Recently did my first tax lien assignment. I "assigned" or sold
one of my tax lien certificates to another investor. This was a tax lien
that I though I was going to lose money on. Why was I especially the
investors that see repeatedly at tax sales and have more experience than
I doworried about losing money on this tax lien? Let's just say that I
purchased this tax lien certificate early in my tax lien investing
career and did not do the proper due diligence. I had made three
critical mistakes when I purchased this lien and afterward. My first
error was in purchasing a tax lien certificate on a property that I did
not look at myself. I relied on the word of another tax lien investor,
someone who was bidding for a large company and is actually my
competition. My second mistake, since this was a vacant lot, was not
checking the zoning. The lot turned out to be undersized thus
unbuildable. My third mistake was in paying the subsequent taxes for
almost 2 years before I checked the zoning.
By the time I had
realized my errors, the redemption period was almost over and it was
time to foreclose on the property. I did not want to start foreclosure
because I didn't think that there was anything I could do with the
property, and did not know if I would be able to sell it. I tried to
sell this lien to other investors packaged with a couple of good liens,
but no one was interested. So how did I find a buyer for this tax lien
and make over 40% on my investment?
When I attend tax sales I like
to meet other investors and get to know them, . I happened to find out
that one of the investors who I often saw at these sales used to be a
builder and he specialized in undersized lots. He knew how to apply and
obtain variances on undersized building lots. I told him about the lien
that I was looking to assign. I sent him all of the information about my
tax lien certificate with a report of what I had paid in subsequent
taxes and what the lien would redeem for. He took a look at the lot and
determined that it was a good lot that he could do something with. He
paid me the redemption amount of the lien and I assigned my tax lien
certificate over to him. I gave him the certificate and signed an
assignment contract. Since the tax lien certificate and subsequent taxes
paid were at 18% per annum interest, and I had held the lien for more
than two years, I received over 40% profit on my investment. I was happy
to sell him the lien and get the interest and he was happy to have a
tax lien certificate that was ready to foreclose on a property that he
thought he would eventually be able to get a variance on and build on.
If
you have tax lien certificates that are ready to foreclose, and you
don't want to go through the trouble of foreclosing on them, you may
want to consider assigning them to another investor. Tax liens are hot
right now; there is a lot of interest in them and it is usually easy to
find a buyer for your lien. Not all states allow the assignment of a tax
lien from one investor to another, however, so check with the laws in
your state first. Assigning your tax lien certificates to another
investor is one way that you can reap the rewards of tax lien investing
without ever having to foreclose on a lien or own and manage the
property. As always, make sure to do your due diligence and you'll have
no problem finding a buyer for your tax lien.
Joanne Musa is a Tax Lien Investing Coach and Consultant who
works with investors who want to learn how to buy profitable tax lien
certificates and tax deeds. She is the president of Tax Lien Consulting
LLC, a consulting firm for tax lien and tax deed investors and the
creator of Tax Lien Investing Secrets II: The Complete Course to
Investing In Tax Lien Certificates and Tax Deeds available at www.taxlienlady.com
Article Source:
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