Realty411 Magazine A Spotlight on Charles and Lena Sells | Page 43
Q. How big is the tax lien
investment opportunity in the
current market?
Tax lien investing is over a
billion dollar a year business.
However, the majority of that
business is dominated by
institutional investors, such as
hedge funds and banks. That is
why we feel it is important for
individual investors to work with a
service provider in order to be
successful investing in tax liens.
You need somebody that not only
knows the niche markets not
dominated by institutional
investors, but that also have the
resources to perform in those
markets.
most importantly, you have to be
present at the auction in order to
make a bid (not online).
Q. How sustainable is tax lien
investing as the market changes?
I started my career investing in
distressed real estate and tax liens
in the mid90s. You honestly could
not have picked a worse time to
begin a career in distressed real
estate, right? The mid90s was the
beginning of the tech boom and the
early breaths of the housing bubble.
The point being, regardless of a are already in a losing scenario. As
the popularity of foreclosures took
off, novice investors were buying
at corrective market values. In
other words, they thought they
were getting a deal, but were
actually paying retail price on
homes that were still going to need
full rehab. That is definitely not
buying right and those investors
tend to wash out of the ranks pretty
quickly.
Q. What types of opportunities are
there for individual investors in
this space now?
booming, or bust economy, there
are always opportunities to acquire
good inventory. Market changes
don’t usually impact longstanding
services providers like ours. What
impacts us are the competitive
variables, as the popularity of an
investment like distressed real
estate surfaces. For example: As
the housing market crashed, every
novice investor out there wanted a
shot at buying foreclosures for 10
cents on the dollar. There is a term
in our business, which is “buy
right.” If you don’t buy right, you When the
market
crashed,
coaching
programs
and mom
and pop
“turnkey
service
providers”
shops
seemed to
pop up out of
nowhere.
There is great opportunity for both
individuals wanting to do it
themselves, or by using a service
provider, but investors have to be
careful not to drink the koolaid
that comes with so much that is
out there. There are good coaching
programs and there are good
turnkey service providers, but they
probably only represent about 5%
of what is available out there right
now. There’s no such thing as
substantial profit, without
substantial effort. There is no such
thing as a “sure thing.”
Q. Where are the best places to
buy tax liens for best returns
given the amount of competition
out there today?
Market changes are one thing
and really do not impact our ability
to perform. Legislative changes are
a completely different ballgame.
What was once a great state to buy
in, can swiftly be turned into an
industry worst, by a simple change
in legislation. Take Florida, for
example. About 10 years ago,
nearly all of Florida took their
auctions online. Overnight, things
went from 50 bidders in a room
buying at average rates of 12% on
tax liens, to over 50,000 bidders
registering online, with an average
bid rate of ¼ of 1%. The best
returns are in what we call
“investor friendly” states – those
with short redemption periods,
high penalties on redemption and
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