1

DISCLAIMER
This publication is meant to provide authoritative and accurate
information with regard to the subject matter covered. It is
presented with the understanding that neither the publisher,
author and or staff are engaged in rendering accounting, legal,
and financial or other professional services. If legal advise or
other expert assistance is needed, the services of a competent
professional person should be secured.

ALL RIGHTS ARE RESERVED

The Mailbox Millionaire Copyright  2001 by Steven e. Waters,
Tax Lien University, Inc. Published 2001. All rights reserved.
Printed in the United States of America. No part of this book may
be used or reproduced in any manner whatsoever without the
expressed written permission of the author.

Attention Schools and Universities:

This content may be purchased at a discount in bulk with the

expressed permission by the author. For more information write:

Steven e. Waters
Tax Lien University
1329 South 1145 West Orem, Utah. 84058

Published and Printed in the United States of America.

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 Secret Strategies of
PURCHASING TAX LIENS & DEEDS
Through Assignment & by Mail

I have divided this book into three sections! In section one you

will learn the basic concepts and laws relating to tax liens and

deeds. A thorough understanding of these laws and concepts will

help you in your investment process.

In section two we talk about the practical step-by-step system

that you can follow to purchase tax liens and deeds. I have also

included a few letters that you can mail to county workers to

obtain the right information that you need to invest in tax liens

and deeds by mail.

In section three I have included a few examples of the kind of

information you may get as a result of your inquiry.

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Imagine having Government issued checks mailed to you from counties all
over the United States. Imagine purchasing million dollar homes for pennies
on the dollar. Imagine retiring 10-20 years earlier than everyone else. If you
can imagine these things than you can obtain them with Government
issued Tax Liens and Deeds.

I’m so excited to be sharing this information with you. I know that if you
follow the strategies, systems and techniques in this book you will
successfully obtain high Returns and/or properties for pennies on the
dollar!

Before we get started I would like to give a brief “Birds-Eye” overview of the
contents of this book.

In section one I want to reveal a few important principles and concepts that
are vital to the investors success. With this foundation we will then move
forward to section two where I share my super simple 12 STEP SYSTEM to
obtaining SUPER HIGH RETURNS and/or PROPERTIES FOR PENNIES
ON THE DOLLAR.

In section three we will discuss the Hidden dangers of Tax Defaulted Parcels.

This is where we will discuss how to avoid or greatly minimize the risks

associated with investing in Tax Liens and Deeds.

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SECTION ONE: “FORTUNES IN TAX DEFAULTED PROPERTIES”

“The greatest creator of wealth known to mankind is

compounding interest.”
by Albert Einstein

WHAT IS A LIEN

Before you begin investing in Tax Liens and Deeds, I want you to

understand the basic laws and concepts related to tax defaulted

properties. A proper understanding of these principles and their

relation to Tax Liens and Deeds are key to the investors’ success.

With this foundation you will then be able to use my practical 12-

step investment system.

Simply put, a Lien is a charge or even a claim that attaches to

someone’s property to legally enforce the payment of money.

Whenever you or I borrow money the lender requires some form

of security.

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Security is something of value that the borrower will have to

give the lender/lien holder if full and timely payment isn’t made.

This collateral makes the lender feel safe in loaning the

borrowers a large sum of money.

Liens are not limited to security for loans (such as a mortgage.)

A lien may be attached to a property owners’ real estate by a

local taxing district in the event that a property owner fails to pay

their property tax (called a Tax Lien).

A lien is a legal action that allows an individual or agency to

compel payment for service’s rendered or work performed. For

example: let’s say that you hired Mr. Carpenter to renovate your

kitchen. Mr. Carpenter takes a few weeks to finish the job and

issues you a bill. You are astonished at the prices he has charged

for the services rendered. You simply cannot pay the bill.

Mr. Carpenter may attach a MECHANICS LIEN to your property

to compel payment. When you try to sell your home the title

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company will strongly suggest that it be cleared before a new

owner can take possession of your property. Likewise a lender

would not offer financing to a purchaser of a home that is

encumbered with a lien senior to the loan. If the lender did

he/she would stand in a position to lose their security (the home)

if the senior lien-holder was to foreclose.

From a lenders point of view the mechanics lien stands in a

position to wipe out the lenders interests. Likewise, getting title

insurance on a lien-encumbered property is near impossible.

Equity is the difference between a Property’s Market Value and

it’s debt. Liens represent debt. New owners do not want to take

ownership of a property that will have liens on it. Why? Liens are

like leaches that suck the equity from it.

In all of the ways mentioned above, a person, agency or

corporation can use another person’s property to compel
payment for work performed, services rendered or debts accrued
by attaching a lien.

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THE EFFECTS OF LIENS TO A TITLE

Having a lien does not prevent you from passing title or

ownership of your property onto someone else. However, you,

the owner, might find it difficult to sell your property. Why? Very

few buyers will take on the risk of an encumbered property. It is

also important to remember that the lien attaches to the property

and not to the owner.

Let me explain with a short story, we will use our friendly Mr.

Carpenter again.

Remember he has attached a mechanics lien to your property to

compel payment. When you sell or convey title to a new owner

they stand in a position to lose the property.

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If Mr. Carpenter takes action to legally enforce payment, the new

owner may need to come up with a lot of money to pay off the

lien. Most people don’t have a lot of money sitting around so they

are then forced to sell the property.

When a lien is properly established, it sticks to the property like a

leach and will restrict all successive owners until the lien is

cleared through the payment of services rendered or charges

accrued.

THE PRIORITY OF LIENS

Priority of liens means the order in which debts will be paid off.

Basically, the priority of Liens is “FIRST COME, FIRST SERVED”.

The priority of a Lien is established by the date in which it was

recorded at the local county recorders office.

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For example, under Arizona law:

“The (tax) lien shall be prior and superior to all other liens and

encumbrances upon the property, except liens or encumbrances

held by the state.” A.R.S. § 42

In addition, under Texas the tax lien:

“takes priority over the claim of any creditor of a person whose

property is encumbered by the lien and over the claim of any

holder of a lien and over the claim of any holder of a lien on

property encumbered by the tax lien”

What does all this gibberish mean anyways? Let me explain in lay

mans terms.

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Just imagine carpenters, lenders and others racing to the county

recorders office to be the first to officially record a lien on the

property. The date and time that the lien is recorded will

determine the lien priority. Therefore he who records first is

senior to he who records second.

Sometimes the lien position can be changed or altered through a

subordination agreement. When properly established it will

change the priority of a mortgage, judgment and any other lien.

Essentially the agreement empowers a junior lien-holders’

interest to move ahead of a senior lien-

holders’ interest.

There are two major exceptions to this rule of priority.

Real Estate Taxes

Special Assessments

Generally speaking these before mentioned exceptions take

priority over all other liens. When other liens (i.e. mortgages,

mechanics and judgment liens) were recorded has no effect to

the order in which real estate taxes and special assessments will

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be paid off. They will always be senior to all other liens

regardless of the date and time of recording.

Imagine in your mind’s eye a ladder with a few rungs. Each of

these rungs represents lien positions. The top

rung is the first lien position and the last

recorded lien is the last or bottom rung. When a

property is sold to pay off all the Liens the first

in order is the first to be paid. Taxes hold a first lien

position….even above a mortgage! This is great news to us the

investors of tax lien certificates but terrible news to the lenders

who hold a note on the property.

Let me explain what could happen. Let’s say that Jim purchases a

property by taking out a loan from ABC Mortgage Company for

$100,000. The lender has the ability to take over ownership of

the property in the event that Jim fails to pay his mortgage. If

you, the tax lien investor, were to purchase the TLC certificate at

the auction and Jim failed to pay the back taxes, interest,

penalties and fees you could foreclose on him to collect payment.

The proceeds generated from a court ordered sale would pay off

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 the outstanding real estate taxes and special assessments first.

Any left over proceeds will be used to pay off any other

outstanding liens.

WHAT IS A TAX LIEN

“There are two certainties in life: Death and Taxes!”

For our purposes we will only focus our attention on the taxes.

The definition of taxes is “a contribution to the government

revenues compulsorily levied on individuals, property, or

businesses..” to help pay the costs of government sponsored

agencies and programs.

Not only do Counties have the ability to tax its citizens but also,

so do the following:

• City or Town

• Water District

• School District

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• Sewer District

• Port Authority or District

• Road District

• Metropolitan Park District

• Public Hospital District

• Mosquito Abatement District

• Fire Protection District

• Flood Control District

• Rural County Library District

• Transit District

• Inter-County Rural Library District

The property tax bill that you get from the government pays a

small portion to each of the before mentioned districts. Without

this income stream the above would suffer.

The way of arriving at a real estate tax rate begins with the

adoption of a budget by each taxing district. Each budget covers

the financial requirements for the upcoming fiscal year. The

budget includes an estimated expenditure for the year.

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The actual process of collecting real estate taxes from property

owners is sought through a tax levy. It is a formal action made

by the vote of the local taxing district to impose the tax upon the

property owners.

The local municipality or city usually has an elected official called

the assessor. It is his or her job to appraise real estate for tax

purposes. This process is called an assessment.

From this assessment the county/city will apply

the tax rate to the assessed value of the real

estate. The property owners tax bill is computed by applying the

tax rate to the assessment of the real estate.

Next the county or city official will send out a Tax Bill. This piece

of paper will state the amount due. When all the property taxes

are collected the monies are dispersed according to the budget.

The dates for which the taxes are due vary from county to

county. Taxes may be payable Monthly, Quarterly or

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Semiannually. In some areas the property taxes are due at the

beginning of the current tax year and must be

paid in advance.

What can the government do when

irresponsible property owners fail to pay their property taxes?

Uncle Sam enforces payment by issuing a Tax Lien certificate.

When the real estate taxes have remained delinquent for the

statutory or redemption period they can then be collected

through a tax sale. Each state and county’s methods for

collecting differ substantially but the results are the same.

The basic procedures from state to state are as follows. An

upcoming tax sale is usually held after a judge has ordered a

judgment that the property is sold for the back tax and penalties.

An investor who attends the scheduled tax sale must be prepared

to pay the delinquent taxes and penalties. The winning bidder

will then be issued a certificate of sale as a proof of purchase.

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Some states will issue the actual Tax Lien and others will issue a

Tax Deed.

The delinquent taxpayer can redeem or fix the debt

any time before the tax sale as long as the

statutory redemption period hasn’t expired.

The taxpayer exercises his or her right of redemption by paying

the delinquent taxes plus interest and charges.

In states that offer a redemption period, the bidding at a tax sale

is based on the interest rate (penalty) the defaulted taxpayer

would have to pay in order to redeem the property.

The investor who bids the lowest interest rate wins by getting the

Tax Lien Certificate. Theoretically that interest rate would be the

easiest for the delinquent taxpayer to pay off to redeem the

property.

Meanwhile a penalty of 8% up-to 50% per year is being added to

the amount of the lien. Which means when the delinquent

taxpayer finally decides to clear his title of the lien he must pay

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what you paid to purchase the lien/deed plus any late

fees/penalties (i.e. high interest rates).

When the statutory redemption period has

ended the holder of the certificate may take

one of two steps to acquire the property:

1. Apply For the Deed or

2. Foreclose.

In some states, the tax-delinquent property is sold or assigned to

the state. At the end of the redemption period, the state usually

sells the property at the tax sale auction and issues a tax deed to

the highest bidder.

The title conveyed to you the investor is usually considered

GOOD TITLE because it is a conveyance by the state. If all

delinquent properties are not sold at auction due to lack of

investors the state will usually take over ownership of any and all

left over Tax Liens and Deeds through a process of assignment.

They will then sell the Liens and Deeds at a later date.

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It’s a win-win! A win for the Government because they get the

taxes they need to operate their agencies and programs. It’s a

win for the investor because they are rewarded with HIGH

RATES OF RETURNS with the POSSIBILITY OF AQUIRING

PROPERTIES FOR PENNIES ON THE DOLLAR.

TAX DEEDS and TAX LIENS

TAX DEED STATES

In Tax Deed States you will first find out about

an upcoming sale through a local legal notice.

This is published in the classified section of the

newspaper.

Typically the property (security) is sold at a public tax foreclosure

sale. Usually the first and opening bid at this auction will be for

the delinquent taxes, interest and penalties that are due. This

amount due is usually only pennies to the dollar when compared

to its actual market value.

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At this FIRST AND ONLY SALE investors are bidding on the

ownership, or a percentage, of the delinquent property. The

winning bidder walks away with a Tax Deed, which conveys

ownership or a percentage of ownership to the property. The

balance of the property goes back to the original owner.

In the event that the original owner try’s to sell he will not be

able to do so because you are now a co-owner of a portion of the

property. Let me share a true story about this kind of situation.

REAL ESTATE MIDDLE OWNER MECHANIC

AGENT

STREET

There was a certain mechanic whose business was growing

quickly and he found himself running out of room, so he decided

to expand his business. To do so he needed to acquire

neighboring properties, he noticed that the lot at the end of the

street was for sale. He contacted the agent and said that he

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would buy his property if he could get the owner in the middle to

sell his lot also. The agent contacted the owner of the middle lot

to see if he would agree to sell his property. The owner of the

middle lot agreed. The mechanic was pleased and so continued

on with the purchase of the two lots adjacent to his. The day of

the close the title company phoned the mechanic informing him

that there were two owners of the middle lot and that they would

need to contact him in order to purchase the property.

Apparently, this OTHER OWNER had purchased a very small

portion of the middle lot at a tax sale. He had held onto the lot

for over 15 yrs waiting for this day. The bottom line was that the

OTHER OWNER agreed to sell the small piece for 15x the price

per square foot as the other two property owners

Deed
INVESTOR with a Tax

REAL ESTATE MIDDLE LOT MECHANIC

AGENT

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Imagine the surprise of the owner of the middle lot when he

found out that someone else owned a portion of his property!!

Some Tax Deed states have a period of redemption after the sale

of the property. This equitable redemption period allows the

delinquent property owner to pay off the taxes and interest due

and reclaim the ownership of the property.

TAX LIEN STATES

In Tax Lien States you will first hear about the upcoming tax sale

in the local legal newspaper. The notice may be found in the

classified section of the newspaper.

When you attend the auction you

should be aware that the

investors are bidding on the

Interest Rates and NOT THE

PROPERTY! In these situations

the investor who accepts the lowest rate of interest wins the

certificate. Tax Lien Certificates are known by different names all

over the United States.

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For example, Florida law state:

“Tax certificate” means a legal document, representing unpaid

delinquent real property taxes, non-ad valorem assessments,

including special assessments, interest, and related costs and

charges, issued in accordance with this chapter against a specific

parcel of real property and becoming a first lien thereon, superior

to all other liens, except as provided by s. 197 Florida Statutes

When the owner pays off the delinquent taxes the investor may

collect up to 50% depending on the amount of time they have

owned the TLC and the amount of interest the state issues.

In some states if the delinquent taxpayer fails to redeem the

property the investor may apply for a tax deed or title to the

property. In other states such as Florida there will be a second

tax sale where the property is auctioned off. When an investor

purchases the parcel he/she will have to clear the liens by paying

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you the back taxes and interest before he/she can take

ownership of the property.

Each state has the rights to enact Statutory Laws to govern how

the collection of unpaid taxes is conducted. Therefore, study up

and find which state fits your investment needs. If you have

purchased my Tax Lien and Tax Deed directory you will find them

Very helpful in contacting the right people and finding out the

details on how each state conducts each delinquent tax sale. If

you do not have these directories visit

http://www.taxlienuniversity.com for ordering information.

WHY INVEST IN TAX LIEN CERTIFICATES

Let’s pretend; let’s pretend that you just

won $2,000 dollars! Now of course you

don’t want to waste that money on

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things that depreciate in value like cars and boats. Being the

intelligent investor that you are you will want to make your

money work for you!

We will be using a principle called the Rule of 72 to help

determine which investment option will help us to double our

money the fastest. This will become one of your greatest tools as

an investor. Basically it will tell you how long it will take to double

your money. I will give you the steps you need to apply this

principle correctly.

Step 1. Divide 72 by the Interest Rate. (72 ÷ 20%)

Step 2. The number shown will be the amount of years it would

take to double your investment. ( 72 ÷ 20%= 3.6 years )

For example, if you invested your $2,000 in a CD at the current

rate of 3% - it would take you 24 long years to double your

investment. If you combine that number with the current rate of

inflation, which is 6% you would actually lose 3% of your

moneys buying power each year. So as you can see that would

not be the best choice for your money.

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Let’s move on!

What about Bonds? If you invested your $2,000 dollars at the

generous rate of 10% it would take 7.2 years to double your

money. Decent but not good enough! We want MILLIONAIRE

RATES OF RETURN!

Therefore, we want to identify investments that yield 16%, 18%,

24% or HIGHER! Where can we find those kinds of rates of

return?

We have already ruled out

CD’S and BONDS. What is

left? Traditionally speaking we

have the stock market,

which has the potential to create MILLIONAIRE RATES OF

RETURN. There are no guarantees in the stock market. Even with

dollar cost averaging you are barely touching the MILLIONAIRE

RATES OF RETURN that we are looking for.

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 I want to discuss some of the LEADING INDICATORS that make

Tax Liens the ideal investment for your hard earned dollars. You

will quickly become aware of how GREAT this investment truly is!

You will also have a GREAT DESIRE to shift your investing from

the UNPRODUCTIVE, UNPREDICTABLE investment options

mentioned above.

Below I have listed FOUR OBVIOUS INDICATORS that make Tax

Liens the intelligent investment decision.

• HUGE PROFIT POTENTIAL

• HIGH DEGREE OF SECURITY

• PREDICTABILITY

• LOW RISK

PROFIT POTENTIAL : Unlike Certificates of Deposit and

Bonds, Tax Liens can create Millionaire Rates of Return. Investing

in these super safe government issued tax liens and deeds

present a massive profit potential. Imagine getting 16%, 18%

up to 50% on your invested dollars. In contrast savings accounts

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offer less than 4%. Ouch! With inflation and taxes your actually

losing money!

In the National Tax Lien and Deed Directories I have listed the

current Rate of Returns for each state. As you scan the

spreadsheet you will quickly notice rates of 16%, 18%, 20%,

24% even 50%. These are called MILLIONAIRE RATES OF

RETURN!

Who in their right mind wouldn’t invest in Tax Liens and Tax

Deeds?

SAFETY: One of the only appealing characteristics that CD’s

and Bonds have is their Safety! Are tax liens/deeds safe? You

bet! How about armor car safe! Tax Liens and deeds have their

safety because they are secured with real estate. That means if

the delinquent property owner doesn’t pay his or her taxes and

fees you get the property. That means that you can potentially

pickup premium properties for pennies on the dollar.

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What about the stock market? Are there any guarantees?

Certainly not! In fact if you have ever invested in the stock

market you will have received a prospectus shortly after your

purchase. What does that mean. Well its basically telling you that

there are no guarantees and that you are investing at your own

risk and that any losses you incur will be your problem.

PREDICTABILITY: Who doesn’t want a little more predictability

in their life? Every new day brings hidden challenges and

changes that have their effect on your life. You have two choices

before you. You can either change with it or be left wanting. I

would rather change with it. In an uncertain life there are few

things that are predictable. Tax Liens are one of them. The

government guarantees these high rates of return. They are fixed

by statute. I am not the one who gives these rates, the

government does.

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Is there any predictability in the Stock Market? Heck NO! In fact

in my current investment

consulting I have talked with literally

thousands of people who have lost their

entire life savings in the stock market. In fact many of these

people went on to lose jobs, friends and even marriages. Why

would anyone invest in the stock market especially when you

could live a much easier life by investing in tax liens and deeds!

LOW RISK: What about Risk? Well we all know that the higher

the risk the greater the reward! Tax liens are the exception to

this rule! If you follow my 12 steps, mentioned in section two,

you will greatly reduce and in come cases completely eliminate all

risk and position yourself to collect High Rates of Return for a

long time!

In fact I have created section three for the main purpose of

exposing you to some of the major risks. I have also indicated

ways in which you can effectively manage these risks.

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REDEMPTION PERIODS

If you were to look up Redemption Periods in Wyoming statutes

you would read:

“Real property sold for delinquent taxes may be redeemed by the

legal owner within four (4) years from and after the date of sale,

by paying to the county treasurer to be held subject to the order

of the holder of the certificate of purchase, the amounts provided

by W.S. 39 ”

Essentially each defaulted taxpayer is given a period

of time to Correct or Redeem the taxes in default. If

the certificate or deed is not redeemed within this

designated period of time the investor may then proceed with

collecting the property, which has been pledged as security.

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This “waiting” period varies from state to state. Some states will

grant the irresponsible tax payer as much as four years while less

generous municipalities will grant as little as six months. It is

important for you to know the redemptive periods on each Tax

Lien or deed you invest in.

Arizona has two redemptive periods:

3 years: Essentially any time after expiration of three years

from the date of purchase the Investor may bring an action in a

court of a competent jurisdiction to foreclose the right to redeem.

5 years: Essentially any time after expiration of five years from

the date of purchase the Investor may instead of filing an action,

he or she may apply for and receive a treasurer’s deed to the

property.

There you go. Basically the redemptive period is the “waiting

time” that you the investor has to collect Interest on the

defaulted taxes before taking further actions to collect the

32
property. It is also a period of time that the delinquent taxpayer

has to correct the problem.

FORECLOSURE

As you begin to invest in Tax liens and Deeds you may find

yourself without the Returns you had hoped for. Essentially the

certificate has not been redeemed with in the redemptive period

set by the state.

What is a Tax investor to do? Basically you can foreclose that

right of redemption with the owner of the property or any

interested parties. By doing so the “bundle of rights” to the

property are taken from the delinquent taxpayer and given to the

investor.

I essentially want to give you, the reader, a basic overview of the

foreclosure process. Please understand that each state will

administer the process differently. Therefore it is up to you to

find out the exact procedures.

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 Foreclosure is a legal procedure in which the

property pledged as security is sold to satisfy the

defaulted taxes and interest penalties due to the

investor. The provisions and procedures of foreclosure bring the

rights of all parties and junior lien holders to a conclusion.

YOU MAY NEED A CORPORATION

If you are an out of country investor who wants to get involved

with Tax Liens and Deeds you may find it

difficult. There are really only two legal ways for

a foreigner to invest in tax liens and deeds.

1. Get a Social Security Number

2. Get a Federal Tax Identification Number.

Getting a Social Security Number can take a long time. Not only

will it take a long time but it will also require lots of paper work.

34
 There are much faster ways to get involved with tax liens and tax

deeds.

I would highly suggest that you get a Federal Tax Identification

Number. They can be obtained by setting up a legal entity. By

setting up a corporation you will have the ability to legally invest

in tax liens and deeds.

The cost associated with tax liens and deeds varies from state to

state and person to person. Now there are many different types

of corporations available. You have:

• LLC

• S Corporations

• C Corporations

LLC: Members of a Limited Liability Corporation have a limited

liability while also enjoying the tax advantages offered to a

corporation or partnership.

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S-Corp: The major difference between a C-corporation and an S-

corporation is its taxation. S corporations have the ability to avoid

double taxation. Shares of the s corporations profits are passed

to the shareholders, which is then taxed.

C-Corp: Is an artificial person created under the laws of the

state in which it is to be created. Each corporation is managed

and operated by a board of directors. Corporations offer huge tax

benefits and breaks when properly managed and operated.

The corporation you choose to set up is your decision, I highly

suggest seeking legal consultation prior to taking any actions.

YOU MAY NEED A SELF DIRECTED IRA

No matter what your age, it is never too late (or too early) to

begin planning for the future. The longer plans are put off for

retirement the more money it will take to fulfill those plans.

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With Americans in general living longer, planning for retirement

becomes even more crucial. In addition to longer life

expectancies, Americans must deal with inflation. In general,

prices for goods and services upon retirement will likely be higher

due to inflation, which in turn could affect retirees and their

families.

Another point that must be emphasized is that for most

individuals, Social Security and employer-sponsored retirement

benefits may not provide the level of financial independence and

comfort desired in retirement.

Social Security has not been, and never should have been

thought as the only source of retirement income. Americans need

to take their financial future into their own hands. By saving and

investing while they are working, Americans can achieve the level

of comfort desired in retirement. To encourage this type of

saving and investing the United States government created the

Individual Retirement Account (IRA).

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The power of compounding interest comes from the fact that the

original investment as well as the income derived from that

investment are reinvested. Using an IRA as an investment vehicle

allows investors to enjoy the power of compounding interest due

to the fact that investments made within an IRA are tax-deferred,

or in the case of the Roth IRA, tax-free.

TAILOR YOUR IRA

Once you have set up your account you can invest in practically

any type of product, matching your financial goals with

appropriate investment choices. A self directed IRA also allows

you flexibility to adjust or modify investment selections according

to changes in economic conditions, market fluctuations or your

individual situation.

Your investment selections can range from conservative to

aggressive. For example, you may choose an investment that

offers safety of principal, such as money-market funds,

government securities and certificates of deposit. Or if higher

yields are your goal, you may select investments with slightly

higher risk to principal, such as corporate bonds, bond mutual

38
funds, government unit investment trusts, or preferred stocks. If

you’re looking for appreciation in long-term value and inflation

protection, and can accept the risks of market fluctuation,

common stocks, equity mutual funds, or TAX LIEN

CERTIFICATES may be your investments of choice.

You can refer to the Self Directed Ira book for details on How To

use your Self-Directed Ira when purchasing tax liens and deeds.

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40
41
 12 Practical Steps To
Purchasing Tax Liens and Deeds By Mail

Did know that thousand of Investors purchase Tax Liens and Tax

Deeds from the comfort of their own home everyday. Once you

read this TLC Mail Guidebook you will be on your way to buying

TLC’s from the comfort of your own home.

WHY INVEST FROM HOME

Why do you need to know how to invest in Tax Liens and Deeds

without having to travel? First of all most of us cannot afford to

do it. Cultivating the ability to invest in Tax Liens and Deed from

the comfort of your home is the key to your success as a Tax

Lien Investor.

SAVE MONEY AND TIME

This means no expensive airplane tickets, long bus rides, or fancy

hotels. This is perfect for the investors who will purchase tax

liens for less than $900 dollars. It doesn’t make sense to spend a

lot of money in travel only to break even on your investment.

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The goal is to increase our returns and we can do this by cutting

our costs and competition.

BUYING WHOLESALE THROUGH THE MAIL

Did you know at this time there are more available Tax Liens

than available investors? What can the county do? Let me

explain.

You can place your bid through the mail. The statutes appoint

the county treasurer as the individual to sell these Tax Liens to

the highest bidder. In most state statutes it does not require

that the investor PHYSICALLY be there. Therefore an investor like

yourself can legally send your bid through the mail or on the

Internet (which we will discuss later).

NO BIDDING REQUIRED

I recommend that you avoid the bidding process and go straight

for the leftovers. Right now you are probably saying to yourself

that the leftovers are just undesirable liens and deeds that

wouldn’t make a good investment. There could be some truth to

that but in my experience I have noticed that most of the time

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there are leftovers because there were not enough investors to

purchase the available liens and deeds. The county then files

these left over liens for future purchase.

You can simply send a payment for the amount of taxes owed

enclosed in a letter that requests that a certain tax lien be sent to

you. It’s that easy.

The hard part is actually researching your investment before you

purchase it. Let me explain the steps and procedures before you

get started.

The very first step is to choose a state to invest in. Remember

you want to choose a state that has laws that benefit your

strategy. For example, if you want to go after the actual

properties, then Arizona would be a great place. If you want to

go after high returns then Florida would be a more appropriate

state.

In addition you ought to select a county within that state. If your

main interest is the properties you want a county that is

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experiencing an economic hardship. This will greatly increase the

odds that the taxes will not be paid off. If you are going for the

high returns then the opposite would be better.

Next you may need to look up the phone number and name of

the county official to speak with. Ask if you could have the list of

delinquent property tax payers be sent to you.

After your done speaking with the county Treasurer’s office call

the county’s chamber of commerce. They can send you the local

city and plat maps be sent to you.

Now that you have paid for the TLC Lists and Maps etc be sent

you need to pay for them.

Now you can begin researching the properties and parcels to

separate the duds from the diamonds. Using the TLC Bargain

Finder you will be able to tell if the property is APPRECIATING IN

VALUE or DEPRECIATING IN VALUE. You want APPRECIATION!!!

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You will also want to converse with local Real Estate agents and

appraisers to get a feel for the area’s you are interested in. SOME

ADVISE: Maybe humor them that you are interested in possibly

building/buying a home in the areas mentioned. The goal is to

find out HOW THE AREA IS. You want to make sure that the TLC

is located well.

STEP ONE: CHOOSE A STRATEGY,

Basically, you need to decide if you want to purchase Tax Lien

Certificates or whether you want to purchase property by paying

off the back taxes (Tax Deeds). What you do decide will require a

few different researching strategies.

STEP TWO: CHOOSE A STATE,

Now that you know your major investment goal for tax defaulted

properties you now need to select a state that compliments your

choice. Obviously, you need to select a state either a Tax Deed

State or Tax Lien State. Please refer to the Guidebook for the

specific criteria to use while choosing a state.

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Here is a list of states that you can buy over the counter and

through the mail:

Alabama, Arizona, Colorado, Florida, Kentucky, Maryland,

Michigan, Montana, Nebraska, North Dakota, Oklahoma, South

Carolina, South Dakota and Wyoming.

STEP THREE: CHOOSE A COUNTY

We can further narrow down our available selection of 3,000

counties to just one. How do we do that? Well again I am going

to refer you to the Guidebook. Bottom line you need to find the

“good side of the tracks” and invest in only residential areas.

STEP FOUR: CHOOSE AN AREA

Now that you have identified the appropriate county you need to

select an appropriate area within the county. If you are going for

high rates of return then you want to select a part of the area

that maybe has a more affluent type of owner. Why? They are

more likely to pay off the taxes. Now, if your strategy were to

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acquire properties I would recommend selecting an area where

people are less likely to pay their bills. Thereby increasing your

chances of getting the property.

STEP FIVE: MAKE A CONTACT AND REQUEST

INFORMATION

Now that you know the state county and area to focus your

investing you now need to get a list of available liens and deeds

to choose from. You can usually get a list from a number of

sources. You can get it by calling the county and requesting that

a list be sent to you. You can also see if it is available via the

Internet. You may also find it helpful to fill out the answers to the

questions listed on the Tax Lien Worksheet. Otherwise, mail or

fax it to the correct agency.

I would also suggest beginning with the oldest Tax

Certificates/deeds. The reasoning is that these will have the least

amount of time for redemption. This way you do not have to wait

the entire redemption period to obtain title.

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STEP SIX: RESEARCHING THE PROPERTIES

This is probably the most important step in the investment

process. The chances of getting a bad property are fairly unlikely

especially when you take a few extra minutes to do a little extra

research. Investing in Tax Defaulted Properties does involve

some risk…therefore I have devoted a whole section in the

guidebook to RISK MANAGEMENT. Specific options that are

available to you, the investor are represented by the acronym

ACT, which means to Avoid, Control and Transfer. Here are

the specific hidden dangers that you NEED to pay attention to.

• BANKRUPTCY

• USELESS/WORTHLESS LAND

• ENVIRONMENTAL PROBLEMS

At this time I have not came across any other known dangers to

warn you about. That does not mean that there are not any

others but it does mean that if there are they are HIDDEN.

Therefore you are taking on any responsibility for anything that

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could happen. You must seek professional assistance from an

approved source.

Now here are the sources you can use to avoid the before

mentioned dangers:

Bankruptcy: Check with the Recorders office for any recorded

bankruptcies for the named owners of the parcel of which you

are looking at.

Useless/Worthless Land: Check with the Assessor for property

appraisals. You are looking for improved properties whose total

improved assessments represent at least 70-80% of the total

assessed value. You need to also check with the Building and

Planning Department for detailed information on zoning. Look for

residential properties only. In addition, check with the

department that handles the Hazardous waste and environmental

issues. Usually that would be the Environmental & Engineering

department.

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A good rule is to check and verify all the information with Real

Estate Brokers for assessments or comparatives in the area.

Environmental Problems: Take all the before mentioned steps

and then check with the zoning department to find out what the

property was previous to its residential state. (You need to find

out if it was ever industrial or commercial.)

STEP SEVEN: GETTING REGISTERED

Each state and county will require different things but most will

require you to fill out a W-9 or W-8. You may have to fill out

another form used for bidder identification purposes. Therefore

call the county in which you have chosen and get the details and

information sent to you.

STEP EIGHT: PURCHASE THE TAX LIEN or TAX DEED.

Your day has finally come. Now you can purchase the Lien or

Deed. If you have a self-directed IRA set up then you need to

contact the appropriate person at the securities company with

which you are presently dealing with. They can help you wire the

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money from your account to the county. Be sure to contact the

county for details on payment options.

STEP NINE: COLLECTING THE INTEREST.

When the delinquent taxpayer has satisfied your Tax Lien you will

receive a notice to the address that you have provided the

county with. Therefore if you have moved it is YOUR

RESPONSIBILITY to notify the county. Basically you will receive a

letter in the mail letting you know that you need to send the lien

or deed back to receive a CHECK WITH THE PRINCIPAL AND

INTEREST.

STEP TEN: COLLECTING THE PROPERTY

To collect the property you may have two available options to

choose from. You may either have to APPLY FOR THE DEED or

FORECLOSE. Please be aware that I am not an ATTORNEY and

therefore you need to seek proper guidance from a state

approved source. Needless to say no matter what steps you take

you still need to proceed with a “Quiet Title Action” to clear up

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any problems that may exist in the chain of title. This way you

can take full ownership of the parcel.

STEP ELEVEN: FIX/CLEAN IT UP

It is amazing what a little soap and water can do for a place.

Better yet a coat of paint and a good mowing of the grass. When

it comes time to clean it up you can use the Guidebook as a

reference.

STEP TWELVE: SELL/ RENT IT

In this step you are either going to sell it or rent it out. To sell it

contact a local real estate broker for help. To rent it out you may

need to hire a professional property manger. It is much better to

have someone who is trusted and has a good reputation with

property management. Call many Real Estate brokers for

assistance in locating an appropriate agency to help out with this

process.

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Well there you have it! Now I have included a few sheets that

you can use when calling the various counties to get the needed

information. Some counties may already be prepared and have a

pamphlet put together for you. Other counties may not so I have

included a sheet of questions for you to FAX or MAIL to them.

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TAX LIEN CERTIFICATE / TAX DEED WORKSHEET

It is important to note that this worksheet is to serve as a general

guide to finding out the appropriate information relating to Tax
Delinquent Certificates. You can may call the county and ask the
questions via telephone or you can send an email, fax and letter
requesting the information needed to get started. If calling ask to be
transferred to the person responsible for the sale of tax delinquent
properties, deeds and certificates.

1. Who coordinates the procedures for selling Tax Lien

Certificates?
2. What happens when someone does not pay his or her
property taxes in your county?
3. When is the Tax Lien Certificate sale?
4. Who is in charge of that auction/ sale?
5. Where is the auction located?
6. What date/time is the auction held?
7. What are the registration procedures?
8. What are the requirements to be a legal bidder?
9. What are the accepted methods of payment?
10. How much time do I have to make full payment?
11. What are the bidding procedures?
12. What am I paying for?
13. What rights do I have as the investor?
14. How long is the redemption period?
15. What happens if the penalties and taxes are not paid?
16. What must I do to make sure I am compensated
correctly?
17. Is foreclosure required?
18. Who can I contact to do this?
19. Will I be compensated for legal fees?
20. Who can I contact to research the property?
21. How can I obtain a list of the available Tax Liens?
22. Who can I get help from?
23. Must I be present to bid?

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24. May I make a bid via phone, mail or fax?
25. What happens if all the Tax Liens are not sold at the
auction?
26. Can I purchase any leftovers?
27. How can I make Payment?
28. What happens if I lose the Tax Lien Certificate?
29. What are the procedures for the deeding process?
30. What happens if the Tax Delinquent Owner files
bankruptcy?
31. What happens when subsequent taxes are not paid?
32. How can I research the properties with Tax Liens on
them?
33. How do I read the parcel numbers?
34. Who can tell me about the area?
35. What are the more desirable areas of the county?
36. What is the current status of the Real Estate Market?
37. Are prices going up?
38. What are the primary income sources for the area?
39. Are there any dangers to be aware of i.e. flooding, etc?

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 DELINQUENT TAX SALE

Name of State:

Name of County:

ATTN: County Treasurer, Assessor, Clerk or County

Worker.

I am an investor who is interested in your procedures for the sale

of parcels and certificates for delinquent property taxes. I am
interested in possibly investing in these discounted parcels and/or
interest bearing certificates. Could you please answer the short
questionnaire included.

• What are the Delinquent Property Tax Procedures?

• When is the Tax Sale?
• Do you issue Deeds or Certificates?
• What am I issued in return for paying the back taxes?
• Who is in charge of the collection of Delinquent
• Property taxes?
• How can they be reached?
• Where is the Tax Sale held and what time?
• What are the registration requirements?
• What must I do if I am a foreigner?
• Must I be physically present to participate?
• How can I get a current list of tax delinquent properties
• to be
• offered at the sale?
• What are my resources to research them?
• What are the bidding procedures?
• What is the redemption period?
• What happens if the property taxes and penalties are
• not paid?
• What can the holder of the certificate or deed do for
compensation?
• Is foreclosure required?

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