Hello, everyone and welcome to a new video, my name's sean and today we're doing something just a little bit different. The tax lien sale is this week for two counties that i live by maricopa and pinal, and while i was browsing tax, liens and purchasing some, i figured. What am i doing. This is a great video idea to share with everyone else.

So if you're interested in tax, liens or you've always wanted to get started in purchasing tax liens, then let's do it. There's tons of videos on youtube talking about pros and cons of buying tax, liens and things you might want to watch out for and some super successful people saying they made billions of dollars on it. But no one really walks you through how to specifically do it. When i was interested in purchasing tax liens, i had no idea what i was doing because, like almost anything in the financial world, it is so dang archaic.

I spent hours and hours reading county websites, reading rules and regulations figuring out how the heck do. I actually purchase a tax lien. I knew what a tax lien was. I knew that i wanted to buy one, but i didn't know how to actually purchase one.

So that's why today, i'm gon na show you firsthand me actually purchasing live tax liens, so you could do so as well. Okay, so, first i want to talk about what a tax lien is and check out. My uh super sweet white board. Definitely not just a sheet back here.

Definitely not it's a brand new whiteboard check out this floating money. This is gon na feel. Like i'm giving a school presentation, it's going to be fun here we go, but anyway, a tax lien is basically when a homeowner doesn't pay their property taxes. Now, instead of the government constantly pestering them and saying hey, you didn't pay your taxes.

You didn't pay your taxes; instead, they want their money asap. So what they do is they actually auction off the tax lien? They do not auction off the house, yet they auction off the tax, lien or the money that is owed to the government right. So when a homeowner owes that money, investors like myself can go ahead and buy that tax lien and that's what the tax lien auction is because you are buying this lien at a specific interest rate. Now, let's do a real world example: okay, let's say your neighbor bob.

He owns this house right here. Your neighbor bob basically didn't pay his taxes. Now you can buy his tax lien at the auction and say: hey bob. I'm gon na pay your property taxes.

For you, and instead you're gon na, owe me that money at the specified rate at which you buy that lien for now this is usually when people ask the question well sean. Why would you want to buy the tax lien on the property instead of the actual property itself? Well, the good thing is one you're gon na get it at a very high interest rate, so it's a very safe way to hold money and i'll get into that. In a little bit, but secondly, when this home is sold by bob and bob's like i no longer want to live here or maybe even if he wants to refinance that home. All of the liens on the property have to be paid out prior to bob cashing.

In on the equity that he has earned in his house, so that's when you get paid on your tax, lien, typically anywho. Let's put some numbers behind this. Let's say you bid on bob's tax lien and you say you get it at the max rate, which is 16 okay, you get his tax lien for 16 and, let's say his taxes that year were a thousand dollars, so you pay a thousand dollars to pay his Lien for him and then you're, basically telling bob hey bob. When you go to pay your taxes, i won your your tax lien at a 16 interest rate.

That means that when you pay me you're, not just paying me the thousand dollars that it cost me to buy your lien you're, paying me a thousand one hundred and sixty dollars, because that's sixteen percent of a thousand dollars super easy money from investors, because a sixteen Percent interest rate on your money or a rate of return is really really good, and this is also why tax lien investors or owners of tax liens are typically very old people, because a 16 rate of return is insanely good. Not always does the s p 500. Push 20 percent a year in returns, that's very not normal and in economic downturns, a 16 rate of return on your money is incredibly good all right, but not only that. Okay, let's go back to the scenario that i mentioned earlier.

Not only do you get a great return on your money, but there's actually a potential of actually owning bob's home. If you consecutively pay for his tax liens, let's say he didn't pay him one year, so you bought him the next year. He didn't pay him again. You bought him again in the third year.

You bought him for a third time, that is when the property potentially will go to the property deed sale, which is not a taxing sale. It's a detail: it's a totally different video in and of itself, but it goes to the deed sale where then, investors can now purchase the deed of the home because of the outstanding tax lien or whatever ended up happening with the property? Well, since you are the one to own that tax lien for three years in a row, you get first priority on if you want to foreclose and actually take over bob's property. So not only is it a great way to hold money, but it's a great way to actually acquire real estate for very, very cheap now. On top of that, i do want to mention that this all sounds phenomenal and everyone's like.

Oh, i want to go jump in and buy tax liens. Well. The problem you'll run into a lot is that the properties that you're getting these tax liens on look like this they're they're, not super well, awesome, modern and super cool properties that people didn't pay, attacks on, typically they're run down buildings or homes, or even a lot Of times it's just vacant land that either property owners forgot to pay the taxes on, because the property is not worth the whole lot or they don't really have the money to and if they don't have the money to pay their property taxes. They probably don't.

Have the money to maintain the property itself, so you have to be careful when bidding on tax liens to not get an absolute junker of a property, because the worst thing you want happening is you basically buying a tax, lien and then being stuck with it yourself? If it's a property that requires way more work than what it's worth and now you're stuck paying that tax lien every year after that, when you might not even want the property yourself and to put even more kind of, i guess, stressfulness, possibly on top of the Pot here is the fact that there's actually a fee to buy a tax lien. So what most rookie tax lien investors will do is they'll go. Oh, i'm going to go, get signed up and i'm going to join the auction and i got a thousand dollars. I want to just drop in and have some fun with, so they start buying all these super cheap tax liens.

You know fifty dollar tax, lien hundred dollar tax lien, seventy five dollar tax and they end up buying all these little tax tax liens, but they don't realize that there's typically a fee associated with now in the counties that i bid in maricopa in canal. It's a ten dollar fee. I have a ten dollar transaction fee on every tax. Lien that i buy.

That's gon na become very problematic, which i'll show you in a second, but all of those kind of tax liens that you're buying can add up a ton, because the fee itself is almost worth a ton of money in comparison to the tax lien and, if you're, Having to continually buy that tax lien every year, you're continually being hit with a fee - and i know a 10 fee sounds like nothing when you're buying a tax lien, that's very expensive, but that's the key. Is you don't want to just buy a ton of tax liens just to buy a ton of tax liens, because it's cheap to hold your money? You have to be wary of the fees that are involved in your specific county and not to mention there might even be bank wire fees that you have if you're going to be wiring money for the county. Now let me drive that point further, though. Now i've done the math.

I have a very detailed expo excel spreadsheet that i follow to the t when i do my investing strategies totally up to you on. If you want to follow this or not, but this is one thing i learned very quickly when i was putting in bids on tax liens is the fact that there's minimum break even points based on the fee that you're buying this lien for and not only based On the fee, but the interest rate at which you bid on these tax liens, it's calculated over the year, not right away. So, for example, if i were to buy bob's thousand dollar tax lien and he's gon na owe me 160 if he paid off. For that he's, only gon na owe me see if he pays off that tax lien at the very end of the year on day 365, because the interest rate is calculated over time over that year.

So it's 16 on the year, but if they pay it off right away, well, now you're not going to make that full 16. So i've done the math on it all. I built a very basic bar chart for you to kind of see here. These are the minimum amounts of the tax lien that you need to be buying with a 10 county fee.

Now it could be different if you have a different county fee in your area, but a 10 county fee. These are the minimums that you need to be buying this tax lien at so, for example, if you were to buy a 250 tax lien all the way at the end of this year, a 250 tax lien at a 4 interest rate after a full year. If someone were to pay that tax lien off on day 365, which is super rare, but if someone were to pay it off at the very end, you would literally just break even you would not be making money now. Investors don't want to be breaking even we want to be making money right, we're tying up a lot of our cash to hopefully make more and if we're not making more.

What's the point right, if you're bidding on a four percent in trade, you need to make sure your tax lien is at the very least 250 or more, and i'm going to show you a different chart in a sec that i actually follow. This is just literally breaking even on a full year, but then, on the other end of the spectrum, you know, if you're, only taking 16 bids, which a lot of times is where i fall. I fall anywhere between 12 and 16 because i know i'm going to get a great return out of that and i'll explain why a little bit. But if you're going at a 16 return, then you can bid as low as a 63 tax, lien um to still break even after a full year.

Now again, that's after a full year. I don't know about you, but it's i don't want to have that very bottom margin line on basically, okay, i'm gon na break, even if that literally goes for a full year. The odds of it going for a full year are pretty rare. So here's a different chart that is based on if someone were to pay off that tax lien after one single month now this is if bob goes.

Oh crud. I didn't know that my taxes that i didn't pay my taxes now i got a notice saying that some investor bought my tax lien whatever, and i need to pay off this tax lien well if they paid off right away because they have the money and they Just weren't, you know they didn't remember, to pay their taxes, then they're gon na pay it off right away and here's the numbers you need to be looking at if someone were to pay that off right away. So, if you're bidding again at the four percentage trade all the way over here, if you're betting, if you're bidding at a four percent in straight, you need to make sure that the the tax lien you're buying is worth more than 3 000. Because if it's worth more than 3 000, then that means that you'll be actually profiting money, even if that person pays off their tax lien immediately.

Now again, i stay on this side of the spectrum, the the 12 to 16 range. Now i can go much lower. I can bid on a 750 tax lien and still be super safe if someone pays it off in the first month now again, the odds of someone paying off in the first month is also very rare. Most people are going to fall in between the one month and 12 months or maybe just going to let it go for years and years and years until you finally collect on it in in multiple years after that, so those are some numbers you really want to Take into account when you're actually looking at bidding on tax liens, because a lot of people when they start learning about a new investment strategy, they want to start very cheap and go i'll dedicate 500 i'll dedicate a thousand dollars.

Well, if you're going for the crumbs you're, not really going to be making a whole lot and this data kind of explains - why but, okay you're here to learn how you can actually get started, investing in tax liens yourself, so i'm going to actually show you firsthand In just a little bit me actually inside of the auction like bidding on actual real live tax liens, but the first thing you want to do is you want to actually just search around your specific county's guidelines for investing in tax liens? This is a snippet of the website for maricopa, which is a big county in arizona, and it literally outlines here is the tax, lien sale details and it gives you it per year. So it's basically going to say here's when the auction starts, because it's only open for typically one to two weeks out of the entire year, you'll literally have one or two weeks to actually buy tax. Liens i'll, tell you the dates. It'll tell you when you can actually register, for it.

It'll also give you the details on any fees that are there, maybe what kind of batches or what kind of tax liens will be available. So you really want to get your specific county's treasurer's website pulled up and actually read through their tax sale details because you'll get a lot of information. It's going to vary depending on the county. So that's step one and then step two is actually getting your account set up and approved to actually start bidding on tax liens.

Now i would say most counties, like probably 75 percent of counties in the entire united states, follow and use the same software. That looks just like this. I mean this. Is the software i'll be showing you today? I say software, it's just a website.

It's an auction site, it's very basic, very rudimentary, and that's what most counties actually use getting familiar with this website or this auction platform. Um you're going to be a lot more successful and that's what i'm going to be showing you as we work through some of that today, so learn about it and then get set up on here. You can only get registered during certain times of the year. So again you have to read your county's website to kind of learn those details all right, let's get in and actually buy some taxes.

Now again, a lot of the tax lien counties are going to be looking very similar to what i have here. There's a login in the top left, which you can't see because my face is covering it with my boy and then this is ultimately what you're going to be seeing once your account is approved and you've submitted your deposit. You have to submit about a ten percent deposit of what you think you're going to be bidding on um. As you can see, i just put in a thousand dollar deposit, which means i shouldn't be bidding on more than ten thousand dollars worth of tax liens.

On this sale, you can also see that you know i haven't bid on anything yet so we're going to be kind of looking at everything. You've got some helpful things on the bottom. Like you can bulk, you can bid in bulk. You could download a csv to basically just analyze all the data of all the tax liens.

If you'd like the easiest way, i do it because i'm not basically putting a ton of my portfolio into taxis. I just like to buy a couple every every year. What i'll do is i'll actually just come on over into um? You know to go and place bids and i'll sort within the actual platform itself, instead of actually downloading a csv and then going from there. But these are the different batches that you can buy.

Typically batches from what i've seen at least in my counties are that the batches are kind of sorted by location, so, for example, in the phoenix area it would be like south phoenix west phoenix north phoenix east phoenix mesa. Chandler gilbert, like it groups together a lot of the areas that are close in similar proximity. I don't bid on super high end and very very expensive tax lien, so i'm just going to kind of go down to four five or six and see which areas. Those are in and see if those are the areas that i like um, you can also see the amount of tax liens available in each right here looks like this.

One has the most at 800. Oh this one actually 871 and again it's just kind of location based, so i'm going to go probably to six. I've got a lot of tax liens in here and then once i'm in here, it'll give me the full list now. What i do from here is i'll sort by the amount of the tax lien, because i don't really care too much about location.

These are all going to be very similar in location to them, so you can actually pull it up, and this is the strategy i do. I literally just look it up on google maps and i go over to you, know satellite and i see what it is. So this is vacant land, which is what a lot of these tax liens are going to be in the county that i'm bidding in because pinal county, as you can kind of see from this map, is lots of land. This is just lots of land.

This isn't really the phoenix area the phoenix area is here. This is maricopa if you're not familiar with arizona and that's where a lot of the actual homes are going to be. Pinal county is going to be like this circle around here, which is a lot of vacant land. So that's one thing you always want to check on, but i care more about the um, the cost at which they are so like, but the last graph that i showed you.

So what i'll do is i'll, just sort by cost, and i always like looking at some of the super expensive ones just to see what they are. Pinal county is a bad example, but, for example, maricopa county has all of the big high-rises in phoenix that you can actually look up and see who owns a building and who hasn't paid their taxes. And i mean we're talking like massive buildings like where you see sky sky high, like towers and everything out of them, so it's kind of cool because the tax liens are like. I don't know three hundred thousand dollars a year, but um yeah we're not focusing too much so this is going to be again my range i want to stick in the 12 to 12 to 16 um interest rate bidding range and i'll actually bid a lot of Mine at 15, because if you bid the same rate as someone else, what ends up happening is it's just a luck of the draw and you kind of just see.

Okay, if we both bid, you know 16, i got a 50 chance of actually winning that bid, and you know if you do, that by a thousand people and all bidding at sixteen percent the odds of you getting. It are pretty rare. So again, i'll kind of stick around this 1800 to probably the bottom of this page yeah to about 893. These are going to be like the only ones i want to be bidding on, and so what i'll do is i'll, just open them up and see what they are now you also want to see if they have an outstanding or prior tax lien.

That means you won't be in first lien position because someone else already owns that tax lien you'd be in the subsequent lien, so i don't bid on any of those either. So i'm just going to look at the ones that aren't i'm going to open them up. I'm just going to start with three here because they can kind of get confusing. If you don't, if you open up a bunch at once, and you don't know which one goes to what you can also look up by the parcel id i'll show you what that looks like at least in my county right now in case, you wanted to do Any research on who owns the property - this is looks like it is a an actual person who owns a property a lot of times these.

These properties that don't get paid their tax liens for they'll, actually be owned by businesses that just forget to pay them. So yeah so we'll look at some of these properties here this looks like a house. This is a prime example of something i'd want to bid on. It looks like a great house now.

Obviously, the best way to do tax, lien investing is to actually go to the home, because this is only as of uh, hopefully not april 2011.. I actually don't know what the dates are that we're going to be looking at image captures. It says april 2011, which seems super dated, usually google's a lot more recent than that, but this is kind of out of the way, so the best way is actually go to the properties, because i'm bidding on such low amounts. I don't have time to go to all these properties.

Now i've actually done loans in a lot of these areas, so i actually know a lot of these neighborhoods and know a lot about the area. It helps that i do mortgages in them. So, even though this might not be super updated, i actually know a lot about the area so like this is a prime example of something i definitely want to be buying a tax lien on great looking house. I know the hoa in the area is not super high, the odds of them having an hoa tax lien on it's probably pretty low, and if it is something i could afford to buy it out if needed.

But this is great. It's on a lake uh super cool. You actually can't do much in that lake, but you can do some fishing, so that's cool. Let's check out this one again, i'm only looking at some tax liens that i actually want to eventually be owning the property on, because i don't want to be stuck with a junker that i don't even want to make the payments on now.

This is something that's unique. This is a commercial building which you will see a lot of commercial buildings for these tax liens commercial buildings are, could be gold mines, but could also be absolute nightmares. This is something that i probably don't really want. It could be a little bit of a junker uh, you don't know for sure it's it's again.

All of these are going to be kind of in the middle of nowhere, but this looks like this property is probably incredibly run down. If i were to drive by it, it probably would look a lot worse than what it looks like now, so this one probably not going to be bidding on, but the first two i definitely do and because of that, i'm going to put in 15 percent. For my bid here and then there's a little button off right off to the side, you can't see because of the crop on the video, but it just says bid and so i'll bid. And now you can see that i'm holding a fifteen percent interest rate bid at eighteen hundred dollars, which is a little bit on the high end for this county.

I should say, and then i'll basically just do, that i'll just continually go through this list and i'll just open up a bunch of them and um. You know pretty much just look through them all and go okay. Is this something that i would eventually want to own? If it is great, i want to buy the lien on it now. This is something that is super in the boondocks.

Oh, my goodness um i mean this is very very very in the boondocks over here, and a lot of these do come on like a ton of property. So it is cool that if you do get something you get a lot of property with it. But this is probably not something i want um. It looks like it could be very run down.

I mean this. This isn't even near um. This isn't even near like civilization. It feels like so uh you're, really you're, really running a risk on these ones.

Uh. This map is showing imagery as of 2022, so at least it does have a roof on it. I wish we could see some google street view, but don't know for sure on that one, here's another one, really good neighborhood that i know pretty well, so i probably want to be bidding on this. If the property looked decent, this one again was updated april 2021.

Overall, though, not bad, i would say that's one i do want to bid on and then this one right here right off of the major freeway. I love properties right off a major freeway in developing cities, because that's really where things will get expensive over time, because you got to remember that tax liens are something that you buy and you don't ever see a return on for years and years and years. So you have to be comfortable, you know kind of hanging out and waiting, but this one is kind of a junker. I don't know if i would buy this.

This is probably like. If i do it'd be at a 16 rate - and i probably don't want - i mean that just looks like a nightmare and this could be a very old photo. So that's definitely one that i'm not i'm going to pass on this time. I'm not going to be buying, and then this guy right here actually will probably be a pretty good one.

You always want to be near a good neighborhood, or else you're really running the risk without seeing it this one's not bad. Probably a 16 percenter again i'll range. If i really want a tax, lien, really bad i'll, go as low as 12 percent. If i don't really want it that bad, i usually stick at about 16, but after you basically bid on all the ones that you want to bid on then you're good and you basically can just sit back.

Relax wait for the auction to actually end once it ends. Then you'll get an email from the county, saying: hey here's, the ones you won and hopefully you did win some and then they'll actually you'll have to actually pay for those liens in full. If your deposit didn't cover it and then you're pretty much good, and now you are a tax lien owner, but anywho. That's how you purchase tax liens, it's incredibly easy once you get all set up and you've.

Actually you know dive in and actually start doing it. But i will recommend that you do want to track every single tax lien that you purchase outside of the county websites, maybe on an excel sheet, or something like that, because if the tax lien does come up and it's not paid off next year - and you want To buy it again, you want to be able to reference that property and realize oh yeah. This is a property i want to keep buying. Eventually i want to own this property or no, maybe i don't i'll just let this one go.

You definitely want to be organized and track all of your tax liens, especially as you start adding tens 20s hundreds, thousands of them, i'm not quite at the thousands or even like the hundreds level yet, but one day anyway, before this turns into like a 45 minute. Video, i hope you enjoyed it. That was the purpose of it. I hope you learned something new if you did please hit that like button, please subscribe for more content like this i'd also like to know, if you think buying tax liens is worth it or not.

Reach out to me on social media or drop me a comment down below. Otherwise i will see you in the next video me.