From Sean MacIntyre, research analyst, The Palm Beach Letter: To give you a sense of the scale of this opportunity, let me compare stock investing with tax deed investing…
There are 3,100 stocks listed on the Nasdaq exchange and 2,800 on the New York Stock Exchange (NYSE)—for a total of 5,900 possible investment opportunities. And this market is massively overcrowded: 55% of the American populace own stocks.
Compare this with the number of property tax delinquencies that can go to auction.
In trying to research this number, I found one county in California that had about 2,400 properties go to auction. But as the county processes more tax-delinquent properties, that county will continue to put others up for auction each month.
There are 3,144 counties in America—each one is its own market, open for investors. Half sell tax liens, and half sell tax deeds.
That means, in any given year, there are anywhere from several hundred thousand to several million discrete investment opportunities.
And the pool of investors competing for opportunities is much smaller…
I personally went to a tax deed auction in Florida. There were 10 properties up for auction, but only eight people were bidding on them.
Depending on the county and the day, sometimes auctions will have no attendees whatsoever.
In more populated counties and counties with online auctions, it’s possible that up to a few thousand people will be bidding, but there are many more properties to go around as well.
Now, when it comes to returns, historical S&P 500 returns are about 11% on average. Some years it’s higher, some years it goes down.
And, keep in mind, these are returns for an index like the S&P 500. The average investor earns much smaller returns: typically 3.7% per year.
Tax liens have a positive interest rate guaranteed by states. It’s possible to make up to 24% per year on an investment that’s backed by collateral (property) and set by state statute.
So let me ask you…
Would you rather compete with over 150 million other people scrambling to beat market averages of 11%?
Or would you rather do a little bit more research… compete with anywhere from zero to a few thousand people for a pie that’s plenty big to go around… and possibly make 16%, 18%, or 24% or more on your money?