information on deductions at their website.
Originally posted to Blog on 12/28/2009
I had to make a u-turn when I saw this billboard. If you haven’t seen what the banks do with your money then offer you, take a look. This will you can bankrupt a billionaire and in a short time s/he will make that money back. It’s what you know and what you do with that knowledge that matters. This will be a real eye opener for some of you.
Get this free eBook to learn more.
Originally posted to Blog on 8/27/2009
This is the other side of that ugly coin that has ‘Paralyses of Analysis’ on the opposite end. I don’t know which is worse; In the long run you loose money with both. As much as I ‘preach’ to investors to make sure you know what you are bidding on, I still come across people who jump in head first and bid on a piece of property without doing their homework. One of them attended my class and this person was so excited about doing a deal that this investor neglected to do the proper tax deed due diligence and is now banned from bidding in 2 counties for not paying for the properties won at the auction. When you don’t pay for your property after winning the bid most counties will bad you from bidding on future sales. This investor was lucky and was only temporarily banned but this resulted in forfeiting $400 worth of auction deposits. This is the same person who tried to buy tax deeds without the home study course. I just haven’t had the heart to tell this investor, the home study course would have cost less than the $400 lost in auction deposits not to mention saved the investor the humiliation and anxiety those deals caused.
Originally published in Blog on 6/26/2009