John Lane Review

Trying to Profit from Tax Sales
The Wrong Way?

By Rick Dawson

've been a tax sale property investor for over 10 years and tax sales have really been a great investing area for me. I constantly get requests to comment on John Lane and taxsalelists.com.

The lists on his site are a very useful resource to anyone involved in tax sale investing, and are kept up-to-date. The site even shows past sale dates. Getting a free account on his site is simply the best way to keep up on the sales that are occuring throughout the country. I use it all the time.

If you want to learn the "in's and out's" of tax lien and tax deed investing, John Lane also has a 15-hour workshop that is done online, which I believe costs around $1000-$1500 or so.

This webinar will teach you everything you could possibly want to know about buying tax liens and tax deeds at tax sales.

The most exciting thing about John's webinar is the display of properties he shows which his students have purchased for less than $1000, free and clear and resold for huge profits.

Are You 'Qualified' To Profit from Tax Sales?

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

Before you register for John's program, why not learn a little inside information about tax sales and decide what you want to accomplish with tax sales. You might be surprised that investing at a tax lien or deed sale will not give you the results you're looking for.

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. Mostly free and clear anyway, we'll talk about that a little more in a minute.

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 buying 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 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 quality lien 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 probably get paid off.

To have any chance of getting a property through a tax lien you probably need to buy at least a dozen.

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 recommend John's course - it will be a great education.

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 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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