Everyone wants to be successful with every investment they make. The fact is, no one is perfect and as humans we all end up making some mistakes. In this blog post I want to explain what I do to avoid making costly errors when evaluating tax liens or tax deeds.
Even the most experienced airplane pilots review a checklist prior to every flight no matter how many times they have piloted the same plane on the same route. As a tax lien and tax deed investor I do the same thing. I still work off of a checklist on every investment that I make even though I have purchased thousands of tax liens and tax deeds over the years.
Using a checklist assures that I do not overlook any element of the investment. The checklist prevents me from getting too careless with the evaluation process and prevents me from making mistakes.
My checklist also serves as the cover page of the portfolio that I create for every lien or deed that I purchase. My lien or deed portfolios also include copies of the documentation that I have reviewed as part of the evaluation process. When you are considering a large number of properties these small portfolios can be a real time saver as you review the potential investments and prepare to place your bids.
I am often approached with the question; how do I attract other investors? The best answer to that question is to find quality investments that are too good for them to pass up. Of course that statement begs the question how do I accomplish that?
The simple answer is the numbers dictate the quality of an investment.
For example if I can make a $5000 investment with a 24% annual rate of return backed by a property that is worth $200,000, that is a great investment. In fact I would say it is too good to pass up. The catch is that you have to prove the value of the investment to the potential investor even if you are investing your own money. The proof you need is found out by following through with the 14-step evaluation process. To insure that I follow through with each of the 14-steps I create a checklist.
You can set up your checklist in any format that works for you. Some of the clients that I have worked with have preference toward old-fashioned pen and paper, while others prefer to use modern technology. As for myself I prefer to use my computer to create the files electronically. That way I can easily send them to potential investors via email or other similar method. With today’s technology that means a potential investor can even review the portfolio I have created on their smart phone.
A good method for creating a checklist is to include the questions that are answered through the 14-step process. In addition you may want to consider including information that you would require if you were providing investment capital to someone else. Add those questions to your check list and acquire the answers through your evaluation of the property backing the lien or deed.
In conclusion the best thing for you to take away from this blog post is that using a checklist is a good practice for insuring a complete evaluation and in addition it makes a great start for the creation of a property portfolio. I am confident that using a checklist and creating a property portfolio will help you pick winners every time.