Ted Thomas built a successful career as an airline pilot, but he always saw the untapped potential in real estate. Eventually, he made a leap of faith and found himself in a group of investors that buy apartment buildings and commercial properties. Thomas’ success in that venture was partially due to the fact that none of them had seen a down-market, but that illusion ended in bankruptcy when the market turned and it was back to the drawing board.
That experience inspired Thomas to do things differently the second time around, so he decided to take a conservative approach with his investments by specializing in tax lien certificates. For thirty years, Thomas has been practicing this strategy and he has become the Tax Deed Authority in the real estate industry. His experience culminated in a lucrative real estate career, a bestselling book, and a coaching/mentorship program where he trains other serious-minded investors on how to master his technique.
Purchasing Tax Lien Certificates
Becoming an expert in tax liens is not easy, but if you are willing to do the work, you can get started with a limited amount of capital. On the low end, it takes a couple thousand dollars to get your feet wet, but Thomas is blunt about the fact that you won’t see huge, timely returns from an investment like that. It is a great opportunity for casual investors and young adults to start building a portfolio that doesn’t involve risk because the only other party directly involved is the United States government.
Tax lien certificates do have the potential to yield large returns once you are ready for them, but first, it is important to understand how they work. When someone owns a home, they are responsible for paying property taxes to the local government. But, if for whatever reason the taxes are not paid, the county will issue a tax lean certificate stating that the property owner must pay their back taxes in full with interest ranging from 16-36% depending on the location.
How Tax Lien Certificates Work
When the tax lien certificate is issued, it is also made available for purchase and investors have the opportunity to buy the certificates directly from the government. The first way you can start making money from this certificate is by absorbing the interest payments. If the homeowner is able to pay their back taxes, you will recoup your entire investment plus the additional interest as pure profit. This can take upwards of two years to materialize, but as you buy more certificates, the incremental payouts start to add up.
The second way that purchasing tax lien certificates can earn you money is when the homeowner fails to pay their back taxes. If this happens, there will be a foreclosure on the property and you will acquire it. At that point, you just bought an investment property for 1-2% of its initial value by purchasing the tax lien certificate, and you can choose to sell it or fix and flip.
In Florida alone, over one million tax lien certificates were auctioned off last year. It is a competitive market but there are enough to go around for everyone if you know what you’re doing. The process varies from state to state, so with Ted’s help you can navigate the changing landscape and start earning money with predictable, certain, and secure investments from the comfort of your home.