Issue #2108
- WEALTHY: How to profit from a low-risk and low-maintenance investment (Darius Barazandeh)
- HEALTHY: How a didgeridoo can help you sleep like a baby (Suzanne Richardson)
- WISE: Donald Trump on real estate
ALSO IN THIS ISSUE:
- Selling alligators, ascots, argyle socks – and much more (Michael Masterson)
- The 3 R’s of a rock-solid guarantee (Katie Yeakle)
- It’s Fun to Know… about Wii-itis
- Add "noblesse oblige" to your vocabulary
You Already Know Fortunes Are Made from Trading. The Question Is: WHAT Are "They" Trading Most? (And It’s Not Shares or Commodities!)
… Thirty times more trading going on than the stock market and mostly investment banks doing it. Ummm… Maybe "they" know something you don’t? Click here to learn more…
"Well, real estate is always good, as far as I’m concerned."
Donald Trump
A Primer on Tax-Lien Investing: How to Get up to 24% Yields Guaranteed by the Government
By Darius M. Barazandeh
Tax liens can offer a very high, government-guaranteed yield on an almost completely passive investment. At the same time, you could end up with the bonus of owning the underlying property itself… for profits in the hundreds, even thousands, of a percent. No other investment can quite match the unique benefits of tax liens.
It’s not surprising, then, that there is a rapidly growing amount of information about tax liens on the Web: tax-lien investing, tax-lien riches, tax liens for wealth, tax lien this, tax lien that. Yet, what most of these "experts" don’t tell you is what could go wrong with your investment if you fail to do the proper research.
I have helped thousands of investors profit from tax sales. And I have been involved in the process from many different perspectives – as an investor, attorney, teacher, and business consultant to one of the largest tax-collection entities in the United States.
Here’s the gist of what you need to know to start investing wisely in tax liens…
High Yields and the Chance for a Property Windfall to Boot
Earning 16 percent to 24 percent interest through a low-risk and low-maintenance investment is rare, to say the least. But that’s exactly what tax liens can offer. And yet, the high returns and passive nature of tax liens are just the first of many unique advantages this investment has.
Tax liens are generally insulated from changes to Federal Reserve interest rates. They are secured by real property, usually with first-priority claim. With tax liens, you can get a high yield to start … and end up owning a property for a fraction of its value.
Finally, there are tax liens for every budget. You’ll find tax liens ranging from a couple of hundred dollars to tens of thousands.
The end result is a flexible but highly secured investment with minimal downside and market risk. But to become an investor, you first have to educate yourself on some of the basic distinctions in tax-lien law among the various states.
Understand the Distinction Between Tax Liens and Tax Deeds
Tax liens or tax deeds are sold in 35 states. Almost every state and territory in the United States has a process for collecting delinquent property taxes and placing reliable taxpayers back on the tax roll. This process occurs at the last juncture of the tax-collection process, and it allows ordinary individuals to purchase the rights of local governments in tax-delinquent property.
The process can be separated between two general types of systems: "tax-lien systems" and "tax-deed systems." These systems may be distinguished by the "bundle of rights" sold to the purchaser.
If the taxes are not paid in states using a tax-deed system, county governments will sell full ownership and possession rights to the investor. That means you get the property itself right away. Currently, 17 states authorize the sale of ownership rights to tax-delinquent property through a tax deed sale or assignment deed.
Conversely, in so-called "tax lien" states, county governments sell only their right to the tax lien or tax claim on the real property. That means the delinquent taxpayer has to pay you the overdue taxes plus interest and penalties. Only if he fails to pay you after a certain amount of time can you then petition the authorities to get a deed to the property itself. A total of 18 states have authorized sales of a county’s tax-lien position to the public.
My own program on tax liens only covers the 21 states with tax-lien processes. The only tax-deed state I deal with is Texas. I have invested exclusively in tax deeds in that state for almost three years, because of the special opportunities it presents. However, for the sake of this primer, I’ll give you a brief overview of the tax-deed process in general.
Tax-Deed Processes
In a tax-deed state, the county will sell all of its rights to a property at a public foreclosure auction or through a later assignment process. The sale will generally occur three to five years after the first tax payment becomes delinquent. Property is sold for the back tax amount plus any fees, interest charges, and court costs.
Since property taxes are a small percentage of market value, investors can acquire full property rights at a fraction of the market price. The purchaser will generally obtain full ownership rights, or at least all rights held by the county. In tax-deed states, the purchaser generally has the customary rights of a landowner, namely to possess and/or occupy the property.
Tax-Lien Processes
In a tax-lien state, counties do not sell property; rather, they sell their liens for unpaid property taxes. The lien is an encumbrance or enforcement right held by the county. While the lien does not grant full ownership rights to the property, it does provide the investor with two commanding rights: (1) The right to receive interest penalty charges if the lien is paid off by the delinquent property owner, and (2) the right to foreclose the tax lien and take title to the property if the lien is not paid. Even better, the property-tax lien is a high-priority lien superior to judgment liens, mortgage liens, trust deeds, and other private liens.
Because of the powerful nature of these rights, tax liens are a very attractive investment opportunity. Moreover, since the property-tax lien is usually for a small fraction of a property’s market value, the investment is highly secured. In addition, the lien purchase does not subject the investor to landowner liability, since no right to possess or occupy the property is granted by the sale of the lien.
So… How Much Can You Make?
States offer maximum interest rates on tax liens that range from 16 percent to 24 percent, depending on the state and county. And because you buy your tax lien in a competitive bidding process, you may end up getting less than the maximum amount. For most states, that can happen in one of two ways: through the Price-Bid-Up Process or the Interest-Bid-Down-Process.
It’s important to note that the starting price of the lien includes more than just past-due taxes. It also includes penalties, assessments, and other charges or fees. Once the initial price is determined, in virtually all states, the lien has to be sold at public auction and all ordinary citizens may take part in the sale.
The Price-Bid-Up Process: Some states use a process in which the price of the lien is bid up based on competition for the lien. In this format, while the price may be bid higher, the nominal interest rate is fixed and will not fluctuate due to bidding. States using this system include Alabama, Georgia, Indiana, Montana, and Kentucky.
For instance, say there’s a tax lien for $10,000 paying 24 percent. You might bid $12,000 to get that tax lien. That lowers your effective interest rate, but it doesn’t change the nominal interest rate or the amount the debtor will owe. That remains as $10,000 and 24 percent per annum.
The Interest-Bid-Down Process: During this type of auction, the price paid for the lien does not change… only the interest rate does. The lien ultimately goes to the bidder who is willing to accept the lowest rate. States using this system include Arizona, Florida, Maryland, New Jersey, and Missouri, to name a few.
For example, let’s say you’ve got that same $10,000 lien, but now you’re in Florida. The bidding starts at the maximum 18 percent. As the auction progresses, there are takers at 17 percent, then 16 percent, then 15 percent… and so on. It could get bid all the way down to three percent or even less. It depends on the lien and the bidders that day. But let’s say you end up getting the lien at 12 percent. That’s your final number. You’ll get $10,000 plus the 12 percent per annum.
[Ed. Note: Darius Barazandeh holds an MBA and is an attorney and an active real-estate and tax-deed investor in Texas, as well as a leading national speaker on tax liens and corporate entities for small businesses and real estate investors. On Wednesday, August 1st, Darius will share some of his most profitable tax-lien advice in a teleseminar with Main Street Millionaire's Justin Ford. Spaces are limited, and attendance is reserved for registered callers only. To reserve your spot now, click here.]
Free Stock Report: Buffett’s Biggest Play Yet! Our Best Stock Pick of the Year
Recently, Warren Buffett bought 39 MILLION shares of one stock that could make all his past successes look like peanuts. For a full write-up – including the name of the stock, the ticker symbol, buy and sell targets, and why now is the time to get involved – request your copy of this report right now.
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Dear Michael Masterson: "Is it possible to market ANYTHING on the Internet?"
"I am an avid ETR reader and have bought several programs through your site, including the currency-trading program, from which I am already making a living.
"I am about to launch my own Internet-based business, and I was wondering if it is possible to market ANYTHING on the Internet?
"I have a very unique weight-loss/wellness/detox program that works wonders (and on everyone that follows it), but several people have told me it can’t be marketed on the Internet for one reason or another. In your experience, are some things limited?"
- Linda Pritchett
Greensboro, NC
Dear Linda,
You ask two questions. Both are easy to answer.
1. Is it possible to sell anything on the Internet? I don’t know. But I do know that all of the following things have been sold through that great medium:
Automobiles, airplanes, Artesian spring water, ambulances, alligators, architectural plans, antiquities, armor plating, Andalusian carpets, amphetamines, ammunition, apple-mint wine, andrographis, accordions, Armani figurines, agates, axes, Abs of Steel workout videos, Ayurvedic herbs, antelope meat, arrows, argyle socks, anger-management programs, Alfa Romeos, apple tree seedlings, angelfish, Aerosmith tickets, art supplies, ascots, algebra software…
And that is just a short list of the A’s.
2. Could you sell a weight-loss/wellness/detox program on the Internet? Yes. And you wouldn’t be the first person to do so. Or the second. Or the third…
One piece of advice: Before you start, read my book Seven Years to Seven Figures.
- Michael Masterson
How to Silence Snoring
By Suzanne Richardson
If you’re being jolted out of dreamland most nights by your spouse’s jackhammer snore, you’re probably feeling pretty tired. And with that comes crankiness and less productivity.
But short of kicking your spouse out of the bedroom (which more and more people are doing), what can you do to stop that earth-shattering noise?
Although snoring can be a result of anything from a common cold to sleep apnea (when you stop breathing during sleep), obesity is one of the biggest causes of this nighttime malady. So getting your partner to lose weight might be a good start.
Some other common remedies, according to the National Sleep Foundation:
- using a nasal strip
- asking your dentist/orthodontist to prescribe a dental appliance for the snorer
- making sure your spouse always sleeps on his/her side
- getting your spouse to give up alcohol and/or cigarettes
If you’re up for a more cutting-edge solution, you may want to suggest that your spouse take up the didgeridoo (an Australian wind instrument). According to a small study published in the British Medical Journal, playing this instrument can strengthen the upper airways and make them less susceptible to collapse and vibration. After four months of practicing the didgeridoo, participants in the study had less daytime sleepiness and fewer episodes of sleep apnea.
Also in the works for snorers is a new type of surgery. At Belgium’s University of Antwerp Hospital, Dr. Evert Hamans is testing a technique in which two metal anchors are implanted in the base of the tongue and lower jawbone. This pulls the tongue closer to the jawbone, opening up the airways to prevent sleep apnea and snoring.
Giving Your Customers Peace of Mind
By Katie Yeakle
With all marketing, we know it isn’t enough to just "sell" your prospect. You have to reassure him and make him feel good about his purchase. The best way to do that is to offer a rock-solid guarantee that:
- rationalizes the buying decision
- reduces buyer’s remorse
- initiates an ongoing relationship with the customer
When I asked copywriter Michael Samonek to let us in on some of his secrets to writing strong guarantees, he told me that these are the three most important elements:
- Risk Free. Your guarantee must state, in black and white, that your customer’s purchase is risk free. These two words speak volumes about your confidence in your product.
- Refund Regardless of Reason. Your guarantee must convey to your customer that his money will be returned quickly – for any reason whatsoever.
- Reign of Guarantee. Tell your customer exactly how long your product will be covered by your guarantee. The longer the guarantee, the greater the response will be to your ad.
[Ed. Note: Katie Yeakle is Executive Director of American Writers & Artists Inc. (AWAI). How to use guarantees to reassure potential customers is one of more than five-dozen sales secrets in AWAI's Accelerated Program for Six-Figure Copywriting. To find out how you can start using these winning techniques today to boost sales at your business (or to become a successful copywriter yourself), click here.]
It’s Fun to Know: About Wii-itis
Who says you can’t physically overexert yourself playing video games? A Massachusetts doctor has diagnosed and treated himself (with rest and ibuprofen) for Wii-itis, a condition similar to tennis elbow that results from marathon gaming sessions with the Nintendo Wii. The Wii, unlike most game consoles that allow gamers to remain sedentary, requires players to simulate movements, such as swinging a tennis racket or wielding a fishing pole. The physician believes most cases of Wii-itis go unreported.
(Source: CNN)
A Top Business Breakthrough Known Only by a Handful of Insiders Turns Out to Be One of the Best New Ways to Make a Bundle…
Plenty of people make tons of money every day in Real Estate and on Wall Street. But if you’re looking for something different… and if you don’t have $100,000 to invest or even $10,000…
Well, we’ve found it…
Till now, only a handful of insiders even knew about this almost secret powerful business.
What is it? All I can tell you is that more than half of the world’s billionaires have made their money this way. You’ll have to read on to learn more about it.
Finally the cat’s out of the bag… Click here to read more…
Word to the Wise: Noblesse Oblige
"Noblesse oblige" (noh-BLES oh-BLEEZH) – literally French for "nobility obliges" – is the benevolent, honorable behavior considered to be the moral obligation of people of high birth or rank. The term is used, sometimes ironically, to insinuate that wealth, power, and prestige bring certain social responsibilities.
Example (as used by Alison Owings in a New York Times movie review of The Waitress): "Waitresses know that ‘taking it’ includes a string of verbal and nonverbal slights: the ‘give me this, give me that’ order, the ‘you’re only a waitress’ show-off vocabulary, the ‘you are my servant for now’ treatment, the noblesse oblige (or no oblige) power regarding a tip…"
[Ed. Note: Become a more persuasive writer and speaker ... build your self-confidence and intellect ... increase your attractiveness to others ... just by spending 10 VERY enjoyable minutes a day with ETR's new Words to the Wise CD Library.]
Michael Masterson
Copyright ETR, LLC, 2007
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