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Yesterday we highlighted a unique income investing opportunity that’s 100% off-Wall Street and sports up to 24% returns. It’s tax lien/deed investing.
Today, PBRG researcher Sean MacIntyre returns to warn us of two of the most common tax lien/deed investment scams to watch out for…
From Sean MacIntyre, research analyst, Palm Beach Research Group: Tax liens, unfortunately, have been at the heart of a number of scams…
Because they’re a lesser-known asset—and because they can cost very little compared to the property to which they’re coupled—many wealth stealers have found interesting ways to take advantage of people who want to get involved in this lucrative asset.
There are two common traps that tax lien investors should avoid.
The first involves buying tax lien certificates from lienholders on sites like eBay and Craigslist.
Some of the sellers on these sites are legitimate, offering good liens, and simply want a return on their investment before the redemption period elapses.
Buying and selling liens this way can actually be a good way to get a quick return on your investments. Counties usually levy a transfer fee on liens that can range from $2.50 to $10, but that’s just about the only restriction.
But what if the seller is selling the lien to a property that’s underwater? Or to a house that’s burned down? Or to a lot occupied by a government power line?
If a seller withholds information about the property coupled with the lien, this is a big red flag that the deal is potentially a scam.
The other common trap involves individuals or companies that ask for a fee or program charge in exchange for the assignation of a lien certificate.
A particularly insidious case of exploitation took place in 1991 when the “International Loan Network” invited 162 Milwaukeeans to join the group. It guaranteed liens on properties in exchange for hundreds of dollars in fees, even though the properties themselves had liens worth only a fraction of what people paid.
The SEC cracked down on the pyramid scheme, but this example just illustrates the importance of educating yourself about this opportunity before jumping in.
You don’t need any middlemen to acquire a good lien, but there are circumstances when it might be good to work with someone you trust to acquire liens. For example, you can hire someone you trust to attend an in-person auction in a county in which you don’t reside. Just make sure you’re paying the right amount for the right things.
And if you’re ever in doubt about the legitimacy of a lien, county treasurers and comptrollers will verify a great deal of information for you.
Reeves’ Note: PBRG’s research on tax liens and deeds investing has been one of our greatest successes in providing our readers legitimate “income in an incomeless world.” You’ll be hard pressed to find stronger, safer yields anywhere today (up to 24%—with potential to double your money or more depending on the investment).
Recently Sean led our research team to produce a follow-up report on “over-the-counter” (OTC) tax lien investing. It’s a tiny backdoor way into the niche that doesn’t even require you to attend an auction. And it’s a special additional bonus for all new “Retirement Plan B” subscribers.
Learn more about our unprecedented program to provide you daily, monthly, weekly, and annual income streams right here (or click on the image below).
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