Aneinfo Real Estate

Recently I sent an e-mail out to my subscribers asking them some questions. I wanted to find out what it is that most people want to know about tax lien investing. I got a lot of good questions and I won’t be able to answer them all in this article, but I want to try to answer those that were asked most often and that weren’t answered in my new free video course.

I especially like to answer questions that start out with the words “How do I…” or “How can I…” This type of question shows me that someone is really interested and is ready to take action. So let’s answer some of these types of questions that are not answered in my video series. So here are some frequently asked questions about tax lien investing.

Q1: How can I buy tax liens or tax deeds without going to the auction?

A: In most states you have to attend the auction in order to bid, or have a representative there to bid on your behalf. But there are 2 ways that you can purchase a tax lien or deed without physically going to the sale. A few states do have online auctions, but not all counties in these states conduct their auctions online. Usually just the larger counties do. Many counties in Florida, California, and Arizona have online tax sales. And I know that some counties in Colorado and Illinois have online tax sales as well. Another way that investors have bought tax lien and tax deeds without going to the sale is to bid on left-over liens, this can usually be done through the mail. The only problem is that as tax lien and tax deed investing become more popular, there are less and less good properties left-over after the tax sale.

Q2: I don’t live in the US; can I still invest in Tax Liens or Tax Deeds?

A: Yes, in most states you can invest in tax liens and tax deeds even if you are not a US citizen and do not live in the US. There are a couple of states that you have to be a resident of the state to invest, but these are not the most popular tax lien states and they don’t have online sales. All you have to do in order to purchase a tax lien is to fill out a tax form called a W-8BEN form. In order to complete this form you will also need to apply for an Individual Tax Identification Number (ITIN) if you are bidding in your own name. If you are bidding using a business name, you must apply for an Employer Identification Number (EIN). This is only for tax liens. You do not have to do this to participate in a tax deed sale.

Q3: So how much money do you need to get started with tax lien investing?

A: The beauty of tax lien investing as opposed to tax deed investing and other types of real estate investing, you can start with a very small investment. The first very profitable tax lien that I purchased started with an initial investment of only a couple of hundred dollars, on a small sewer lien. Then I was able to pay the subsequent sewer taxes the next couple of years and instead of trying to foreclose I just kept paying the subsequent taxes. After a couple of years, the homeowner moved out of state and stopped paying the taxes on the property, so then I got to pay even bigger payments $5000 over the next couple of years. The lien finally redeemed and I collected 18% per annum on most of my investment plus penalties.

Q4: How often do you acquire the property with tax liens?

A: In the state of NJ where I invest, very, very seldom do you get to foreclose on the property. If you are interested in owning property than tax deed investing or redeemable tax deed investing is the way to go. Only about 1% of tax liens will not redeem and of those properties, once you start the foreclosure process about 80% will redeem sometime during the foreclosure process. I’ve been investing for about 6 or seven years and I haven’t foreclosed on a property yet. I do have a couple of liens that I could start foreclosure on right now, but I know that when I do, they will redeem, so I just let them go.

I know some investors who have foreclosed on a couple of properties, but either it is not recent – we’re talking a few years ago when property values were not what they are today and it was much harder to get a loan, or they have a really huge portfolio with thousands of liens.

Q6: Are there risks involved in this type of investing? What are they?

A: Yes, there are risks involved and that’s what the gurus leave out, they make it sound so easy. They like to use the term “Government Guaranteed” to make people think that they can’t go wrong with tax lien investing, that the government guarantees that they’ll get paid on a tax lien. That’s really not true, what they mean by “government Guaranteed” is that there are laws that protect the investor but you not guaranteed to get paid. The guarantee is the property. Tax Liens are guaranteed by the property that you have a lien on, so if you buy a tax lien on a worthless piece of property, then you made a poor investment and it is possible that you could lose your money. Yes, there is risk involved, but that risk is minimized by doing your due diligence on the property before you purchase the lien, just like you would do due diligence on property before giving someone a loan against it. If you do your due diligence properly than tax lien investing is a very safe investment because it’s secured by something tangible, not just a piece of paper.

One of the things that I do in my courses, John, is teach people how to do due diligence for tax sale properties so that they can totally reduce the risk involved with tax lien investing.

Q7: Can you invest in tax liens and tax deeds in your IRA?

A: We all want to keep more of those profits for ourselves and not give half of it away to Uncle Sam. The good news is that you can use money in your IRA or Roth IRA to invest in tax lien certificates or tax deeds, but only if it’s a true self-directed IRA. With a self-directed IRA, your profits can grow tax-differed, and with a Roth IRA, your profits can be totally tax-free.

In my courses I have 2 audios from different experts from 2 different self-directed IRA companies that explain how to do this.

Today marks a major change in the lending landscape and the way loans are sold to Fannie Mae & Freddie Mac…. Specifically, how they are appraised.

If you have not heard of Home Valuation Code Of Conduct (HVCC),just ask your favorite mortgage broker about it and more than likely their response will be something like:

&$#@%^&%$#^%$#@#$%^

(sorry, but can print what they really will blast you with)

In short, this change is designed to fix the evils of the past.

As always, there are good and bad sides to every change. We will explore the good, bad and ugly of this new approach but first, let’s synopsize what it is about.

WHAT IS HVCC (Short Story)

So what does the code say? Basically, it’s that the people responsible for originating mortgages can have nothing to do with the appraisal process.

In addition, the code also:

* Prohibits lenders and third parties from influencing or attempting to influence appraisals.

* Requires lenders to ensure that borrowers get a free copy of appraisal reports at least three business days before closing.

* Allows lenders to have in-house appraisers, so long as they’re completely independent of sales staff and their compensation does not depend on their estimates or on loan closings.

* Requires lenders to test a randomly selected 10 percent (or other statistically significant percentage) of appraisals and report any problems to Fannie Mae or Freddie Mac, which may force lenders to buy loans back from them.

* Requires lenders to report appraisal misconduct to applicable state agencies.

You can download a copy of the HVCC at: https://www.efanniemae.com/sf/guides/ssg/relatedsellinginfo/appcode/pdf/hvcc.pdf

WHY IS HVCC GOOD?

Let’s face it, the appraisal business has been a bit “rigged” over the last several years.

In short, only appraisers that could “get the deal done” were used on a repeated basis by mortgage brokers, realtors, and or builders. It only makes sense that this is the way the system worked. If you were a realtor, or even if you were a new home buyer, the last thing that you want is for your appraisal to come up short and the deal fall apart.

Since appraisals are somewhat subjective, the appraisers that always got called were those where the subjectivity worked out in favor of the deal.

However, many appraisers felt very pressured to make the deal work….. their future business counted on everybody walking away happy. Of course we are now seeing some of the consequences of that type of approach with our current housing and mortgage crisis.

WHY IS HVCC BAD?

Because now your purchase or sale is a crap shoot.

Why?

Simply because appraisers will be pulled out of a “blind pool”. From my personal experience, only about 20% of appraisers are good at their profession (you know, the ole 80/20 rule).

So you now have an 80% chance of a mediocre appraiser being assigned to your appraisal. Are they really capable of determining the value? I am skeptical.

In addition, most the incentives for the appraisers are now set up to appraise low….. The safe play is to come in BELOW what you may be thinking is actual value.

CONSEQUENCES

HVCC will be implemented May 1, 2009. Many people believe, myself included, that this is going to severely disrupt the home seller market, and investor market, for a period.

Everybody’s major hope is that soon, tweaks will be made into something that is workable for all in the industry.

Forecast growth by a respected UK investment TV show, is anticipating growth of up around 280% in the next 10 years and interest in property investment in Slovenia is at an all time high. Of course you will need an Estate Agent in Slovenia to help you with your property investment and this article will give you tips on choosing the best Slovenia estate agents.

There are many Slovenian Estate agents to choose from and here we will look at choosing one to help you get your dream property.

Here are your general guidelines for choosing an estate agent in Slovenia.

1. Cut Out Middlemen

There are lots of “middlemen” selling property in Slovenia, however most are not regulated. For your security you should only deal with a licensed estate agent that is based locally and governed by local laws. This means their business conduct is regulated by a strict code of rules, which are designed for your protection.

2. Find an Agent That Knows Slovenia

Many middlemen are simply interested in selling their own properties – these may not be the most suitable ones for you. You need to find an estate agent that knows the areas they sell in. Check how long they have been in business and that they have a good knowledge of the area you are buying in and get some references if possible.

3. You’re Aims

Are you buying property for sale in Slovenia for capital gains, rental income, or a mixture of the two? Always match your specific aims with a location that can deliver what you require and find an agent that will understand and match these needs. This is really common sense – but many investors simply buy without thinking about the above and it costs them later on In conclusion, make sure you do your homework and that means a visit to get a feel for the area and property you are investing in.

4. The Buying Process and Finance

For buying property in Slovenia will only take around a month to complete the contracts and the salient points to consider are outlined below. Once you have found your property you will be required to pay a 10% deposit which if the seller decides not to proceed will be returned to you – but doubled, under Slovenian law. If on the other hand, you decide to back out, the seller will keep the 10% deposit. Mortgages are now available to foreign nationals.

For example, Volksbank offer 70% mortgages, secured on your investment property in Slovenia not on your primary residences elsewhere. When you want too buy, you will need to produce your passport; your estate agent will then apply for a tax number for you as well as an EMSO number, both of which are required to complete a property transaction.

You should use a local Lawyer to check all paperwork, ownership details and contracts, who is familiar with Slovenian law. When sending your final payment check your banks for favorable rates – or seek out a specialist foreign exchange company. Make sure you shop around, there are big variations in currency exchange rates offered and these can make a significant difference to your purchase price.

You should also open a bank account locally – this will enable you to pay all your local costs easily and promptly. Bank accounts are easy to set up and can be done on the same day and require only a passport as proof of ID.

5. Management Of The Property

You can also get Slovenian estate agents to offer property management services.

This will include everything from finding tenants for your house to making sure the house is ready for guests and also make sure wherever you buy your Slovenia property it is safe, secure and maintained

Finally

Buying property in Slovenia can be a lucrative investment destination and if you choose the right Slovenian estate agent, you can maximize your growth potential.

Your estate agent can help you get the right property which fits your investment aims, budget and thereby maximize your long term growth potential.

Choosing the right estate agent is essential when buying property in Slovenia so make sure you do your homework!