Tax Deeds or Tax Liens by Tony Martinez

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Asking yourself whether you should invest in tax liens or tax deeds (or both) is important. This should be one of the first questions you explore as you embark on your journey to financial freedom. Your choice will depend on the amount of time you have to commit to investing, as well as the amount of funds you have to invest... among other deciding factors. Below I’ll list a few important points you need to analyze that will help direct you in choosing either tax liens or tax deeds.

Time
Realistically tax deed research and handling takes much more time than tax liens. For tax deeds there are many more steps you must complete before making a purchase, and the buying process can be time consuming as well (especially for live auctions). When you purchase a tax lien, it’s just a matter of waiting before you get your money back plus interest.

Tax deeds on the other hand will require you to potentially rehab the property and market it to sell among other important tasks that can take anywhere from 3 months to a year (if your exit strategy is flipping and selling, or just wholesaling). If you don’t have that kind of time, and if you cannot have larger amounts of funds tied up for that amount of time, then liens may be for you. Liens are typically much less expensive to purchase, though the waiting period is much longer, anywhere from 2 – 3 years on average.

Money
I eluded to the fact that tax deeds typically take larger sums of money to invest in. Not only is the initial bid price more expensive, but there are various costs associated with tax deeds. To name a few: realtor commission, inspections, rehab, insurance, utilities, title clearance and insurance etc... basically the costs in sum are purchase price, holding costs, rehab costs, and closing costs. This all adds up and is something you need to estimate before making a purchase.

Passive vs. Hands-On
One strategy is not better than the other, but you know yourself better than anybody so ask yourself how involved you really want to be with the process. If you’re looking to make investing your full time job, then incorporating tax deed purchases into your strategy would be a must to fill the hours and boost the returns.

As you know liens are not better than deeds and vice versa. It’s simply a matter of analyzing what you’re capable of doing, and what you actually want to do. You can of course choose both, nobody is stopping you!

Sincerely,
Tony Martinez

Tony Martinez is the Co-Founder and Co-Chairman of the US Tax Lien Association, which is an organization that is committed and dedicated to helping others achieve total financial freedom through the power of investing in Tax Lien Certificates. With over 20 years of expert experience, Tony is the world's #1 authority on the subject of creating enduring wealth through the little know strategy of investing in Tax Lien Certificates, which gives anyone the opportunity to earn guaranteed fixed rates of returns of 18% – 36% interest per year, and acquire valuable real estate for approximately 10% of market value.