Profiting from Unpaid Property Taxes with Ted Thomas
Meet Ted Thomas, a renowned figure in the real estate investment industry. He is known for his tenure of over 25 years dedicated to property investment, particularly in the area of unpaid property taxes. His insightful perspective and proven methods bring significant value to anyone looking to enter this investment.
A frequent guest on Dave Debeau's podcast, Ted shares his wisdom, explaining complex concepts with easy-to-understand language. He's a numbers guy who values the human side of real estate investing. So, his insights will prove invaluable whether you're a seasoned investor or a beginner in the field.
Thomas believes that education is the key to success in real estate. Investment, especially in the complex world of unpaid property taxes, sounds daunting. But with the proper knowledge and understanding, that stumbling block can transform into a stepping stone. Ted strongly advocates for learning, persistently emphasizing that the more you understand, the less you fear.
One look at Thomas's story is clear -its process isn't about wins but a structured, systematic approach. From regular studying, staying up-to-date with market trends, and, most importantly, taking calculated risks, he executes each step diligently - a crucial lesson for anyone looking to emulate his success.
In conclusion, the goal of introducing Ted Thomas isn't just for his reputation as a successful real estate investor but also for his knack for simplifying off-beat financial concepts so they're accessible to all. Learning from him assures understanding of the how and why behind every action - a much-needed trait for budding and seasoned investors.
But first, if you want financing for your next investment and want to know what type of collateral may be involved, click the link below for a free strategy call with our mortgage team at LendCity to discuss your specific situation.
The Basics of Unpaid Property Taxes
Now, Ted, let's delve into the nitty-gritty of unpaid property taxes. When homeowners fail to settle their property taxes, what usually happens next?
Ted Thomas: Great question, Dave. As you probably know, property taxes are a crucial form of revenue for local governments, helping to fund essential services such as schools, parks, and emergency services. So, when homeowners don't pay taxes, local governments often sell tax liens or tax deeds on the property to recover that lost revenue.
A tax lien is a claim against a property due to unpaid property taxes. When a tax lien is issued, the owner still owns the property, but the lien must be paid off before the property can be sold.
And then we have a tax deed. Unlike a tax lien, a tax deed is a legal document that grants ownership of a property to the local government when the property owner fails to pay their taxes. The provincial government can then sell the property at a tax deed sale to recoup the unpaid taxes.
Here's an expert's thing: These unpaid property taxes can present an excellent investment opportunity, which is where we enter the picture. Wouldn't you?
Dave Debeau: Absolutely, Ted. It's an overlooked field that can yield significant returns if appropriately managed.
Understanding the Potential Returns
The potential returns of investing in unpaid property taxes are pretty intriguing. However, understanding these potential profits depends on the investor's interest, so let TeLet'smas lend us his expertise.
According to Ted, there are two main methods investors use. These methods are purchasing tax lien certificates and buying tax deeds. Each approach comes with its potential returns.
When you invest in tax lien certificates, you essentially loan the property owner money to cover their unpaid property taxes. In return, you receive an interest rate on your invested money. In many instances, the interest rates can be significantly high, ranging anywhere between 16% to 24% annually. This could lead to substantial profits if the homeowner pays their taxes.
The other approach, buying tax deeds, involves purchasing the property outright. This action grants the investor ownership of the property for the amount they paid at auction, often much lower than the market value. If the investor chooses to sell the property, it can yield high returns, even after considering renovation costs. However, Ted Thomas emphasizes that a careful approach is necessary with this strategy to mitigate potential risks.
Ted rounds up this segment, explaining that a due diligence check is crucial before finalizing any investment. He insists on understanding the local rules, the potential returns, and the associated risks. He believes successful investing in unpaid property taxes is possible if appropriately executed.
Finally, it's crucial to assess the profitability of your investments. The potential returns can be significant with the correct strategies and insights from experts like Ted Thomas. Dave Debeau always reminds listeners that investing does not guarantee instant wealth. Success in this field requires patience, knowledge, and strategic planning.
Exploring the Benefits of Investing in Unpaid Property Taxes
Every investment opportunity comes with its unique blend of advantages, and Dave's guest, Dave's Thomas, sheds light on the benefits of venturing into unpaid property taxes.
The Profit Margin
Your potential for earning is set in stone when you invest in tax lien certificates or tax deeds. Ted Thomas emphasizes that unlike traditional investments, where the rate of return fluctuates, buying tax lien certificates gives you a predetermined interest rate, offering a hedge against market volatility.
Security of the Investment
Ted strongly remarks that investing in tax lien certificates and tax deeds is backed by real estate, which gives a sense of security not found in many other investments. If the property owner has no redemption period, the tax lien investor can acquire the property, often for just the back taxes owed. This process is commonly known as foreclosure.
The Availability of Properties
According to Ted Thomas, properties with unpaid taxes are abundant across different states and counties within the United States. This availability offers potential investors a broad pond to fish from. Consequently, it allows you to diversify your portfolio geographically and mitigate risks.
Entry Point
Ted points out that the financial barrier to plunging into tax lien or deed investing is lower than in other real estate investing genres. Due to the affordability of tax lien certificates and tax deeds, this is an investment option many people can explore, irrespective of their financial might.
Above all, investing in unpaid property taxes is a trail less travelled by many, so there's less competition and more opportunities for savvy investors to prosper. As Ted Thomas stipulates, the key to thriving in this neighbourhood lies in understanding the game's rules and playing it smartly.
The Risks Involved: A Candid Discussion
Investing in unpaid property taxes may sound like a profitable venture, but as with any investment, it's not without its share of risks. Our host, Dave Debeau, and guest, Ted Thomas, continually emphasized this during their insightful conversation.
Risk of Property Dilapidation: As Ted Thomas points out, one of the significant risks you may face involves the physical state of the property. You may find yourself responsible for a property in dire need of repair, which could significantly impact your returns.
Risk of Lawsuits: Legal risks are another factor to consider. According to Dave Debeau, it's not up to previous owners or their heirs to bring legal action, claiming they weren't adequately informed about the sale of the tax lien.
"It's essential to thoroughly research each opportunity and ensure that your due diligence processes are solid," advises Ted Thomas.
It's worth noting that the risks associated with unpaid property tax investing extend beyond financial losses. For example, managing dilapidated properties can be time-consuming and emotionally draining, a point that Dave Debeau emphasizes.
Finally, the reputation risk should never be underrated. As Ted Thomas puts it, "If you're t"kinyou's someone's, someone's creates a negative image, which could potentially impact future dealings."
Remember "that these concerns shouldn't prevent potential investors from exploring this asset class. Instead, these risks serve as a reminder of the importance of thorough research, due diligence, and a clear understanding of each investment's investments.
Common Mistakes to Avoid
Dave Debeau sits with Ted Thomas on unpaid property taxes to outline the common pitfalls investors frequently face. According to them, understanding these could mean the difference between making a worthwhile investment and experiencing unnecessary losses.
1. Alleviating Information Shortages
Thomas insists that lacking information is a fast track to financial trouble. Being aware of each specific detail is the key to successful investing. "Don't make "Don'ttions or act based on half-baked information," cautions T"omas. Research properties thoroughly, examine their histories, and ensure you know their current status.
2. Failure to Assess Local Legislation
Debeau agrees with Thomas on the importance of getting to grips with local laws concerning unpaid property taxes. Regulations often vary significantly from location to location, and failure to consider these disparities might lead to unexpected troubles. As a result, detailed knowledge of property tax laws in your area of interest is paramount.
3. Mimicking Others Blindly
Debeau and Thomas point out an often-overlooked point: the mistake of unthinkingly copying another's in another's in another's strategy. Although following a successful investor's investors seems enticing, numerous factors are at play in each individual that usually can't be replanted precisely. Ted Thomas says, "Creating your unique strategy based on personal preferences, risk tolerance, and resources is the secret to success."
4. Neglec" in Financial Planning
Lastly, both agree that neglecting financial planning is a fatal flaw. The duo can't stress the need for a sound fiscal strategy when diving into the waters of unpaid property tax investments. "Keep track "of your potential expenditure, and ensure you have backup funds to tackle unforeseen issues," advises De"eau.
In summary, Ted Thomas and Dave Debeau emphasize that avoiding these common missteps can lead to successful investment in unpaid property tax properties. Pace yourself, do your research, respect the rules, and above all, manage your finances smartly.
Exploring Different Investment Approaches
Dave Debeau kicked off this section of the conversation by inviting Ted Thomas to share the various approaches individuals can adopt when investing in unpaid property taxes. According to Thomas, there are primarily two methods: tax deed sales and tax lien certificates.
Tax Deed Sales
Tax deed sales allow investors to buy properties for the taxes owed. That's why local governments, in an attempt to recover unpaid property taxes, sell these assets to the highest bidder at public auctions.
"The winning"bidder becomes the new property owner, often snagging it at a bargain," Ted explains. "It's a wide"It'sed approach with the potential for significant returns if executed effectively."
Tax Lien "certificates
On the other hand, tax lien certificates are a little different. Instead of buying the property outright, the investor purchases a claim against the property for unpaid taxes.
"It's a way, "It's handing money to the property owner to cover their outstanding tax liabilities," Dave Eluci" said. "In return, "the property owner agrees to pay the amount with interest. You get an interest rate on your investment, ranging from 16% to 24%, possibly even higher."
With these" approaches, Thomas pointed out, the trick is to ensure you conduct thorough due diligence. "You must be "if the property's properties understand the laws in your respective jurisdiction and correctly calculate your prospective returns," he stressed."
Personal Approach Versus Third-Party Management
Finally, Ted discussed personal management versus hiring third parties to manage these investments. "Self-manage can be more hands-on and result in more control, but also requires time investment and a solid understanding of the process," he stated." Utilizing a"third party, while less personal, can help to streamline the process and handle the legal and regulatory issues."
Ultimately," each approach has its benefits and drawbacks, and the best one for you will depend on your circumstances, priorities, and investment goals.
Final Thoughts from Ted Thomas and Dave Debeau
In the final part of their discussion, Dave Debeau and Ted Thomas further reflect on the potential of investing in unpaid property taxes. Dave and Ted emphasize the need for thorough research and due diligence before entering this type of investment.
Unpaid property taxes present an opportunity to invest in tax lien certificates or tax deeds. As Ted Thomas reiterates, this involves paying the owed taxes on someone else's property, potentially earning high-interest rates or eventually owning the property.
However, Dave Debeau underlines the importance of proper preparation. This investment strategy isn't one you can plunge into without understanding the intricacies.
- Research the rules and regulations of the county you are interested in.
- Contact the county tax collector's collector to understand the process and terms of sale.
- Consult a real estate attorney familiar with tax deeds or tax lien investments.
"It's not so much about making a large amount of money quickly," says Ted. "It's about consistent returns over time. What could be better than an investment that continues to pay out, even after you've put in the initial work?"
Dave concludes the discussion by saying, "It's imp. "It's to remember that by very inv. "It doesn't have its unique set of risks and rewards. Some might be lucrative yet volatile; others might be slow yet stable. Ultimately, your investment goals and tolerance should guide your decisions."
So, if"you're willing to do your homework and have the patience to wait for returns, investing in unpaid property taxes could be a profitable venture worth exploring!
If you are ready to start investing today and want more information about how your mortgage may be secured – or are looking to apply for a mortgage today – click the link below for a free strategy call with our mortgage team at LendCity today.