201201REM Report Loop2

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The Secret 24% CD

Dr. David Eifrig Jr., MD, MBA

Almost every courthouse in the U.S. employs a little old lady to stand guard over the real-estateproperty records the way a junkyard dog guards the auto yard.

Buried in their file cabinets in rooms with names like County Tax Collectors Office, Officeof Finance, or Treasurer Tax Collectors Office are lists of properties held by owners who haventpaid their property taxes.

For investors patient enough to do some homework, finding those lists could lead to double-digit returns on your money in some cases within months.

And since most short-term CDs and money-market accounts arent paying more than 1% to 2%interest, these investments Ill describe in this report offer a great opportunity to increase the incomein your portfolio.

The investment has nothing to do with stocks, bonds, or any other risky investment. Its not anactual CD either. (So the FDIC does not guarantee it.) But because the investments are backed byreal estate, they can be in some cases even safer than a bank account.

Quite simply, this investment what we call a Tax CD is created and administered by stateand local governments all across the country. Essentially, its a way for your local government to raisemoney.

Like all great opportunities, it will take some work. (But dont worry, youll have time to do theresearch because, in many states, you can only take advantage of it once or twice a year.)

Im talking about buying tax liens on your county courthouse steps. And right now, its one of thebest alternatives to leaving money lying around earning next to nothing.

An Investment That Wins 95% of the Time

The basic idea of tax lien certificates is simple...

Every year, the local municipalities require property owners to pay taxes on their real estate thetaxes cover sewer, trash, and police. But every year for many reasons, people dont pay those taxes.Its up to the county to chase down those delinquent payers.

But since the city needs that money, it allows other individuals (us the investors) to pay the backtaxes in exchange for a lien on the property. The government regularly auctions these tax liens onthe courthouse steps (at least once a year and as often as monthly).

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Once the person pays the taxes, the lienholder get hismoney plus interest. The investment is incredibly securebecause it is collateralized by the value of the real estate. Ifthe property owner never pays the taxes, the governmentwill eventually seize the land and force the sale.

In most cases, people want the tax collector off theirbacks as soon as possible and pay what they owe thismeans a quick return on your money. Even in the worstcase when the government forces a sale the holder ofthe tax lien is first in line to get paid in foreclosure.

There are more details to consider, of course. Everystate is different, with different interest rates, penalties, feesand time periods to pay back taxes. So you do have to rollup your sleeves here and do a good deal of homework. But

thats also part of the beauty of it... You have literally thou-sands of these tax lien certificates available, and not manypeople willing to figure them out. Its a perfect way for a Re-tirement Millionaire reader to make safe income and evencapital gains.

Risks of Investing in Tax Liens

The beauty of this opportunity is the tax collectorcharges steep penalties and fees for late payments. For ex-ample, Texas sticks it to delinquent property owners for

25% Georgia 20% Illinois 18% and Florida 18%.Those percentages represent your gains. When the propertyowner pays his taxes and fees, you get your original moneyback, plus the fees.

The best part is, property owners pay off 95% of theseliens within a couple of years (sometimes within months). Thus, you can easily and safely earn 16%-24% a year on your money by investing in these liens.

Worst case is the taxes and penalties arent paid, and the property has to go to auction. Once itssold, you get your money back. Because taxes are usually only 1%-2% of the value of the property, its

almost impossible to get back less than your initial investment from the proceeds of a foreclosuresale.

In some states, you can actually get the property for just the cost of the taxes and penaltiesyouve already paid (but this is rare).

The bankruptcy can represent a big question mark and risk. Before you bid for a tax lien, youhave to make sure the lot exists, is accessible, and is worth significantly more than the back taxes toensure youll get your money back with full interest.

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Heres just a small sampling ofthe interest rates per state:

Alabama 12%Arizona 16%

Connecticut 18%Colorado 15%District of Columbia 18%Florida 5%-18%Hawaii 12%Iowa 24%Kentucky 12%Louisiana 12%Maryland 6%-24%Massachusetts 16%Mississippi 18%Missouri 10%Montana 10%Nebraska 14%New Jersey 18%North Dakota 12%Ohio 18%Oklahoma 8%Pennsylvania 10%South Carolina 8%-12%South Dakota 12%

Tennessee 10%Vermont 12%West Virginia 12%Wyoming 15%


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As long as youre certain of these things then bankruptcy mostly represents a delay in whenyou receive your payback. The laws surrounding foreclosure vary among states and can at times beByzantine. For example, in Florida, the foreclosure process can start only after two years of delin-quent property taxes. Even then, it takes time and you cant be sure when youll get paid.

Still, the rewards here usually outweigh your risks. This is a lot more secure and a lot less riskythan the stock market... Again, 95% percent are paid with a couple years (usually sooner). That kindof certainty is hard to beat, especially when it comes with a built-in 16%-24% gain.

Six Steps to Collecting Amazing Income Checks

The clerk of court in your county sells tax liens at auctions.

Often, the court advertises the auction in the local newspaper. Theyre hidden away in thelegal-notices section of the classified ads. The notices dont give the property address. They just givethe legal description of the property, which sounds like a bunch of mumbo jumbo. Heres a sample...

...said certificate embraces the following described property in the County of St. Johns,State of Florida, to-wit: PARCEL NUMBER 050602-1030 SEC 09 TWP 10 RGE 28 PARTOF SE 1/4 & PART SEC 16 330 X 404.8 FT (EX S 70 & E 30 FT) OR TRACTS 1030 &1031 UNIT 2 FLAGLER ESTATES UNRECORDED PLAT OR696/1613 & 2729/1739(D/C)

The assessment of the said property under the said certificate issued was in the name of[name withheld]. Unless said certificate shall be redeemed according to law, the propertydescribed therein will be sold to the highest bidder at the front door of the RICHARD O.WATSON Judicial Center, 4010 Lewis Speedway, St. Augustine, Florida, 32084, on SEP-TEMBER 30, 2009 at 12:00 oclock noon.

Its almost impenetrable. But you can take the parcel number and enter it into the local propertyappraisers website. That should identify the property and all the info, aerial views, and so on. (If youcare to, you can also get this info by braving the elderly ladies guarding the property-records office.)

Taking the time to do a little homework could be worth as much as 24% in annual incomechecks.

Id be willing to bet that you can get great buys just about anywhere... Local governments dontcare what the properties sell for or how many people show up to the auction. They just want theirtaxes. So they do a terrible job of promoting them, and usually there are just a few bidders.

How can you earn 16%-24%? First, find out if your state is a tax-lien state or a tax-deed state.(Dont worry about the distinctions. Were only interested in tax-lien states.) Not every state handlesback taxes through lien auctions. Heres a list of tax-lien states: AL, AZ, CO, FL, IL, IN, IA, KY, MD,MI, MO, MT, NE, NJ, ND, SC, SD, VT, WV, and WY.

State law determines the interest, penalties, and fees the owner has to pay to redeem the lienfrom you the investor. In some states the owner pays a minimum penalty (5% in Florida) no matterwhen the lien is redeemed even if its two days later.

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If you live in or want to invest in one of the tax-lien states, call the courthouse and find out whattime of year and what type of auction it holds. Insome states, the auction bidding is for interest ratesthe investor will receive. For example, in Florida

bidding starts at 18% and goes down to 0.25%. Inother states, potential buyers bid on the nominalamount of taxes owed and go up, but with an inter-est rate attached to the final balance. In some statesits a mix of the two. These are local details thecourt employees can explain.

Thats why I love to visit the courthouse andtalk with the people in the property departments.They have books and records easily available, al-though not always understandable. And by hanging

out in person in the offices, your questions arequickly answered. A few counties now have onlinerecords you can peruse from home.

Once youve picked out the properties, at least aweek or two before the auction, visit all the proper-ties youre interested in bidding on. Be sure and setthe limit youre willing to accept. Once the auctionhappens youll easily lock up returns of 12% onyour money and in amounts as little as $500-$1,000 amounts that anyone can invest.

So heres what you need to do:

1) Go to your local county clerk of court website and search for tax lien sales, tax deed auc-tions, or something along those lines. You can also call the clerk of courts office and ask where theinformation is published and when the next auctions are.

2) Check out the properties up for auction. First, look them up on Google Earth (or GoogleMaps) to find out exactly where they are. Then, drive by them and make sure they have rights-of-way and such.

3) Figure out what youd be willing to pay for them. A starting figure for this trick is to takethe property appraisers number and cut it in half. Thats for a great property. If its something thatsnot particularly impressive, try to buy it for 25 cents on the dollar. (Yes, Im serious.)

4) Before you show up at the auction, pick up a couple of five-star-rated books on tax lien invest-ing from Amazon and know them backward and forward... particularly the rules of your state.

5) Visit the courthouse and thumb through the big file for the property. Ask questions about theproperty... youd be surprised at what you can learn.

6) When you go to the auction, stick to your prices. Dont get caught up in the bidding.

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In addition to following the six steps Ioutline at the end of this report, I encourageyou to buy a few books on tax liens a couplemonths before the auction so you know ex-actly what to expect.

Here are several books I recommend(Theyre easy to find on Amazon.)

The Complete Guide to Investing in RealEstate Tax Liens & Deeds: How to Earn HighRates of Return Safely by Jamaine Burrell

Profit by Investing in Real Estate TaxLiens: Earn Safe, Secured, and Fixed ReturnsEvery Time by Larry Loftis

Real Estate Tax Deed Investing: How WeMade Over One Million Dollars in Two Yearsby Matt Merdian and Laurence Samuels

Complete Guide to Real Estate Tax Liensand Foreclosure Deeds: Learn in 7 Days byDon Sausa


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