Land Trusts – Holding Beneficial Interest

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By Jay Butler

Land Trusts, sometimes referred to as Florida or Illinois ‘type’ trusts because of their favorable state laws and years of case history, are designed to hold title to real property and real property assets including real estate options, contracts and mortgages. Land Trusts are most commonly used to transfer title of income-producing property without invoking a due-on-sale clause with their lender. Public Law 97, also known as the Garn – St. Garmain Act, prohibits financial institutions from invoking a due-on-sale clause upon transferring title so long as, among other things, the beneficial interest holder is the same the day after the transfer as it was the day before the transfer and there is no transfer in the rights of occupancy in the property.

Both residential and commercial real estate investors alike have made the mistake of listing themselves as the beneficial interest holder in their land trust agreement. Even though the beneficial interest holder of a land trust agreement is not filed anywhere in the public domain, should the property held in the land trust face an inside lawsuit, or should the individual listed as the beneficial interest holder of the land trust face an outside lawsuit, all the assets of both the land trust and the individual are at risk to seizure by a judgement creditor.

Although land trusts provide an excellent veil of anonymity, it is still a form of an intervivos trust and thus not an asset protection vehicle. Intervivos means ‘among or between the living’ hence the term ‘living trust’. Land Trust assets are considered personal property to the beneficiary, which is not subject to seizure by judgement creditors in some states. However, existing court precedence has held that,“If a settlor has the right to revoke a trust, all of the assets are treated as owned by the settlor and is ignored for creditor purposes, just as it is ignored for tax purposes.” Meaning, while land trusts can provide you with an excellent veil of anonymity in the public domain, they are not a shield of protection as is an entity.

Land Trusts can be revocable or irrevocable. While generally created as revocable, if a judge were to call you into a debtor’s examination, requiring you to provide ownership information under penalty of perjury (wherein you may not plead your 5th amendment rights), you must disclose all of your assets or risk being held in contempt of court. If the beneficial interest holder of the land trust is an entity, you stand measurably improved chances of protection as such structures provide outstanding asset protection under scrutiny.

It is therefore of paramount importance to assign the beneficial interest of the land trust (at least 24 hours after transferring title) to another ‘person’, such as a Limited Liability Company. With recent state supreme court rulings in Colorado,California and Florida rendering most single-member Limited Liability Companies (LLC) useless as tits on a bull, we recommend that when possible you form any such single-member limited liability companies in states like Nevada, Wyoming or Delaware whose respective state statutes offer the same charging order protection to single-member LLC’s afforded to multi-member LLC’s.

Placing the beneficial interest holdings of a land trust into an entity isolates individual liability from an inside law suit to the LLC and protects LLC assets from a judgement creditor in the event of an outside law suit to the individual. Factoring equity value, cash flow and overall risk of each property should aid in determining just how many entities require forming to hold the beneficial interest to your land trusts. We suggest holding beneficial interest to your land trusts in either a Nevada, Wyoming or Delaware Limited Liability Company or (Family) Limited Partnership.

In 2011, Nevada enacted legislation NRS 78.746 which extends Nevada “C” Corporations the same charging order protection afforded to Limited Liability Companies and Limited Partnerships. In addition to a few other minor restrictions, such “C” Corporations must have at least 2 and no more than 99 shareholders. Wyoming is considering adding this favorable concept into its legislation but, at the time of this article, has not yet done so. Meaning, you can also have a Nevada “C” Corporation act as the beneficial interest holder to your land trust as it too affords ‘charging order protection’ just like a Limited Liability Company and Limited Partnership.

In-so-far-as taxes are concerned, a Land Trust is a private agreement amongst the involved parties and requires no financial reporting, however the entity which acts as beneficial interest holder is required to file a tax return annually either in the form a 1065 (Partnership), 1120 (“C” Corporation) or 1120-S (“S” Corporation).

For states which require beneficial interest holders of a Land Trust to be disclosed, Personal Property Trusts can be used as an effective vehicle “between” the property (held in the Land Trust) and the ultimate property owner (ie. Corp, LLC or LP). This use of ‘layering trusts’ can be a very effective tool in dissuading would-be creditors from attacking you, all without creating unreasonable costs or sacrifices in time and energy during your real estate transactions.

Whether owning, renting or holding for long-term growth, be sure to mitigate unnecessary liabilities for your business by assigning the beneficial interest holdings of your land trust to an entity. 

 

STRATTON EQUITIES’ HARD MONEY MEET AND GREET ON MAY 22

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Loan Officers, Real Estate Agents, Developers and Investors are invited to the Son Cubano Restaurant in West New York in May to learn more about Stratton Equities

April 17,2019- Parsippany NJ – New Jersey based Mortgage Lender, Stratton Equities, is making noise with their launch event; The Stratton Equities’ Spring Meet and Greet on Wednesday, May 22. To RSVP or learn more information about the Spring Meet and Greet follow the link here: https://strattonequitiesspring2019.splashthat.com/

Stratton Equities is a leading Nationwide direct Hard Money Lender that offers the most diverse array of programs in Today’s industry. Providing loans such as Hard Money, Private Money, Fix and Flip, Stated Income, Commercial, and more.

The Parsippany, NJ, flagship location is home to Founder, serial entrepreneur Michael Mikhail, and hungry Loan Officers that close their first loans in an unheard of previously – 4-6 weeks- and now they are ready to make a splash in the fast growing Mortgage lending industry with their upcoming Meet and Greet event.

After their soft launch in mid-2017, Stratton Equities focused on building their foundation of providing the most innovative programs at the lowest rates.

In early 2019, Stratton Equities became listed in the Scotsman Guide and focused their efforts on expanding outreach with the creation of their Seasonal Meet and Greets.

The focus of each event is to connect Loan Officers, Real Estate Agents, Developers and Investors– face to face- with curated one on one meetings during an entertaining affair focused on showcasing the high quality and luxury lifestyle that Stratton Equities possesses.

On Wednesday, May 22, The Stratton Equities’ Spring Meet and Greet will commence at Son Cubano Restaurant in West New York, in partnership with Remax Realtor Carlie Carreira and Media Partner, Realty 411.

Attendees can enjoy signature themed cocktails, the New York City skyline, and tasty appetizers, while they network with top influential members in the industry.

All guests will be able to take home a Stratton Equities’ VIP Gift Bag filled with products from their sponsors: Simplicity Title, Design + Build Enterpríses, United Real Estate New Jersey, Nationwide Property & Appraisal Services.

To find out more about Stratton Equities, please visit www.strattonequities.com

For more information about the event and to RSVP, please visit https://strattonequitiesspring2019.splashthat.com/

All press or media inquiries should email, Jordan Elizabeth Gelber at [email protected]

Another Reader Retires Five Years After Buying 1st Rental

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Hello, Realty411 readers! I hope everyone is doing fantastic and ready to step into Spring. It’s my hope that you’re expanding your education and forging ahead with your investment goals.

I, for one, am moving right along with my mission of providing complimentary and quality resources to investors around the world, which can help them realize their financial goals.

Recently, Bobby S., one of our long-term followers in the Bay Area, reached out to share with me that he was turning in his resignation at the technology company where he worked. He is only 55 years young so he’s definitely retiring early, which is what most people dream of doing.

The reason he specifically called was to thank me for organizing an out-of-state investing bus tour five years ago, which helped him buy his first long-distance rental. That experience also sparked an interest in him to want to help others learn to invest as well.

Soon, he began to tell his colleagues about his positive investing experience, and he began to seek more properties out for himself, and later also for his friends and associates.

After a number of years, our loyal investor/reader evolved into an educated authority on investing in out-of-state rentals. He now also hosts his own events and has a loyal following of investors. What an amazing experience to know that Realty411 was the instrument which shaped Bobby’s early retirement. Not only did we teach him about passive cash flow, but now he is multiplying that message by sharing it.

What a joy to know that Realty411 is changing LIVES! I changed the course of my life with real estate, and now it’s your turn too. Please call us anytime if we can assist you, or if you have any questions: (805) 693-1497. I hope to see you soon at our next live event!

HOW TO USE FUND INVESTING TO OVER-COLLATERALIZE YOUR CAPITAL

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Is it time to rethink the way you think about funds and invest in them?

There are all types of funds. Some are far better and safer than others. Some see all the gains eaten up in fees and admin costs. Others generously pass on great gains to participating investors, even though their upfront estimates may have been modest. There’s a good chance that there is a place in your portfolio for some type of fund. Yet, most just don’t get the real advantages. They only see passive income and some stability in yields in the case of real estate funds. There are other advantages though, which more sophisticated investors are aware of.

THE OTHER ROI

“What’s my return?”

That’s the most common question novice investors ask when shopping and comparing investment options. “How much are you promising me?” That’s like shopping mortgage interest rates on your home loan. If you’ve financed a few homes, you know that the rate and terms you can get at the closing table may be WAY different.

What experienced and intelligent investors prioritize is another kind of ROI. The Return OF Investment.

It doesn’t matter if you’re promised the chance of 100x returns, if the chances you’ll lose everything are pretty close to 100% too. That’s the case with a lot of investments. Especially in the tech and startup world.

If you lose your capital you have nothing to reinvest. It is far better to make nothing in terms of returns on your investment, and just walk away with your capital back to try something else. A little icing on the cake, in yield, to cover inflation and lost opportunity costs on top of that would be nice too though.

So, what the most sophisticated investors look at is how likely they are to get their capital back in the worst case scenario. Think bank loans, mortgage lenders and even VC funds and Warren Buffett. What is this asset worth? If it completely fails to perform and the borrower or tenant goes broke, how can I get all my money back, and then have the chance to potentially sell it for a whole lot more? You think banks really did bad in the 2008 crisis? Probably not near as poorly as you think.

HOW TO OVER-COLLATERALIZE YOUR INVESTMENTS

So, how do you make sure that the risk-reward balance is so skewed in your favor when investing that you can’t lose?

Well, you can invest in mortgage notes and demand great spreads. You can buy properties for pennies on the dollar. Or you can choose great fund investments.

Over the past decade we’ve only seen problems ramping up. Virtually a whole industry of novices have popped up, overpaying for assets, without any plan for sustainability. Many are already seeing their assets dive into negative equity territory. It’s a catastrophe waiting to happen. Though a massive opportunity for others.

Here’s what’s cool about funds. Not only do the best have the ability to still buy assets in bulk, off market for pennies on the dollar, they can over-collateralize your investment with all of the assets in a fund. Let’s say you put $100,000 into a $1M fund. Well your capital technically has 10x the protection of your investment. Inside that fund there can be hundreds of assets too. So, you are never counting on a single asset to perform. In fact, even if 30% of them totally flop, you’ll still be fine.

In our diversified hybrid fund we’ve also built in multiple strategies and plays that are working for you at the same time. Redevelopments, buy and hold income properties, mortgages notes, etc. if one niche slows down, the others are speeding up. It’s a great way to not only ensure your return OF capital, but a return on your investment too.

Is your capital safe? Is your portfolio future proofed?

INVESTMENT OPPORTUNITIES

Find out more about investing in secured debt and real estate, go to NNG Capital Fund

Real Estate Investors, If You Could Buy Single Family Homes With No Mortgage For 20 Cents On The Dollar, How Many Would You Buy?

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By Ted Thomas

Here’s the secrets of a little known but highly lucrative business of purchasing tax defaulted properties at auction for 10-20 cents on the dollar.

For many, the question is, what’s the difference between a tax lien certificate and a tax defaulted property (tax deed)? Before you begin investing, it is vital that you understand how a tax deed works, once you know you can purchase tax-defaulted real estate for pennies on the dollar but it’s only profitable if you know what you are getting when you bid.

What is Tax Defaulted Property (Tax Deeds)?

In a very basic sense, every piece of land in the United States is owned by the federal government. The government allows you the right to own the property as long as you pay taxes on it.

Many years ago, the U.S. Congress enacted laws that allowed individual states to handle governmental duties and obligations at the local level. The states further designated counties to handle the property taxation part of those duties and obligations. When you pay property taxes to the treasurer or assessor’s office, those funds are used to pay for public schools, police and fire departments, and any number of other civic services. The local government that manages and operates these services is primarily funded by property taxes.

Every year hundreds of thousands of property owners neglect to pay property taxes for various reasons. So what happens then??

The remedy for local government is to confiscate that property and resell it at a tax defaulted property auction for only the back taxes with no mortgage. The majority of these auctions use a public oral bid system. To quality as a bidder is simple; you just need to register before bidding. The starting bid is the amount due to the local government for back taxes plus penalties and interest. If you win, in most instances, you must immediately pay for your purchase.

It doesn’t matter where you live; county governments in all 50 states are authorized to hold auctions to recover delinquent back taxes. Some states offer tax lien certificates, other states offer tax defaulted property auctions (tax deeds) which are used to collect the past due property taxes owed. The difference? A tax lien certificate entitles you to collect the amount of tax you paid plus the interest penalties; a tax deed purchased at auction allows you to become the owner of the property for the price you bid at auction the mortgage is extinguished, that is deleted by law.

The secret to becoming a successful investor in tax defaulted property (tax deed) real estate is to know the who, what, when, where, why, and how these tax auctions take place.

Golden Rule #1

Know what you’re buying. This includes the size of the parcel, how many buildings are on it, zoning, restrictions, easements, the annual amount of property taxes, the appraisal value, previous sale prices, and current condition.

Taxes are usually assessed at 1 to 1.5 percent of the property’s value. So a piece of real estate valued at $100,000 will be assessed somewhere around $1,000 in taxes each year. Three years of back taxes would equal $3,000 and the local county will probably ask for a minimum bid at the tax defaulted property auction of $3,500 -the county will add late payment penalties to the back taxes.

The next question that must be answered is where and when are the auctions taking place? Normally auctions are conducted at county offices, but not always. Regardless of the location, it will be announced in advance of the auction. Some counties hold one big annual event while others schedule tax defaulted property auctions monthly, annually in the United State of America there’s over 5,000 tax defaulted auctions.

Secondly, you must know how the bidding process works. Rules vary from state to state, taxing district to taxing district. Some counties use an online bidding process which is becoming more and more popular, but the majority still hold live auctions you may attend in person.

At the auction, each parcel number is announced in turn; then the auctioneer asks for opening bids. It works much like any other auction; the bidding goes up until there are no more bids. The person who wins with the highest bid is awarded a Treasurers Tax Deed from the county treasurer. Make note there’s dozens of unique bidding processes, this is only one.

Real Estate For 20 Cents On The Dollar

There’s big money to be made buying tax defaulted property at auction Tax defaulted property (tax deed) auctions allow you to buy low and resell for a quick profit. Do your research, and you’re bound to find success!

Ted Thomas is famous for showing newcomers and investors how to earn 6 figure incomes within 1 year of completing his training program. Conservative investors love tax lien certificates because they are predictable, certain and secure and sold by local government. Tax defaulted properties are sold at oral big auctions and online. Starting bid, only the back taxes…. More information at TedThomas.com

Why Sponsorship Marketing is a Win-Win

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By LAURA ALAMERY

Many of you will immediately associate sponsorship with sports; your name on the team jersey, a display ad printed in the game programs, your logo emblazoned on a prominent banner waving in the wind. You may be pleasantly surprised to learn that sponsorship marketing is far from being exclusive to the sporting world and humanitarian causes. And, it may just be the answer to integrating your brand into the local community; creating a loyal following of believers in your product or services.

Sponsorship vs. Advertising: What’s the difference?

Sponsorship marketing is one of the most effective and affordable ways for a growing business to gain plenty of exposure. By showing your support for (or alliance with) small and local businesses, sponsorship allows you to get your message out in front of a highly desirable audience; your community, your industry niche. Sponsorship marketing also provides the opportunity of an ongoing relationship, giving you more time to really nurture potential customers and gain their loyalty (and referrals).

Advertising, on the other hand, is a huge expense (especially for a startup business). One simple placement in a popular industry magazine – or several 30 second radio spots a month on your local station – can run into the hundreds of dollars. Your return on investment (ROI) is minimal, because the few seconds you’ve got anyone’s attention is not likely to convert to sales. And, the trial and error you’ll experience while finding what works for your company – and doesn’t – can be painful and time consuming.

Advertising is about quantity. Sponsorship is about quality.

Putting Sponsorship Marketing to Work

Whether online or onsite, this method for getting out your message and building brand recognition is superior to many others. Don’t miss the many types of marketing available to sponsors:

  1. Reaching a Target Audience: Remember, with sponsorship marketing your ideal prospect is essentially already in place, and you have their attention. Make good use of it! Sponsoring the right company means you skip about 20 different task levels in narrowing down the right consumers for your products and services!
  1. Standing above competition: Customers take many things into consideration when choosing to spend their money. While the cost and quality of your services (or products) are key factors, your commitment to the economic development of their local community will definitely influence their decision.

  1. Extensive brand exposure: In most cases, sponsorship marketing involves more than just writing a check. You will be given varied ways to introduce yourself to an attentive audience – in person or online, or both. From speaking at group meetings, to brand placement on coveted group web pages; from vendor table opportunities to guest posting. It’s a class act.
  1. Business collateral is a must: Here’s a chance to display your logo and message (banners, table runners) at events and distribute your cards, brochures, giveaways like cups or pens, etc. This goes so much further than wasting hundreds of dollars a year with a neighborhood newspaper ad; thrown into driveways, only to be rained on, run over and tossed in the trash.
  1. Be generous and tasteful: Go the extra mile and have your gift or donation for drawings branded with your logo. Use subtle yet creative ways to make sure the recipient knows (as well as the audience) that it’s your company providing the gift. Thoughtful, useful items may be kept for many years.

Sponsorship marketing is an excellent means of making the most of your valuable time and hard earned dollars. It is a mutually beneficial strategy to achieving meaningful business goals. Hence, the win-win.

Laura’s Story…

I was born and raised in beautiful Vicenza, Italy – only 40 miles from lovely Venice on the Adriatic Sea. I used to hang out at the top of this hill as a teenager, where I could see the whole city stretched out before me.

Laura Alamery investor

In 1985 I relocated to United States, moving to Honolulu in 1987 where I became a college student at Hawaii Pacific University; just 4 miles from the beaches of Waikiki. I began developing a keen interest in real estate, so I started reading everything I could find – watching late night infomercials and buying courses by Dave Del Dotto, Robert Allen and Carlton Sheets.

My Real Estate Career Begins

That same year I became a real estate agent, to help pay for my college studies. I joined Dolman and Associates in Honolulu, and right away I was inspired by some of the top agents on the island. I began following their lead and in my first year in the industry, I became a multi-million dollar producer!

In 1991, I graduated with a Bachelor of Science in Business Administration and moved to Missouri that same year. Once on ‘the mainland,’ my real estate career really took off. I started to purchase properties with no money down, using creative financing.

I continued my education by earning an MBA in Finance, still working part-time in real estate. Then I began a new career as an assistant controller in metal commodities, planning to climb the corporate ladder and keep real estate as a side business.

From Part-Time to Full-Time

By the mid-1990s I had already acquired a sizable portfolio (over 20 properties) consisting mostly of multi-families for rental income – and I was barely 30 years old! I was making more money in part-time real estate (less than 10 hours a week) than my full-time corporate job, so in 1996 I decided to flip the switch and devote myself entirely to real estate. Once I was able to immerse myself full-time into real estate investing, my career skyrocketed.

In 1997, I began sharing my knowledge of real estate investing, proven strategies and creative financing techniques by hosting real estate seminars. And, given the widespread use of the Internet, I decided to also share my practical knowledge and experience as well via online mentoring and coaching. In 2010, I opened The REI Lab, Inc. – the culmination of various companies I had started and closed in the past.

The Next Chapter Unfolds

With a love for laid back lifestyle and great weather (I really missed being near the water), I decided to relocate once more in May of 2015. This time the move was to Broward County, Florida; midpoint between Miami and Fort Lauderdale. Laura Alamery Miami investor

The Miami-Dade area is full of opportunities, and 59% of the real estate transactions here in 2016 were cash – more than twice the national average according to the National Association of Realtors!

Secure Your Future: Investing in Real Estate Through Self-Directed IRAs

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By Kaaren Hall

Do you have a 401(k) with a previous employer or an IRA?

Are these accounts invested in stock market assets? Most retirement accounts are invested in stocks, bonds and mutual funds however the Self-Directed IRA lets you invest outside the stock market.

For over 40 years you have been able to invest your retirement dollars into assets like real estate and most people don’t know about it. In fact there is about $24 Trillion in US retirement accounts. Only 3-4% of that amount is invested in what’s called “alternative assets”.

When you think about building a retirement for yourself consider the Self-Directed IRA.

When it comes to investing in Real Estate, the Self-Directed IRA allows many ways to do this:

  • Residential real estate, including: apartments, single family homes, and duplexes

  • Commercial real estate

  • Undeveloped or raw land

  • REITs (Real Estate Investment Trusts)

  • Real estate notes (mortgages and deeds of trusts)

  • Promissory notes

  • Private limited partnerships, limited liability companies, and C corporations

  • Tax lien certificates

Take Joe for example. Joe retired from his employer at the age of 50. It was a forced retirement because the company was restructuring. He spent 20 years at his previous employer putting aside 15% of his annual earnings. Now that he was “retired” Joe decided to become a real estate agent.

He noticed his own IRA was losing money and putting this money into a self-directed IRA was something that made sense to him. Joe says, “It gave a monthly boost to my IRA account through the rent money. Plus it gave me equity growth. As a self-employed person, it has given me a small glimpse of security into my retirement age. Whenever that will be.”

Right now and for the next decade ten-thousand baby boomers will reach age 65 every day! The average account value for Americans 55 to 64 years old is $103,000. You have to ask yourself is that is going to be enough to sustain you through your retirement years?

Many people, like Joe, are enjoying the tax-deferred or tax-free benefits of using their IRAs and 401(k)s to secure a better financial future.

So how do they do it? Self-Directing your retirement is a 3-step process to 1) Open an account 2) Fund that account and then 3) invest.

We have helped thousands and we can help you accomplish your self-directed retirement goals at uDirect IRA Services.

Kaaren Hall

Kaaren has helped hundreds of people self­direct their retirement savings. A native of California, she has a 17­year background in Real Estate, Property Management and Mortgage Lending. She has worked at such companies as Bank of America, Centex Homes, Pulte Homes and Indymac Bank. She’s held a real estate license in Washington, Texas and California and a Life & Health license in California.

Her company, uDirect IRA Services, LLC, offers self­directed education and services to investors, providing excellent customer service. Kaaren is a public speaker and master networker. A mother of two, she lives in Orange County.

If you have a question about how to use your IRA to self­directed you can contact us here at [email protected] or at 866.447.6598. Our website address is www.uDirectIRA.com .

Savvy Investors Earn 16%, 18%, Up To 24% On Government Tax Lien Certificates

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The Question Is; What Is A Tax Lien?…It’s Not What You’re Thinking

By Ted Thomas

Across America, investors like you are discovering a safe, secure, predictable way to invest directly with the local government and then get checks back from the local government… here’s how..

The most common question I hear is “What is a tax lien certificate?” It is truly amazing how many people are not aware of this centuries-old investment vehicle.

The United States is a country where the majority of citizens own real estate, either residential or commercial, for many the most valuable asset they own is real estate.

Even though the housing bubble in recent years forced many people out of their homes, real estate ownership is still the goal to which most Americans aspire.

One of the costs of real estate ownership which cannot be avoided is the payment of property taxes. Local governments demand property taxes so that they may pay for civil servants and for roads, library, schools, police and fire departments to name a few. These property taxes are usually levied annually. In the U.S. there are 3,000 counties and over 1,400 municipalities that are classified as tax entities, sometimes called districts.

Tax Default

What happens if the property tax bill is not paid? The county government authorities do have remedies. They could repossess the property, but unlike vehicles or other goods, real estate can’t be moved. Instead, the government places a lien on the property.

A lien is similar to a mortgage, meaning that until the amount due is paid, the property is not owned free and clear. A delinquent tax lien is considered a senior lien – the local government must be paid before any other debtors if and when the real estate is transferred or sold. The lien is not beneficial to the municipality because it doesn’t fill their treasury with the money needed to pay for city and county services. In order to get their money right away, the municipality will offer tax lien certificates for sale to the public. This simply means, the defaulted taxes are sold at auction to willing investors. Investor’s purchase tax lien certificates because the county gives the investor a high interest rate and a secure position on the real estate.

The local government challenge is…

To collect property taxes. This is usually accomplished with an annual, or more frequent tax lien certificate auction or a tax defaulted property auction, today we’re talking about tax lien certificates. When the tax lien certificate is sold, the government collects their revenue from the investor and the property owner receives a notice of lien against their property, giving the property owner time to pay the delinquent bill. The purchaser of the certificate gets the lien certificate, which is secured by the actual real estate.

In order to remove the lien, the property owner must pay the amount of the unpaid taxes plus any applicable interest and penalties. When this revenue is received, the government authority sends a check to the tax lien certificate holder for the face amount plus the amount of interest accrued.

What If The Tax Isn’t Paid?

Sometimes the property owner just doesn’t pay the tax lien certificate which represents the taxes due, for one reason or another, it may be that the real estate became part of an estate and the heirs don’t want the property – or can’t afford it. How much time elapses between the taxes going unpaid and the municipality deciding to give up on ever receiving the revenue varies by tax district.

According to county treasurers across the United States, 95 to 97 percent of all property owners pay the delinquent tax in 24 months or less. It’s rare that a property owner fails to redeem (pay) the Tax Lien Certificate, but it does happen, nationwide, every year there are thousands of buyers who end up with property for only the cost of back taxes which they purchased at a tax defaulted auction. In a subsequent article, I’ll have more about tax defaulted property auctions, meanwhile, if the property owner fails to pay taxes, the tax lien certificate holder is awarded the property in exchange for paying the taxes, the county or municipality sends the tax lien certificate purchaser a deed, giving them the fee simple right to keep or sell the real estate.

Where To Find Tax Lien Certificates

Where can you find tax lien certificates that are up for auction? Local governments compile a list of delinquent property owners on a regular basis. This list can be found in one of three places: published by the newspaper, published online, or a printed list available directly from the government office. When you obtain the list, you can also get instructions and the date of the next auction of tax lien certificates.

To review, only two things may occur if you purchase a tax lien certificate. Number 1, the property owner gets their act together and redeems the certificate, that is they pay the certificate and when they pay you’ll receive all the money you invested plus a high interest rate which could be 16, 18, up to 36%. Number 2, the property owner continues the default and does not pay and the time limit runs out and you end up with the property free and clear. The mortgage is wiped out by an act of law, that is, the mortgage is extinguished by law in every state and every county in America.

Advantages of Tax Lien Certificate investing

Tax lien certificates pay interest rates up to 16%, 18%, 24% even 36% depending on the county where you purchase, each county has its own rules and amounts they pay. Conservative investors really like tax lien certificates because they are passive investments with very low risk. In short, they are predictable, certain and secure. Watch for more details in the future…

apr12

Ted Thomas is famous for showing newcomers and investors how to earn 6 figure incomes within 1 year of completing his training program. Conservative investors love tax lien certificates because they are predictable, certain and secure and sold by local government. Tax defaulted properties are sold at oral big auctions and online. Starting bid, only the back taxes…. More information at TedThomas.com

Three Misconceptions about Japan’s Properties

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Japan’s attractive property market draws real estate investors worldwide for its high yield, affordability, rental income cash flow and safe haven economic environment. While the real estate investment arena is undoubtedly attractive, and the second largest real estate investment market in the world, Japan is also one of the countries most affected by natural disasters. Therefore, before jumping in to buy up properties, foreign investors, new to the market, often test the waters by asking about the quality of Japan’s structures and their ability to weather the storm. Investors ask, “What is the risk associated with the age of Japan’s real estate?” To answer this question, we explore the common misconceptions of Japanese properties.

Misconception #1 – Properties are Made of Wooden Structures

Some investors have concerns about the materials used to build real estate in Japan and whether or not they can withstand the force of earthquakes and tsunamis. This misconception stems from traditional wooden houses which used to line the streets of Japan in the former imperial capital. Most investors focus on buildings for the cash-flow play, rather than houses. Therefore, the concern is an out-dated concept and no longer a consideration. Furthermore, wooden houses are being steadily replaced by earthquake-resistant, reinforced concrete apartment blocks.

Misconception #2 – Properties Built after 1981 Pose Less Risk

In 1981, the Building Standards Law was revised to protect residential and commercial structures against earthquakes. In 2006, building certificates and inspections became even more regulated subjecting builders to inspections during the construction process for buildings above three stories. Because of the revisions to the Building Standards Law in 1981, some investors consider 1981 the turning point for sounder structure. Herein lies another misconception.

A building’s condition is affected by more than just its age. A properly managed accumulated funds pool can also affect its condition. With adequate funds, buildings built prior to 1981 can be retrofitted to bring them up to code by regularly renovating, repairing and re-strengthening exterior walls and taking care of unforeseen renovations. Alternatively, a newer building could be poorly managed with insufficient funds for renovations and maintenance. As you can see, investing in an older building under these circumstances could be the wiser choice to minimize risk.

As facilitators to foreign investors, we try not to source anything older than 1973. But, those that we did source were well-maintained buildings housing 50 to 200 units, showing no signs of deterioration, beyond normally acceptable and repairable wear and tear. Generally, since the cost for renovations and repairs are taken out of the building repair fund, if funds are insufficient, then apartment owners bear the extra costs. To ensure the risk to investors is minimal, when conducting due diligence on a potential purchase, we look into the status of the accumulated funds pool, renovation/repairs/maintenance history and the building management company’s handling of the collected renovation/repair funds and provide a report to the investor for an educated investment.

Misconception #3 – Properties have Just a 20 Year Life-Span

Life-span of a house is sometimes referred to as approximately 20 years, while that of a building approximately forty years. From a value perspective, this is a misconception. This life-span refers to tax depreciation not the quality of the property.

There are other benefits to an apartment investment over a house. Houses require more maintenance and can present unexpected costs, whereas, in a building, structural expenses are known in advance and covered by pre-set building fees. And, the building management company’s monthly fees normally cover all or most maintenance expenses, so there are far less surprises.

Overall, risk is greater with speculative play for capital gain such as units in Tokyo or Osaka. Investing in Japan for its monthly cash flow environment in cities such as Sapporo, Fukuoka, Nagoya and other cities with stable or growing population can result in stable returns. For highest yielding properties, investors should focus their criteria on condo units under 200 sq. ft., one to two room units, for inexpensive interior maintenance. Alternatively, some of our clients aim for smaller and older buildings on large plots of land in key locations. The strategy in this case is to sell to a developer when the building becomes too expensive to maintain, in exchange for either compensation at a profit, or a new unit in a new residential project built on that land. The downside is that these units only have a small fraction of land attached to them, so appreciation potential is lower.

Priti Donnelly, Sales and Marketing Manager, Nippon Tradings International, [email protected]

Priti Donnelly

Priti Donnelly is the sales and marketing manager at Nippon Tradings International, a proxy and buyers’ agency representing foreign investors with purchasing, selling and managing real estate in Japan. She understands the importance of transparency in today’s international market. Through her insight, she focuses on breaking barriers and helping investors feel confident about their overseas property investments.

Phone: +1 226 336 4097 / +81 3 4520 9262
Email: [email protected]
Website: http://www.nippontradings.com

Don’t Stop Marketing when Times are Tough (and the Going Gets Rough)

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By Sharon Vornholt

If there is one piece of advice I could give every struggling investor who is trying to stay afloat in today’s challenging market, it would be “don’t stop marketing”.

I know that’s what most people do. But it’s during these times you need to actually step up your marketing. You can’t stay in the game, if you don’t play.

Let’s put it another way.

When you can’t seem to get a deal no matter what, most investors stop marketing to conserve cash. But I can tell you that your business will die a quick and painful death if you do this. You may have to change the way you’re marketing, but whatever you do, don’t stop marketing when times are tough.

So What Can You do If Your Business is starved for Cash?

There are a lot of things you can do but here are some suggestions:

  • Networking is free (or almost free). Get out every day and talk to people. Be sure you have business cards. You can get affordable business cards at Vista Print.
  • What can you cut out to have money for marketing over the next couple of months for direct mail and other things that have a cost associated with them? Do as much marketing as you possibly can.
  • Can you partner with someone? Offer to go look at houses and make offers for someone that has cash for marketing, but maybe has small children and little time.
  • What about spending the day in eviction court? You’re sure to find some tired landlords there.
  • Get a list and call prospects. You’re already paying for your phone, so why not put it to good use?
  • Go driving for dollars. Do some door-knocking to find out who lives in that vacant house.

There are a lot of marketing strategies that cost nothing more than your time.

I can tell you this for sure; it’s these times when “average” investors close up shop. Just keep plugging away. Don’t stop marketing and you will come out way ahead of your competitors over time.

Spend Your Cash Wisely when Money is Tight

This is a time when you need to be smart with your money and your resources.

Here are some more tips for you:

  • Make sure your lists are laser focused. Don’t get too broad. You want to make each mail piece count since they are costing you money.
  • Don’t forget about follow up. Go back through all your leads in the past 12 months. Look at all those who said no. Maybe they are ready to say yes now at the end of the year.
  • Get to work on that stack of direct mail. Do you know someone that has TLO or another similar service that might split the cost for one month to check all of those returned mail pieces?
  • Are there additional real estate niches where you look for opportunities? Think tired landlords, pre-foreclosures, houses with code citations, etc.
  • Remember time and circumstances change all things. This is certainly true of motivated sellers. Just because a seller told you no before, they might just have meant “not now”.

Don’t Stop Marketing During the Holidays

This is probably the biggest mistake investors make. They stop marketing during the holidays. You can take advantage of that, but doing the opposite of what everyone else is doing. This is a good time to look for opportunities where other investors dropped the ball.

Final Thoughts

It’s great to do a marketing brain dump every now and then. Maybe there is something you used to do that you stopped doing. Do whatever it takes to stay in the game.

Get creative and see what you can come up with.

Sharon Vornholt

Sharon Vornholt is the owner of Innovative Property Solutions, LLC in Louisville, KY.

Sharon owned and operated a successful home inspection company for 17 years. She began investing in real estate in 1998 and became a full time real estate investor in January of 2008.

Sharon specializes in wholesaling, and is also an experienced landlord and rehabber.

In addition, Sharon is an internet marketer and also writes articles for several national real estate sites. Sharon is the author of a popular real estate blog called the “Louisville Gals Real Estate Blog”. For your FREE REPORT “Probates and Absentee Owners: Your Fast Track to Real Estate Riches”, stop by her blog at: http://LouisvilleGalsRealEstateBlog.com.