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The Tax Lien Apprentice: Determining a Focus
Follow the story of a beginner tax lien investor, Ryan, through the Tax Lien Apprentice series.
With nearly 30 years of stock and bond investing, Ryan feels most comfortable with tax liens for several reasons. First, liens have a high rate of return. According to Ryan, “Many liens pay equal to or more than stock returns but without the price risk and volatility that comes with stocks.” In some cases, liens are just a few short months, which allows him to compound his money quicker. His plan is to reinvest the funds as soon as possible into the same short redemption periods so he can take advantage of compounding interest.
Second, Ryan likes the potential to own real estate but isn’t sure he’s ready to deal with real estate all of the time. While he’s not opposed to real estate with every investment in tax deeds, he’s not sure he’s ready or has time to prepare and attend deed auctions. Nor does he want to deal with the repair and improvement of a home to get it ready to sell. Tax liens only take a few hours per month. “Perhaps at some time in the future, I’ll be more willing to focus on deeds. But, right now, I just don’t know that I have the time or will to deal with properties,” Ryan explained.
Third, Ryan likes the safety of tax liens. “It’s a lot like owning a bond.You are guaranteed the return of principal, plus interest. But liens provide stock market-level returns.” Additionally, liens don’t suffer from changing interest rates. No matter what the Federal Reserve does, the price of the lien stays the same.
While Ryan has been familiar with tax liens for more than 10 years, he has yet to make an investment. Therefore, he’s just dipping his toe into the market with an initial $5,000 investment. “The low initial investment for tax liens allows me to try out tax liens with a small chunk of change. Then I can add more money if things go well,” Ryan stated.
Finally, Ryan’s day job allows him to work from home, and he invests from home; therefore, tax liens fit with his work-from-home lifestyle. The various auction sites and online inventories allow him to make his transactions without leaving the house. Additionally, he can do his research from home using real estate sites and calling real estate professionals.
In the next Tax Lien Apprentice article, we’ll discuss Ryan’s plan for tax liens including redemption periods and investing goals, as well as how he’s scheduling time to manage his investments.
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.