John Beck Review

Are You About to Make a Mistake by Using the John Beck "Free and Clear System"?

By Rick Dawson

I constantly get requests to comment on John Beck and his TV informercial.

It's easy to grasp the concept of getting tax sale properties for pennies on the dollar. You show up and pay the back taxes of a few hundred dollars on a property, and you're the new owner, right?

Not really.

Though purchases like you see on TV do happen occasionally, they're quite rare - and there is a lot more to getting them, than paying some back taxes and walking out with a deed.

How did Mr. Beck get so many examples on TV? He fabricated many of them. He was exposed on "Inside Edition" on 4/28/2009 as having misstated the amount that was paid for many of the properties.

Even more misleading, many of the property pictures he displays on TV were taken after the properties were rehabbed at a cost of up to $100,000. At least one of the deals he shows was a property that was sold due a clerical error, and never actually deeded to an investor.

Yet, tax sales have led to some of the most profitable deals I have ever gotten - without using a lot of cash. This is because I learned a "loophole" a few years back after unsuccessfully trying to get tax sale properties for 2 years.

Are You 'Qualified' To Profit from Tax Sales?

It's true that tax sales can result in the best bargains out there in real estate investing. But you absolutely need large cash reserves to profit directly from tax deeds or tax liens. And I'll tell you why.

Let's go over a little basic tax sale information so this makes sense.

Tax Deeds Vs. Tax Liens

The first thing you need to know about investing at your chosen tax sale is whether the government is offering a tax deed or a tax lien when you buy at the auction.

If the county is offering a tax deed, the process is usually pretty straightforward. A list will come out showing the properties that will be offered and you can bid on the property against others at the sale.

As the successful bidder, you will pay all cash and then own the property free and clear.

Can you see the problem with trying to get a bargain property at a tax deed sale?

Auction fever.

Properties are usually bid to 50%-100% of value. If you have the cash for this, you could attend sales and wait for those bargain properties to pop up once in a while.

The overwhelming majority of bargain purchases are make through tax lien purchases. But tax lien investing presents its own set of unique problems.

At a tax lien sale, you will receive only a lien against the property, not the property itself. You will have to give the owner a certain period of time, which varies by state from 6 months to 4 years, to pay the lien off.

If the owner does not pay the lien off in this time period, you may then be eligible to apply for a tax deed to the property. In some states the owner can pay the lien off right until you get your tax deed.

You will have a much better chance buying a bargain tax lien that can lead to an eventual property deed. The problem is, if you've purchased a lien on a quality property inexpensively, will get paid off 99% of the time!

Garbage Properties

So, if you go to a tax deed auction, you will probably not get a bargain property with all the others bidding against you at the auction, and you'll need all cash. If you buy a cheap tax lien, you will have to wait many months or even years, and will probably get paid off.

To have any chance of getting a property from a tax lien you probably need to buy at least a dozen. This almost always means investing 5 figures at a sale and waiting years.

What other obstacles will you face? Well, my county recently put out a list of 10,000 properties to be offered at their tax lien auction, and only about 1,200 sold. That tells you that the other 9,000+ properties were not even worth the amount of taxes owed on them!

You will have to attempt to eliminate worthless properties from the list that comes out, and personally inspect the rest (from the outside only!)

Then you'll have your "short list" of properties you want to bid on, and you'll have to determine the maximum you're willing to pay for each.

Once you get to the sale, you will be outbid by large instituional investors on many of them, and other liens you wanted will have been removed from the sale.

Once You've Purchased a Few Liens

After all this work, maybe you've purchased a few cheap tax liens against good property. Now you will usually need to hire a lawyer to do a title report and give notice to each party that has an interest in the property.

If the owner doesn't pay you off, congratulations! You may now apply for a deed to the property.

Just be forewarned, your deed is probably not exactly "free and clear"! The IRS may still have certain rights in the property, and in most areas you will have to do a "quiet title action" in order to be able to sell the property with title insurance.

This quiet title action gives all interested parties one more chance to challenge your tax deed. These parties can and do come forward and reverse tax sale deeds all the time.

Who is the Tax Sale Right For, Then?

Quite simply, buying at tax sale is right for only 2 types of investors:

1. Those with a lot of cash who want to earn good return on their money, and get a property occasionally through a tax lien. These investors are not concerned about tying up their cash for long periods of time.

2. Those with a lot of cash who are willing to research many properties going to tax deed sale, and wait for the occasional bargain to come along. And willing to take the risk that the interior condition of improved properties will not be disasterous.

If you meet either of these criteria, I think investing in tax liens or deeds could be a great area for you. You might want to consider taking the online workshop from taxsalelists.com - it's excellent.

For those of you who want to make money from tax sale property, not necessarily invest a lot of money of your own, read on.

Profit Because Of the Tax Sale, Not At the Tax Sale

I don't care if you have lots of cash or not - why tie it up in today's market if you don't have to? And deal with all the typical tax sale issues?

Plus, if you're like me, you want tax sale properties that you can resell or rent out NOW, not later.

Want to learn the realities of tax sale investing? I'll show you in my free report:

"Why Government Tax Sales Probably Aren't For You"

Then learn to profit from tax sales using the "loophole" I discovered after unsuccessfully investing in tax liens and deeds for 2 years.

When you get your report, you'll also receive my 5-day email mini-course: "Go Ahead - Be a DeedGrabber"

It's free - Just enter your name and email address below.

What Other DeedGrabbers are Saying:

"Thanks for your unusual and good information.

My name is John Vos and I came to the USA in September 2008 from Europe.

Real estate is the only opportunity for me to make a living, but your "DEEDGRABBING" system tops them all and I have researched some.

I only just started sending out letters and already have two deeds for only $200 each and more in the process.

Regards, Dr. John M. Vos

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