People always ask me what the biggest pitfalls are when it comes to investing in Tax Liens. Do you know what I tell them? There are ALWAYS risks in any type of investment. Our job as seasoned investors is to mitigate that risk as much as possible.
When we buy tax liens in Texas, only two things can happen:
1. We get a 25% return on our investment within 6 months.
2. We get the underlying property free and clear and can sell it, rent it or do as we see fit
The 25% return within six months is MANDATED by the state- its all their in the Texas Tax Code.
With that being said, here are some of the biggest pitfalls new investors face when it comes to tax lien investing:
1. Not doing your due diligence- I cant even tell you how many times I have been to tax sale auctions and see people bidding on property that no one should be bidding on- unless they like losing money! We have developed a step-by-step due diligence process that we undertake for each property we are planning on buying. This ensures we minimize our risk and maximize our profit as much as possible!
2. Not having a team in place- for me, the biggest key to success in real estate is the team you surround yourself with. When I say “team” I mean members like property managers, realtors, accountants, mentors etc. If you don’t have a team in place that is excellent at what they do and who genuinely care about your success, you wont be successful- its as simple as that.
3. Auction Psychology- one of the biggest mistakes rookie investors make is how they approach the tax sale itself. Overbidding, not sticking to your maximum bid price, not using bidding strategies and feeling like you have to buy something just because you are at the auction are recipes for disaster. It is vital to understand auction psychology and bidding strategies if you want to be successful in this business! It’ll save you thousands and could be the difference between getting a property or not.
If you are interested in joining us in the field for a 3 day hands on tax lien training tour, we still have spots available for the June 2nd, 3rd and 4th tour in Houston Texas.
You will learn first hand how to invest in government issued tax lien certificates and meet our team of professionals that have helped our students from all around the world purchase millions of dollars worth of property at tax sales over the last three years!
For more info, simply reply to this email.
Have a great week!
Earn, Live, Give
Stephen W. Preston