Monday, May 14, 2012

Can Anyone Invest in Tax Liens

Do you need any special background or education in order to invest in Tax Lien Certificates? In order to answer this question for you, I'd like to tell you a little bit about my background and how I got involved in tax lien investing. I think that when you hear my story you'll realize that you don't have to be a millionaire in order to invest in tax lien certificates or tax deeds and that you don't need any special education or background in order to get started. I'm not a millionaire yet and I wasn't when I started to invest in tax liens. But I do have something now that I didn't have before I started doing this, and that is a positive net worth. I didn't have a positive net worth before I started investing in tax liens. So, how did I get started?
I do not have a background in real estate, I do not have a background in finance, and I didn't have a lot of money. How I got interested in this is a long story, but I'll condense it for you. My story starts in the beginning of 1989. My husband and I had our first child, and purchased our first home (a 2 bedroom condominium). Shortly after we moved into our new home, my husband lost his job, and became self-employed. Then the bottom dropped out of the housing market in New Jersey. We had negative equity in our condo.
It wasn't until more than 10 years later that we were finally able to sell our condo. When we moved into our condominium, we had one baby. When we moved out about 12 years later, we had three growing boys. Our only saving grace was the finished basement. We were finally able to move out and I thought, "I'm going to get out while the getting's good," and rent for a while. We couldn't find a house to rent in the community that we lived in. We even looked to buy a house, and we couldn't find anything in our price range. My parents owned a house in the town that I grew up in, Millburn, New Jersey, in Essex County. This was a very desirable suburban township to live in, about 30 minutes or less from New York City by train. We were only able to live there because we rented the top half of a house from my father. During the four years that we lived there, we looked all over the central New Jersey area, trying to find a house that we could afford to buy. And as we were looking, the values of homes were rising at an incredible rate. In the four years we lived there, home prices nearly tripled!
During this time, other things were happening in my life that made me wake up and smell the coffee, and start taking our finances into my own hands. I started studying different ways to build wealth. I studied the stock market and how to trade stocks and options. I really wanted to get involved in real estate because I thought that was the quickest way to get wealthy. I thought I would try the foreclosure market and I went to foreclosure sales, but in New Jersey you need to have 20% of the selling price in certified funds at a Sheriff's sale.
I went to foreclosure sales in two different counties. These houses were selling, on the average for $300,000. These were foreclosure properties; distressed houses and most of them were not very large houses either. Because of the increasing price of houses and property throughout the state, investors were paying close to market price to get these properties. I found myself locked out of the foreclosure market, so I thought I would try the pre-foreclosure market, but at this time there was a lot of interest in that as well. I sent a lot of letters out to people that were in default, that were going to be foreclosed. And they were getting these same "letters" from many other investors as well. I did not get any good responses from my efforts, but I did get a couple of bad responses; people telling me that I was a shark and not to bother them. I didn't even bother them. All I did was mail them a letter. I didn't call them on the phone or knock on their door, but they called me to tell me how awful I was.
All I was really trying to do was get a house that I could afford for my family. After a few years I decided, well, if I can't buy my own house I'm going to buy an investment property, after all from everything that I had been studying, that was the best way to accumulate wealth.
In looking for an investment property, we found a house that we decided to purchase for ourselves. We purchases a house in Pennsylvania and for less than half of what we would have to spend for a little tiny house in New Jersey that needed to be fixed up. We bought a 2,700 square foot house on an acre of property. We decided that's where we were going to live.
Instead of investing in a home, we actually bought a home to live in. At the same time, I had been investing in tax liens. When I could not get into the real estate market, the foreclosure market or the pre-foreclosure market, I decided to try tax liens. With tax lien investing, I didn't need as much money as I did for other real estate investments. I had been reading about tax liens and tax deeds, and what a great investment they are, but there was nothing available to tell me how to do it. I had to figure it out for myself so I just started going to tax lien sales.
I happened to meet somebody else who was also trying to figure out how to invest in tax liens. We kept running into each other at tax sales. I came to find out that he was someone with a lot of money to invest, much more than me. He was after larger liens than I was. He wanted to put together a sizable tax lien portfolio. We were figuring this out together and I started working for him and building his portfolio at the same time I was building mine. I was buying smaller liens for myself and I was buying larger liens for him.
We were investing in New Jersey where typically there could be a few sales on the same day, in different municipalities. There are over 500 municipalities and they have sales throughout the year. Each municipality only has a sale once a year, but with 500 municipalities, that's a lot of sales. There are quite a few sales throughout the year so I hired a handful of people to do due diligence and bid at tax sales for me. We didn't even go into all the counties. We went to five or six counties in New Jersey and I was able to put together a large portfolio of tax liens for my new business partner over the course of the next couple of years, and a smaller portfolio for myself. As I was doing this, I started my Web site,, I wrote my own e-books and I even helped my business partner to develop a software product for tax lien investing in New Jersey.
While I was in the process of looking at properties in Pennsylvania I also went to a couple of tax deed sales there and purchased my first tax deed. When we moved in to our new home, we also owned a building lot in a desirable community, free and clear. That's how I got started in tax lien and tax deed investing. The reason that I'm telling you this is so that you can see that if I can do this with no background in real estate, no background in investing or finance, then really, anybody can do it. The first thing that I suggest you do if you want to get started investing in tax lien certificates or tax deeds, is to go to a tax sale and see what it's like.
Joanne Musa is a Tax Lien Investing Coach and Consultant who works with investors who want to learn how to buy profitable tax lien certificates and tax deeds. She is the president of Tax Lien Consulting LLC, a consulting firm for tax lien investors. She is the author of the e-books: Tax Lien Investing Secrets and Tax Lien Lady's State Guide to Tax Lien and Tax Deed Investing, available at For more tips on investing in tax lien certificates send an e-mail to